GST impact on informal sector worries officials
GSTN is a digital platform under which all entities are to register themselves prior to the introduction of the new taxation regime.
New Delhi: Even as the Centre is gearing up for the Goods and Services Tax (GST) rollout from July 1 onwards, there is concern within a section of the government that it could have a negative impact on the informal sector as lakhs of small scale entities with more than Rs 20 lakh annual turnover are yet to register under GST network (GSTN).
GSTN is a digital platform under which all entities are to register themselves prior to the introduction of the new taxation regime.
According to highly-placed sources, with just days left for the new taxation system to come into effect, there seems to be a lot of confusion within the informal sector regarding accurate information about GST. They added that as these small scale units generally don’t have chartered accountants or proper representatives, it is difficult to get a clear picture about their actual financial positions.
In addition, with millions of small scale units existing in the country, the Centre is finding it quite difficult to get an exact figure regarding the total number of such entities, as the informal sector is not organised.
These concerns, sources privy to developments informed this newspaper, have been flagged by several departments like finance, commerce, labour, and small and medium enterprises among others, to the Prime Minister’s Office (PMO) and it is learnt that the South Block mandarins have taken due note of the issues, and efforts are on to streamline the process of collating data related to these informal sector entities.
Another aspect which is appearing to be worrisome is that since small units with up to Rs 20 lakh annual turnover are not bound to be registered under GSTN, there is a possibility that several small scale industries with greater turnover may tend to under-report their finances to avoid falling under the new regime’s ambit.
According to the calculations worked out by the Central government under GST, entities with turnover in the range of Rs 20 lakh to Rs 30 lakh annually, the rate will be 1 per cent to 2 per cent. This will be on the basis of self certification of the turnover by the concerned companies.