Simplification in principal place of business norms mooted for MSMEs

New Delhi: In a move to help facilitate small business houses in the country for goods and services tax or GST registration, simplification in the principal place of business or PPoB norms has been mooted to be mandated in every state. The move the government aims at empowering micro, small, and medium enterprises (MSME) sector where the simplification of certain rules would further help the online sellers to expand their businesses, according to a top official in the finance ministry.

"In line with the Parliamentary panel’s recommendations, the implementation of a single home-state PPOB registration and subsequent virtual PPOB registrations for small sellers have been proposed. I think it will be help the MSME sector in some way or the other. In the interest of digitisation and reduction in their compliance burdens, the efforts taken by the government and GST council towards empowering MSMEs also explored areas where simplification of certain rules would further help the online sellers to expand their businesses," the official said.

India's thriving MSME sector has presented unprecedented growth potential in the last few years, propelling the nation towards the ‘trillion-dollar digital economy’ goalpost envisioned by the government. While recent GST simplifications have nudged the industry forward, avenues of further simplification still remain, demanding renewed attention from stakeholders.

As per a leading public policy think-tank, the Dialogue, the right regulatory changes could simplify compliance for MSMEs and nudge the industry towards greater alignment with the government’s vision for this integral industry. "The experts, comprising key officials from the ministry of finance, Trilegal, E&Y, Deloitte and Best Life - an e-commerce seller, have highlighted the need for simplification in the PPoB norms being mandated in every state," it said.

“E-commerce is a game changer for MSMEs and the government has recognised it. They are also helping the MSMEs come online as is evident from the recent steps taken by the GST council. While significant strides have been made, there is still some scope to bring reforms in terms of requirement of physical place of business in every state and digital invoicing to help MSMEs optimally use e-commerce to its full potential," said Bipin Sapra, Partner and Leader, Indirect Tax Policy, E&Y.

“The biggest challenge we faced, the moment you decide to scale up, there is a need to set up warehouses in different states in order to fulfil the demand. Physical inspection mandates in the GST registration procedure are manageable in the home states. However, when we scaled to other states, it took us an unreasonably longer time to get registered, affecting our sales potential," said Karan Kohli, co-founder, Best Life Naturals.

"This issue varies from state to state. In one state, we got our registration number in three months, and in the other, we had it within a week despite the procedures and the documentation submitted being the same. Getting APoB registration for warehouses further adds to the timeline, holding us from supplying to a demand that may fade by the time we are registered and ready to deliver, and that for a small company is huge. There is a need to address these issues and simplify the regime for at least the small companies so that we can scale our business," Kohli added.