The Chamber of Small Industry Associations (COSIA) has formally submitted a detailed representation to the Directorate General of Goods & Services Tax (DGGST), responding to their request for inputs on the various challenges faced by Micro, Small, and Medium Enterprises (MSMEs) under the Goods and Services Tax (GST) framework. This representation outlines several pressing concerns faced by MSMEs and offers actionable suggestions to improve the GST compliance process, reduce burdens, and ensure a more streamlined approach for MSMEs.
Among the key issues raised by COSIA are the increased compliance burdens on MSMEs, many of which struggle to meet the numerous filing requirements due to limited resources. Smaller businesses often cannot afford dedicated staff or advanced software systems to manage GST-related tasks, unlike larger companies. This disparity has led to a situation where MSMEs face challenges in keeping up with frequent returns, reconciliations, and documentation requirements.
COSIA’s representation also highlights procedural issues, including confusion over documentation for GST registration and challenges in ensuring that suppliers have actually paid tax, leading to potential ITC (Input Tax Credit) denials. Additionally, several administrative hurdles, such as lengthy processes for addressing tax paid under the wrong head or claims of erroneous refunds, have been identified as major pain points for MSMEs.
To address these concerns, COSIA has put forward several practical recommendations, including:
- Simplification of GST returns: Eliminating certain returns like ITC-04 and GSTR-1 for smaller businesses, and allowing corrections to GSTR-3B.
- Enhancement of the GST registration threshold to reduce the number of businesses falling under complex compliance requirements.
- Streamlining dispute resolution mechanisms, ensuring a fair process where MSMEs aren’t unfairly penalized for issues that are out of their control.
- Improved transparency in government communications with MSMEs, such as clear guidelines for documentation and contact information for tax officers.
Furthermore, COSIA has called for reforms in the way e-way bills, transit checks, and tax recovery measures are enforced, urging the government to establish more practical and business-friendly procedures that minimize disruption for MSMEs.
Through this representation, COSIA aims to create a more supportive GST environment, reduce administrative burdens, and foster greater trust between MSMEs and tax authorities, ultimately encouraging growth and improving the ease of doing business for the sector.
For a detailed copy of the representation, please click here.