Businesses want to Raise the GST Cap for Small Businesses

The business community pushed for the state’s GST registration threshold to be raised from Rs.20 to Rs.40 lakhs in line with many other states, to enable small firms to offer items at lower rates without GST.

The president of the Federation of Telangana Chambers of Commerce and Industry (FTCCI), Suresh Kumar Singhal, stated that the previous government had received multiple proposals to raise the GST threshold during an interactive meeting on the GST organized by the FTCCI and attended by commissioners from the state and central wings.

Ali Murtuza Rizvi, the State’s main secretary for commercial taxes, and Sandeep Prakash, the IRS’s principal chief commissioner for the Central GST wing, were present. The association also brought attention to the financial burden businesses would face from the GST’s reverse charge mechanism (RCM).

With the implementation of the reverse charge mechanism, the buyer now bears the responsibility for paying GST instead of the seller in the case of goods. In the case of rented space, the burden is reversed from the building owner to the tenant.

As a result of consumers bearing the burden of paying 18% GST on commercial premises rent, the government anticipates an increase in revenue.

The treasurer of the IT Corridor Hostels Association explained the situation, saying, “We will have to pass on the 18% GST that is being imposed on rent. This will go into effect in November. Following our recent representation, the Centre decided to exempt hostels that charge less than Rs.20,000 per month from the purview of 12% tax that was implemented in July 2022. Through various measures, we are now subject to a higher bracket tax of 18 percent, up from 12 percent previously.”

Students, new employees, and job aspirants who are customers will be burdened by this. In the vicinity of the IT corridor, there are 3,500 hostels. There are almost 10,000 hostels in the city, he said.

The vice-president of the Hyderabad Goods Transporters Association expressed concern about the business, stating that small players with fewer than ten trucks operate 80% of the operations. Consolidation is becoming more prevalent in the transportation sector. This occurs as a result of post-GST taxation and compliance needs. Changes are now made through circulars at every GST Council meeting, as opposed to the previous practice of making rules every six months or a year. The regulations are good, yet they are difficult to apply.

Most of the major companies are covered by the forward charge mechanism, which permits them to claim input tax credits for expenses such as GST on tyres, tyres retreading, vehicle maintenance, and vehicle purchase. They can pay the remaining amount to the government after deducting the input tax credit from the 12% GST that was paid by the consumer.

Both the state and central GST officers replied favourably to the tax authorities’ three-day detention of transport vehicles without a valid basis, particularly in border areas, which was causing loss to the industry. Their issues would be investigated.

According to the Spinning Mills Association, they pay a higher GST rate for capital goods and raw materials, while a reduced GST rate is applied when selling textile goods. Their cash flows are being strained as a result of their inability to use the GST credit on capital goods and their delayed refunds. They said that this is driving many entrepreneurs out of business and rendering the textile industry unviable.