The Confederation of All-India Traders (CAIT) today raised their concern over the GST clause which links availability of input tax credit to payment of tax by their suppliers.
If availability of input tax credit is linked to tax payment by their suppliers, it will worsen the situation of small businesses, CAIT said in a statement and pointed out that this is despite the fact that they fully support GST, which is likely to come to force since July 1.
Under the GST law, input credit against taxes paid by the purchaser can be availed of only if the seller deposits the tax. In the event of non-compliance at the end of seller, it is the purchaser who will be denied input credit.
Over 6 million businesses are due to fall under the GST net and most of them are MSMEs. These businesses suffer from uneven cash flows but are largely compliant, claimed the association.
If availability of input tax credit is linked to payment of tax by their suppliers, it will worsen the situation of these small businesses, the CAIT statement said.
“We are happy that the GST Council has cleared the way for the new law to get implemented. The trading community and other small businesses will benefit from the single tax regime undoubtedly,” Praveen Khandelwal, CAIT secretary general said.
“However, the provisions in the law to do with input tax credit availability if not corrected will be detrimental to their survival. Therefore on behalf of the entire traders, we urge the finance minister to remove this roadblock so that GST can be a great law for all,” he said.