Small business demonetization

With the implementation of GST in July 2017, the main issues and problems were faced by the small business and medium scale business enterprises. Small business demonetization is a very crucial issue in today’s world. Small businesses are pretty susceptible to changes and hence find it difficult to adjust themselves as per the new regulations. However, these businesses do not understand that demonetization or GST is supposed to ease the way of conducting business in the long run. The government has taken an innumerable number of efforts to simplify the process of GST yet small business demonetization still faces several issues with creates a hindrance in the normal day to day operations for them

Small business demonetization
Small business demonetization

Challenges due to GST

  1. GST filing is complicated – Filing returns for the small-scale businesses have become pretty complicated and filing them three times a month is a further issue. Registration rules and complex money back rules have also added to the problems. However, to simplify these problems for the SMEs the GST council has reduced the compliance obligations for SMEs. The SMEs can file GST returns quarterly if their annual turnover is above Rs. 1.5 crores.
  2. Hindrance in working capital – Liquidity crunch is a major issue faced by SMEs and particularly people into exports. The increase in the GST rates has been increased from 15% to 18% which has resulted in unintended blockage in the working capital. However, the government has been dealing with relaxing the rates because working capital is extremely important to such businesses for the uninterrupted functioning of their businesses. Small business demonetization has thereby created a serious problem in terms of a hindrance in working capital.
  3. GST on the web – Small business owners have been used to working and paying taxes manually. The inclusion of the digital era has created a huge trouble for such businesses since they are not very tech savvy. Doing the entire operation of filing GST returns for the small businesses have thus proved to be a major challenge for them. Small business demonetization coupled with digital India concept has made these small business owners with orthodox methods face a monstrous challenge.
  4. GTA cannot service unregistered businesses – The government has taken measures to ease the GST compliances for the GTAs. They have also decided to exempt the GST regulations for the services provided by GTAs to unregistered persons. The provisions for reverse-charge have also been delayed to help the GTAs. Small business demonetization for GTAs is, therefore, a growing concern.
  5. 5. GST on advances – Due to small business demonetization the government had made the small businesses pay GST on the advances received on account of the goods and services provided. However, since this has been creating a major issue for the SMEs the government has taken necessary steps to ensure that the SMEs with annual turnover up to 1.5 crores do not have to pay any GST on advances received against the goods and services provided by them.

Hence GST has been a major problem for the SMEs in order to have a smooth functioning of their businesses. The government has also helped in every possible way to ensure that all the small businesses do not face such issues in near future.

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