India’s small businesses presented a detailed list of compliance challenges under the Goods and Services Tax (GST) regime to senior tax authorities during the India SME Forum’s (ISF) stakeholder consultation, GST Samvaad 2.0, where officials committed to further simplification and greater consistency under GST 2.0.
The consultation, attended by more than 60 MSME entrepreneurs and top GST officials (as per ISF), brought direct, solution-focused dialogue on issues that businesses say continue to inflate operational costs and create uncertainty in compliance. ISF said the session was structured to enable enterprises to flag practical hurdles while obtaining clarifications and commitments for corrective measures.
Entrepreneurs highlighted concerns, including documentation burdens, delays in registration approvals, and complications arising from operating on shared premises. Several MSMEs pointed to mismatches between input tax credits (ITC) and supplier filings, manual record-keeping requirements, and the inability of GST systems to account for sector-specific operational realities.
Participants also raised inconsistencies in the implementation of the Goods Transport Agency (GTA) tax framework across ecommerce platforms, which they said undermines a level playing field. Businesses reported rising ITC accumulation after rate reductions, creating cash-flow pressures, particularly for small manufacturers and service providers.
GST officials responded to a wide spectrum of queries, providing clarifications on ITC eligibility, reverse charge mechanism (RCM) applicability for GTA services and documentation required for registration. Officials said that while some compliance gaps stem from incomplete taxpayer records or incorrect classifications, others relate to system-level shortcomings currently being reviewed.
Authorities added that a comprehensive assessment of delays involving refunds, cancellations, and registration workflows is nearing completion and will soon be submitted to the Board for targeted interventions.
Sasmit Patra, Member of Parliament (Rajya Sabha), said simplification remains critical for India’s small firms, noting that entrepreneurs should not be spending “more time and money on GST compliance than on building their own business”. Reducing compliance costs and uncertainty, he said, would unlock “massive entrepreneurial energy”.
ISF President said the Forum’s training of 4,500 entrepreneurs on GST filing shows how complexity continues to drain resources from MSMEs. “Only a fraction could complete the process,” he noted, adding that intuitive systems and time-efficient procedures are essential for enabling voluntary compliance. He said the dialogue reinforced MSMEs’ demand for clearer interpretational guidance, consistent approaches across jurisdictions, and digital tools for reducing human error.
Entrepreneurs at the consultation shared instances where mismatches in the GST backend led to ITC blockages, arguing that better synchronisation and real-time updates are needed to prevent cash-flow disruptions. They also called for automated procedures to replace manual interventions that currently prolong compliance cycles.
Source from: https://www.businessworld.in/article/msmes-flag-gst-burdens-as-officials-push-for-wider-simplification-58195
