Slowdown and pending dues put traders in a spot
A majority of the 13,000-odd micro, small and medium enterprises (MSMEs) in Visakhapatnam are in dire straits as the Goods and Services Tax (GST) is being collected the moment they raise invoice whether or not they receive the amount from those who place the orders.
The MSMEs are already facing the heat of the economy slowdown and severe cost reduction measures launched by their major clients such as Visakhapatnam Steel Plant, HPCL Visakh Refinery, Hindustan Shipyard Ltd and Heavy Plate and Vessels Plant. And the collection of GST even before the payments are made is adding to their woes.
Due to poor placement of orders, the major industries have been delaying the payments to the ancillary, downstream units and the vendors. This has put the MSME entrepreneurs on a sticky wicket.
“Our predicaments have come to such a pass that sometimes the payment is delayed for several months. But GST is collected at 18% from us and import credit is refunded late. If we fail to pay GST after raising the invoice, we have to pay the penalty for every single day,” AP Chambers of Commerce and Industry Federation Director O. Naresh Kumar told The Hindu.
The MSME entrepreneurs want waiver of the pre-closure for bank loans. At present, the banks are charging 4% penalty for pre-closure of industrial and vehicle loans. For income tax, 6% interest is paid if refund is delayed. “When we pay late, 12% to 18% penalty is levied on us,” Mr. Naresh Kumar pointed out.
Capital gain tax
Those units which find it difficult to pay the EMIs and mobilise funds by selling their property are being charged with capital gain tax. “Let the capital gain be considered taking into consideration the loan liability which one wants to clear from the proceeds received from the sale of property,” he said.
MSME entrepreneurs poured out their woes before Union Minister of State for MSME, Dairy, Animal Husbandry and Fisheries Pratap Chandra Sarangi during his brief visit to the city recently. Mr. Sarangi told that he would look into their problems and try to ensure justice as the MSME sector was a major revenue-churner and job-provider.
Source- The Hindu.