BUDGET 2019 – Startups, MSMEs seek faster invoice clearances, GST relaxation

Indian startups and MSMEs community has highlighted areas of challenges for them particularly those impacting their cash flows.

Invoice Clearance

Among the key recommendations made was the inclusion of government departments (central and state) and public sector units to pay MSMEs dues within 45 days of invoice generation. The government had last year issued notification asking companies in their half-yearly filing to disclose the payments due to MSMEs for more than 45 days.


TDS Refunds

Lack of TDS refunds was another area of discussion as for some startups and MSMEs haven’t got their refunds processed for TDS returns filed in September last year. The ask was to process refunds within 45 days.


GST under Reverse Charge Mechanism 

Entrepreneur also stressed on the issue of payment of GST under the Reverse Charge Mechanism by startups for services from overseas suppliers like Amazon Web Services, Microsoft Cloud etc. “Startups have to pay 18 per cent GST under this but if startups are registered outside India then they don’t have to pay it.

So startups have an incentive to relocate their registered office outside India and save 18 per cent. We have requested that for early-stage startups at least, GST under reverse charge should be exempted for foreign vendor payments,” .

An exemption from GST under the mechanism for payment of such services from foreign companies or at least exemption for startups with less than Rs 10 crore turnover was suggested.


Equalisation Levy

Equalisation Levy of 6 per cent paid by startups and SMEs as the additional cost levied on behalf of companies like Facebook, Twitter, Linkedin for using their platforms for ads and promotions was another area of discussion.

GST after Invoice Generation

Startups and small businesses also highlighted in the survey that they have pay GST by 20th of the month following invoice generation even as their customers fail to make payments to MSME and startups even beyond 90 days from invoicing that puts pressure of their cash flows. Hence the government was suggested that GST should be payable when startups receive payments and not after generating the invoice.



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