MSMEs seek lower GST on professional services to benefit from each other

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By Ashish Mitra --
Monday, 11 Jan, 2021

In order to encourage MSMEs to make use of professional services for their business growth, the government should reduce the GST rate on most of the professional services from the currently charged 18 per cent to 5 per cent, said Chandrakant Salunkhe, President, SME Chamber of India and Startups Council of India.

Legal professionals who provide services include chartered accountants, architects, courier services, management consulting and services including HR, marketing, supply chain management, hosting and IT infrastructure provisioning, maintenance, repair and installation services, etc. All this attracts 18 per cent GST.

Amid the latest move by the government with respect to GST, the Central Board of Indirect Taxes and Customs had in December last year notified that enterprises with over Rs 50 lakh as a monthly turnover will be levied at least 1 per cent of their GST liability in cash as it looked to address the issue of fake invoicing.

The 1 per cent GST liability however would not be applicable to firms the managing director or partner of which have paid over Rs 1 lakh in income tax or has got over Rs 1 lakh in refund in the preceding financial year for unutilised input tax credit.

Among other suggestions made by Salunkhe was that the collateral-free loan limit should be enhanced by the government to Rs 5 crore for micro-units, Rs 15 crore for small businesses and Rs 35 crore for medium businesses. “This will lead to better utilization of money available with banks and needy businesses will benefit,” he added.

Under the CGTMSE scheme, which provides credit guarantee to financial institutions to provide collateral-free loans to small businesses, the government had increased the loan disbursal limit from Rs 1 crore to Rs 2 crore.

MSMEs seek lower GST on professional services to benefit from each other. In order to encourage MSMEs to make use of professional services for their business growth, the government should reduce the GST rate on most of the professional services from the currently charged 18 per cent to 5 per cent, said Chandrakant Salunkhe, President, SME Chamber of India and Startups Council of India.

Legal professionals who provide services include chartered accountants, architects, courier services, management consulting and services including HR, marketing, supply chain management, hosting and IT infrastructure provisioning, maintenance, repair and installation services, etc. All this attracts 18 per cent GST.

Amid the latest move by the government with respect to GST, the Central Board of Indirect Taxes and Customs had in December last year notified that enterprises with over Rs 50 lakh as a monthly turnover will be levied at least 1 per cent of their GST liability in cash as it looked to address the issue of fake invoicing.

The 1 per cent GST liability however would not be applicable to firms the managing director or partner of which have paid over Rs 1 lakh in income tax or has got over Rs 1 lakh in refund in the preceding financial year for unutilised input tax credit.

Among other suggestions made by Salunkhe was that the collateral-free loan limit should be enhanced by the government to Rs 5 crore for micro-units, Rs 15 crore for small businesses and Rs 35 crore for medium businesses. “This will lead to better utilization of money available with banks and needy businesses will benefit,” he added.

Under the CGTMSE scheme, which provides credit guarantee to financial institutions to provide collateral-free loans to small businesses, the government had increased the loan disbursal limit from Rs 1 crore to Rs 2 crore.