The Union finance minister Nirmala Sitharaman has been urged to call a special and executive meeting of the GST Council to address the case of “massive overregulation” and their adverse impact on the small- and medium-scale industries of the country.
In a letter to the FM, Amit Mitra, the principal chief adviser to the chief minister of Bengal, listed five compliance-related issues that MSMEs are facing in the GST regime and feared many small businesses would drop out of the formal sector to avoid penalties and harassment.
The missive from Mitra, the former finance minister of Bengal, comes a day before the 49th meeting of the GST Council, which is chaired by Sitharaman and represented by the finance ministers of all Indian states and Union Territories and top bureaucrats of the finance ministry.
Mitra argued that it has become very complex to navigate the GST regime and only large corporates which engage topnotch accounting firms would be able to survive the frequent changes in the regime. He noted that 741 notifications have been issued so far, including 395 central tax notifications and 148 central tax rate notifications. Moreover, amendments in 65 sections of GST laws, 129 rules of central GST have been made in addition to 419 major changes in GST rates on goods, Mitra wrote.
The former Bengal FM, who had held the post of chairman of empowered committee of state finance ministers on GST in the past, enumerated five compliance issues, such as the filing of return, registration, invoice, goods movement (way bills) and IT (information technology) that are dogging the MSMEs.
“What is happening on the ground in the Prime Minister’s own regime vis-a-vis GST is that, MSMEs are on the verge of becoming informal again as they are unable to cope with the punitive regulatory structure, complicated compliances and potential penalties of high order,” Mitra said in the letter.
He alleged that the GST regime would exacerbate the growing inequality as only the large companies would remain and small and medium entities would slowly exit in whatever manner they can.
