GST is an amalgamation of several central and state taxes into a single tax and this would mitigate tax escalation and facilitate free movement of goods across state. There are many drawbacks to current system such as registrations and payments issues ,the application of IGST on self-supplies and delay in releasing refund.
It’s the SMEs who suffered a higher financial impact as compared to medium and large businesses at the time of GST implementation. As per the study of New Zealand , it is suggested that around 60% of the compliance costs of GST fall on SMEs. Moreover, SMEs only accrue the benefits of GST over a long period of time. GST is supposed to be free movement of goods in between states. However, examining the customer profile of SMEs from survey data, it can be said that SME doesn’t get any direct benefit of GST framework.
In addition to this , monthly filing of GST is another stress for SME. The process is necessary for input tax credit benefit too. This is because the SME needs to make sure that their vendors too file return on time so that credit can be availed . This comes with constant follow up, procedure compliance etc.
It is to be noticed that government is an important customer of all private entities in India, it is essential that it makes timely payments for purchases and to take out due payment from the government is an absolutely waste of time . SMEs play a small role in the chain, but their survival is at stake when their customers do not release payments for their order as they have not received payment and when SMEs are one of the most important components of employment generation in Indian industries.