New Delhi, June 25th 2024: Forum for Internet Retailer, seller, & Trader (FIRST), a division of India SME Forum (ISF), in association with the GST Delhi North Commissionerate, hosted ‘GST SAMVAAD with MSMEs’ to deliberate on the challenges faced by MSMEs in the e-commerce sector under the current GST regime and identify solutions to enhance ease of doing business. The session witnessed participation from esteemed dignitaries like Mr. Manish Mohan Govil, Principal Commissioner, GST Delhi North Zone; Ms. Charu Dhankar, Assistant Commissioner, GST Delhi North Zone; Mr. Manish Jha, Additional Commissioner, GST Delhi North Zone; Mr. Shaukat Ali Nurvi, Additional Commissioner, GST Delhi North Zone; and Mr. Vishal Singh, Deputy Commissioner, GST Delhi North Zone.

During the roundtable, sellers emphasized that MSMEs across India struggle with the GST registration process, which they often find overly stringent and arbitrary. Multiple registrations are rejected based on unclear or trivial criteria, creating significant hurdles for small businesses. Sellers also highlighted the ongoing challenges with the obligation to secure Principal Place of Business (PPOB) registrations in every state of operation. Authorities require applicants to confirm their physical presence at the business location on all working days for GST purposes, disregarding the growing trend of remote and digital operations. This necessitates physical offices, incurring working capital block and personnel costs. Bureaucratic inefficiencies and stringent, often misinterpreted, requirements from state authorities pose challenges for sellers. These include excessive scrutiny regarding shared business spaces. The 7–21-day manual APOB filing process delays MSME sellers’ inventory access, causing significant revenue losses, especially during festive sales. The actual time taken for the grant of registration is distant from that prescribed under the law, causing unusual hardships for MSME sellers who are operating on a time and cost crunch. Although GST law allows for auto-approval of registration within 7 days when authenticated through Aadhar, it often takes 30-40 days in practice. Currently, GST law allows for the suo-moto suspension of a seller’s GSTIN, followed by a notice and hearing opportunity. This suspension blocks the seller from e-waybill and e-invoice systems, impacting sales and adding challenges for those already struggling with GST registration.

Mr. Manish Mohan Govil, Principal Commissioner, Delhi North GST said, “We extend our gratitude to the India SME Forum for bringing the issues faced by MSMEs to the forefront. While immediate solutions may not always be possible, we are committed to listening and relaying these concerns to relevant stakeholders. Effective communication in forums like these is crucial for addressing the challenges faced by SMEs. Perhaps for e-commerce we should have separate conclaves so that more such issues can be highlighted. Our goal is to foster exponential growth in the MSME sector. In the coming months, there are plans to launch biometric centers to help alleviate interstate operational challenges. We are dedicated to creating an environment where MSMEs can thrive and achieve global success.”

Mr. Vinod Kumar, President, India SME Forum, and Trustee and President, FIRST India, “We would like to express our gratitude to the GST Delhi North Commissionerate for participating in the first-of-its-kind initiative, GST Samvaad. This initiative aims to highlight the challenges faced by MSMEs, particularly the complexities of multi-state registrations for new e-commerce business models. We plan to take these issues to stakeholders nationwide and conduct similar dialogues across various states to allow more sellers to voice their concerns. More and more such events will have the MSMEs highlight issues to stakeholders some of which might not even be on their radar. Additionally, we have consolidated all the issues received from various sellers and will present them to the relevant ministry and the Delhi Commissionerate.”

Points of discussions

• Adopting a single home state PPOB model in GST regulations will enhance operational flexibility for sellers, streamline MSMEs’ expansion through e-commerce, safeguard state GST revenue, and maintain transparent audit trails.
• Legal recognition of non-traditional business models within the GST framework is essential, including support for digital platforms and shared workspaces in state tax registration processes.
• Promote the adoption of digital solutions for compliance processes to reduce environmental impact, improve operational efficiency, and decrease the bureaucratic load on businesses.
• Implement an API-based APOB registration system to streamline and speed up the registration process.
  Complete digitization of authentication where no physical presence is required authentication, and permit authentication for any state registration in any state PAN India.
• With over 4 crore MSMEs registered on the UDYAM portal, only 1.5 crore have GST registration. To enhance the creditworthiness of informal enterprises, the government should consider including all MSMEs under the GST regime, regardless of their turnover.
• The government should mandate a 3-day notice before suspending GST registration and automatically lift suspensions within 3 days if there’s no officer response, ensuring an opportunity to be heard.
• Issue guidelines/circular specifically addressing the requirements for GST registration through a shared space model with a very specific required list of documents applicable PAN India.