04/09/2017
GST – U/S 9(4) under Reverse charge Provision whether benefiting or making hardship to honest tax payers
The system is based on input tax credit mechanism. However there are certain dominant sections of society who resist being subjected to tax and to overcome it the reverse charge is used. Though it puts compliance burden on honest tax payers, to some extent provisions of Sec 9(3) are justifiable.
What is the aim of this additional reverse charge provision: We understand that the intention behind this provision is to catch those who avoid paying taxes by remaining unregistered, such as sand suppliers, petty contractors etc.
Difficulties for MSME sector: It is seen that difficulties is being faced by the micro, small and medium enterprises (i.e. traders, workshops, job workers, processors, small contractors). The small or petty contractors who are not liable for registration because of smallness of turnover (less than 20 lakhs) may loose business or will be forced to take registration. Other difficulties are registered MSME units do not have in house expertise to know the rates of various inputs. They cannot even afford the services of qualified consultants. Most of them rely on accountants or part time tax consultants. Therefore this provision will not only increase compliance cost for them, but they are likely to make mistakes which make them vulnerable to penal provisions.
