Ahead of the Goods and Services Tax (GST) rollout, small and medium scale enterprises (SMEs) in Pune find themselves in a tricky situation. Automobile manufacturers, the major customers of these companies, have stopped taking finished products from them amid the uncertainty over the GST slabs and ongoing systems upgradation at major companies.
GST is scheduled to be rolled out on July 1 but grey areas in terms of compliance still remain. The tax, which will replace all state and central taxes, is supposed to usher in a business-friendly atmosphere.
The industry has long demanded such a tax, which it says will help in streamlining the ease of doing business. But the SME sector now faces a quandary with their major customers having stopped accepting orders from them. Sandeep Belsare, president of the Pimpri-Chinchwad Small Scale Industries Association, said customers had stopped accepting orders since June 25. “Products are ready but companies are not ready to take them as they wait for more clarity on the GST slabs,” he said.
Belsare said suppliers too have stopped supplying raw material amid the uncertainty. On the preparedness of the SME sector, he said, “SMEs have been paying Value Added Tax (VAT) online, so most of us are prepared.” Pune has around 27,683 SME units, which employ more than 14 lakh people.
Belsare said finished automobile components worth a few lakhs were ready at his set-up but OEMs have refused to offload the order. “They are sprucing up their systems and say finished products will be accepted only after July 5,” he said.
Anant Sardeshmukh, director-general of the Mahratta Chamber of Commerce Industries and Agriculture, said while bigger companies had started preparations in advance, smaller ones had lagged behind. “The OEMs have conducted training for their vendors on the subject but many standalone units are yet to get themselves acquainted with the working of the system,” he said. Sardeshmukh said while multiple awareness programmes had been carried out on GST, it needs to be seen how it was going to be implemented.