Refund accumulated GST input credit for startups faster

Refund accumulated GST input credit for startups faster

By Abhay Batra

There has been transparency in the ecosystem & broadening of the tax-paying base of the country and all this has been possible because of GST in the country. As a startup, we are expecting a refund of accumulated GST input credit due to input services & capital goods especially for companies with an inverted duty structure, i.e. where the tax rate on input services is higher than the tax rate on output goods, prevalent in sectors such as apparel, newspaper, etc. Also, the government needs to allow postponement of output GST liability of brands until the final sale to the end-customer & not on transfer of goods to intermediaries such as distributors, branches in other states, channel partners, etc...

One of the other factors troubling the retail sector is the recent SC ruling with respect to Provident Fund (PF) & ESIC wherein, for employees drawing salary below INR 21,000/-pm, the added burden of deducting statutory PF & ESIC on the whole CTC & not just basic salary, as was the erstwhile industry practice, is an added cost to the company & does not add to the purchasing power of the employees who are the pulse of the Indian economy. Furthermore, the statutory requirement of liability to pay a bonus to all employees earning below INR 21,000/- pm under The Payment of Bonus Act, 1965, without taking into consideration the actual profits of the company and solely depending upon the number of years of operations of the Company, needs to be restricted to employees associated with the Company for a certain minimum number of years. Lastly, our kudos to the introduction of the still-evolving yet promising IBC but the GoI must also look at formalizing debt collection mechanism/ time frame from proprietors/ partnerships to ensure timely recovery of dues which shall be an immense boost to the backbone of Indian economy, i.e. the SME sector..

(Author is CFO of Clovia, India)