FISME seeks GST overhaul to ease MSME compliance

Ahead of the Goods and Services Tax (GST) completing a decade next year, the Federation of Indian Micro and Small & Medium Enterprises (FISME) has proposed a set of reforms, including a statutory safe harbour for Input Tax Credit (ITC), time-bound GST refunds, and centralised compliance and simplified procedures. It said the next phase of the tax regime should focus on reducing compliance burdens for MSMEs.

Among its key recommendations, FISME has sought protection for bona fide purchasers from ITC denial due to supplier defaults. It argued that businesses with valid tax invoices, proof of receipt of goods or services and banking-channel payments should not be penalised for supplier non-compliance; recovery should be directed at the defaulting entity instead.

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The organisation also urged the government to introduce a 30-45 day timeline for GST refunds, automatic interest on delays and simplified procedures for accumulated ITC.

As the GST system matures, the focus must shift towards making compliance simpler, more predictable and less burdensome for honest taxpayers, particularly MSMEs, said Anil Bhardwaj, secretary general, FISME.

“Our recommendations aim to reduce compliance costs, improve certainty, unlock working capital, strengthen voluntary compliance and make GST administration more efficient, transparent and taxpayer-friendly,” he said.

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To reduce compliance costs, FISME recommended faster implementation of the proposed One PAN-One Administration framework, optional centralised compliance for businesses operating in multiple states and uniform registration procedures.

FISME called for an annual GST technology roadmap with advance notice for portal changes, faceless adjudication, mandatory pre-notice reconciliation, consolidated notice dashboards and issue-wise electronic proceeding locks to reduce litigation.

Further, it urged the government to modernise GST by enabling QR code-based documentation, self-approval of business location changes and automated reconciliation of ICEGATE and GSTN data. It also called for more predictable tax administration through uniform guidelines, risk-based assessments and fewer disputes.