Cracking the Code: MSMEs and Exporters Struggle Under GST; Solution Lies in Easier Compliance and Swift Refunds

The Parliamentary Public Accounts Committee (PAC) has sounded the alarm on the plight of Micro, Small, and Medium Enterprises (MSMEs) and exporters under the Goods and Services Tax (GST) regime. In a report presented to Parliament, the Committee has flagged several issues, including the need for a simplified compliance framework, streamlined return filing and refund processing, and a dedicated fast-track refund processing system for exporters.

The Committee has expressed concern over the existing mechanisms for return filing, which result in prolonged waiting periods for refunds and potential cash flow challenges for businesses. To address this issue, the PAC recommends that the Ministry of Finance implement an efficient and transparent refund processing system with clear timelines for processing claims and regular updates to taxpayers on the status of their refunds.

The report also highlights the need for a robust and transparent framework for data analytics to better inform revenue projections. The share of indirect taxes in total revenue receipts has declined to 36.92% in FY20 from 38.76% in FY18, with fluctuations observed in subsequent years. The Ministry of Finance attributes this decline to macroeconomic factors such as import volumes, global economic conditions, and changes in tax policy.

However, the Committee cautions that the Ministry has not provided a comprehensive strategy to mitigate these influences for a steady growth in indirect tax revenue. It recommends that the Ministry develop a proactive strategy to ensure timely assessments of the impact of macroeconomic factors on tax collection and provide accurate projections of revenue to be collected, aided by state-of-the-art data analytics and AI tools.

The Committee also focuses on the issue of multiple registrations required by businesses across states, which creates confusion and administrative burdens. To address this, it recommends enhancing the functionality of the GST portal to facilitate easier management of multiple registrations, and creating a unique business ID for enabling simultaneous tracking of multiple registrations by the same business entity in different states.

Regular consultations with industry stakeholders are also essential to gather feedback on the challenges faced in managing multiple registrations, enabling the Ministry to make informed adjustments to the system as needed. The Committee’s report is a wake-up call for the government to re-examine its taxation policies and provide much-needed relief to MSMEs and exporters.

Original Source: https://indianexpress.com/article/business/parliamentary-panel-flags-issues-faced-by-msmes-exporters-under-gst-suggests-easier-compliance-fast-tracking-refunds-9908032/
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Publish Date: 2025-03-27 00:44:00