Simplify GST for MSME sector: Religare Finvest

By Pankaj Sharma,

The largest employer after the agriculture sector, are the Micro, Small, and Medium Enterprises (MSMEs) and are amongst the worst hit by the Covid-induced lockdowns. While the government did introduce a targeted stimulus package comprising collateral-free loans, subordinate debt provision, equity infusion, a 45-day payment cycle, and discontinuing global tenders in government procurement of up to Rs 200 crore to support the sector, few pain points still remain.

We expect that the Government has looked into the challenges being faced by the sector with an immediate focus on delayed payment and liquidity crunch. Startups and MSMEs continue to demand the removal of GST under reverse charge for services procured from overseas. Further, there is an increased need to resolve the issue of lack of advanced technological support, tax burden, and compliances which add to the stress to the sector being driven by 110 million people in India.

In addition to this, we also appeal to the government to extend the credit guarantee scheme for the industry at least for another year. The government should also consider the demand of the MSME sector to simplify GST and reduce the tax rate from 18% to 5% on professional services. Such steps would pave the way towards creating an enabling environment for entrepreneurs to thrive that will lead to large-scale employment generation in the future.

(Author is a CEO, Religare Finvest Ltd)