Centre weighs compliance relief for MSMEs in budget

Ministry suggests quarterly GST payments, penalty waivers for delayed filings

- Rituraj Baruah & Manas Pimpalkhare

The government is considering easing the goods and services tax (GST) compliance burden for small businesses in the Union Budget for the next fiscal, according to two people familiar with the matter, at a time when US tariffs have disproportionately affected such enterprises.

The Centre may allow quarterly GST payments by micro-enterprises, compared to the current practice of monthly tax payments, the people quoted earlier said, speaking on the condition of anonymity. Micro enterprises are businesses with an annual turnover of up to ₹10 crore.

In case of 'genuine errors' or delayed filings, the micro, small and medium enterprises (MSMES) may first be issued a warning, and penalties could be waived for the first two such instances, said the first person mentioned above.

Currently, under Section 47 of the CGST Act, a delay in filing GSTR-1, GSTR-3B, or GSTR-9 attracts a late fee, which increases daily until it reaches a maximum cap. An enterprise is also liable to pay interest at 18% per annum on the outstanding GST amount if the payment is delayed.

The reforms proposed by the MSME ministry to the finance ministry, which follow a cut in GST rates in September this year, come at a time when small businesses have been hit by the steep US tariffs of 50%. India's 73 million MSMEs contribute 30% to the GDP and 45% to the overall exports.

Queries emailed to the Union ministries of finance and MSME on Friday remained unanswered until press time.