Why in news?
The GST Council has recently proposed certain measures to ease the issues of Micro, Small and Medium Enterprises (MSMEs).
What are the proposals?
- MSMEs - A six-member panel of ministers would be set up to look into the issues in the MSME sector.
- It will be headed by the Minister of State (MoS) for Finance.
- Taxation - The Law Committee will take decisions related to taxation law.
- On the other hand, the Fitment Committee will take decisions related to taxation rates.
- Digital Payments - It was proposed to incentivise digital payments through Rupay cards, BHIM app and UPI system on trial basis.
- A 20% cashback will be available on digital payments through these mediums.
- Customers would get cashback of 20% of the total GST amount, subject to a maximum limit of Rs 100.
- This is to promote cashless transactions in rural and semi-urban areas and help small firms.
- The GSTN and the National Payments Corporation of India will soon develop a system for the above.
- States will volunteer to run a pilot on these lines.
- A final decision will be taken after a detailed system-wide evaluation of such incentives.
What is the significance?
- There were many implementation concerns in the MSME sector ever since the roll out of GST.
- Firms with an annual turnover of less than Rs. 5 crore constitute 93% of the registered taxpayers under the GST.
- GST has notably been a major hindrance to the smooth functioning of this large proportion of small firms.
- The proposed ministerial panel may recommend further easing of compliance for micro firms.
- It may also enhance the Rs. 50,000 threshold for mandatory use of e-way bills.
- It is thus expected to facilitate the growth of MSME sector in many ways.
Source: Business Standard, The Hindu
Quick Fact
Fitment Committee
- The rate fitment committee comprises of tax officials of the central and state governments.
- Its task is to evolve a principle and an appropriate methodology to determine rates for various supplies under GST.
