One of the reasons for the low digital value of MSMEs is the complex GST compliance for online sales

Ease of Doing Business for MSMEs: One reason for the low digital penetration of MSMEs is the need to transform complex Good and Services Tax (GST) compliance requirements from offline to online selling platforms, says MSME Federation of Indian Micro and Small and Medium Enterprises (FISME). “About 10 percent of small businesses in India sell online,” FISME added, as it urged the government to make the necessary efforts to simplify the GST system, rationalize rates and adjust the GST threshold between offline and online sellers.

Currently, online businesses have to register under the GST system regardless of their turnover, even in the case of offline vendors, this applies to businesses over Rs 4 million. This creates an unequal playing field between offline and online retail and discourages small businesses from being part of the digital economy, FISME said in a statement on Friday.

“Digital-enabled MSMEs are likely to grow twice as fast as their offline counterparts. There is an urgent need to educate and encourage MSMEs to sell online and spread awareness about the growth opportunities available through e-commerce platforms,” ​​said Anil Bharadwaj, Secretary General, FISME.

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About 50 million MSMEs are estimated to be unable to sell online due to the complex and mandatory GST requirements while working through online platforms they are forced to comply with difficult and time consuming temporary consent such as registration and submission of monthly returns, which is more than registering them under GSTN. Stops. , The association cited market intelligence and secondary research.

Earlier this month, the traders’ association Confederation of All India Traders (CAIT) also released a survey on GST compliance recording responses from 630 traders. While 72 per cent of respondents believe that e-commerce is an important channel for business, 66 per cent say GST registration is a major hurdle. In addition, 94 percent of respondents said that e-commerce companies are killing their business by violating their exclusive terms and conditions, while 89 percent said that e-commerce policies and regulations are necessary for a fair e-commerce business.