GST to boost competitiveness of MSMEs: Report

New Delhi: The Goods and Services Tax (GST) is set to impart better competitiveness to micro, small and medium enterprises and provide them a level-playing field with large firms owing to factors like an easier process of availing input credit and simpler tax regime, according to a report.

The joint study by Assocham and Ashvin Parekh Advisory Services said the Goods and Services Tax (GST) will lead to improved market expansion and lower logistical overheads, a boon for MSMEs dealing in sales and services and purchase of capital goods.

According to the report, the GST will exert compliance burden and associated costs on MSMEs since it aims to increase the taxpayer base. The GST regime will usher in lower taxes, seamless input tax credit and logistics savings while swinging the market share towards organised players.

Indian MSMEs will be able to better compete with cheap cost centres such as China, the Philippines and Bangladesh, the report said. The report also highlighted issues related to MSMEs in the GST regime like no tax differentiation for luxury items and services, increase in cost of products, selective tax levying, burden of higher tax rate for service provider, excess working capital requirement and realignment of purchase and supply chain regime.