Introduction
A recent report by the Public Accounts Committee (PAC) has put the spotlight on the difficulties faced by Micro, Small, and Medium Enterprises (MSMEs) and exporters under the current Goods and Services Tax (GST) regime. The panel has made a strong case for simplifying compliance procedures and expediting refunds—two major pain points that have been limiting the ease of doing business for small traders and exporters in India.
At CaptainBiz, we understand these challenges and are committed to helping MSMEs navigate GST compliance efficiently.
The PAC’s recommendations aim to reduce the administrative burden and improve cash flows, especially for MSMEs that are crucial to India’s employment and economic growth engine. Here’s an in-depth look at the key findings and recommendations from the report.
Read More: Procedures and Best Practices in Integrated Goods and Services Tax (IGST) Compliance
Why MSMEs and Exporters Are Struggling Under GST
Since the implementation of GST in July 2017, MSMEs and exporters have faced a slew of challenges, including:
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Complex return filing processes
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Delays in refund disbursals, especially for input tax credits (ITC)
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Requirement of multiple registrations in different states
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Lack of clarity in compliance norms for smaller businesses
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These issues have led to working capital stress, increased compliance costs, and reduced export competitiveness.
Read More: GST Relief on Insurance: Why 5% Tax Could Be Better Than a Full Waiver for Consumers
Key Recommendations by the Public Accounts Committee
1. Simplified GST Compliance Framework for MSMEs
The PAC has recommended a simplified and user-friendly GST compliance structure for MSMEs. This includes:
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Reducing the number of return filings required
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Making the GST portal more intuitive and accessible
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Offering special compliance support for businesses with low digital literacy
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At CaptainBiz, we offer a hassle-free GST billing and filing solution that helps businesses stay compliant with minimal effort.
2. Fast-Tracking Refunds for Exporters
One of the biggest concerns flagged in the report is the delay in processing GST refunds for exporters. These delays impact exporters’ cash flow, affecting their ability to fulfill international orders on time.
The PAC suggests:
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Implementing a dedicated refund processing system for exporters
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Setting clear turnaround timelines for processing ITC refunds
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Using automation to reduce manual intervention and errors in refund approvals
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At CaptainBiz, we help businesses track refunds seamlessly, ensuring that exporters receive their funds without unnecessary delays.
3. Leverage AI and Analytics for Better GST Administration
To enhance revenue collection and compliance monitoring, the panel has called for the adoption of Artificial Intelligence (AI) and data analytics. These tools can be used to:
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Predict tax collection trends
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Identify non-compliant businesses proactively
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Monitor large-scale refund claims for possible fraud
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With CaptainBiz, businesses can automate compliance, generate reports effortlessly, and reduce errors in filings.
4. Addressing State-Wise Multiple GST Registrations
Another recommendation is to simplify the process of obtaining and managing multiple GST registrations across states. Currently, businesses operating in multiple states must take separate registrations and manage compliance separately in each jurisdiction, which increases their operational costs.
The PAC proposes:
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Enabling consolidated tracking of multi-state registrations through a unified GST portal
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Introducing a single business identification system for seamless coordination across states
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At CaptainBiz, we simplify multi-state GST compliance, making it easy for businesses to manage their GST filings across locations.
Key Insights from the Report
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The PAC highlighted that inadequate return filing mechanisms have contributed to refund delays and compliance inefficiencies.
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The report noted a decline in the share of indirect taxes (like GST, customs duties, excise) in total revenue collection—from 38.76% in FY18 to 36.92% in FY20.
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Factors like changing import patterns, free trade agreements (FTAs), and global economic volatility have further impacted tax revenue, calling for a recalibrated policy approach.
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Government’s Initial Response
The Ministry of Finance, in response, acknowledged that global economic conditions, changes in import volumes, and policy reforms like FTAs have influenced revenue collection. However, the PAC emphasized that these external factors should not derail domestic compliance systems, especially for MSMEs and exporters.
Impact of These Recommendations
If implemented, the committee’s suggestions could:
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- Improve ease of doing business for MSMEs and exporters
- Boost tax collections through better voluntary compliance
- Enhance India’s export performance by ensuring better liquidity for exporters
- Encourage digital adoption among small and medium taxpayers
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With CaptainBiz, businesses can seamlessly manage GST, streamline tax compliance, and track refunds effortlessly, ensuring they remain financially strong and compliant.
Conclusion: A Step Towards Inclusive Tax Reform
The Public Accounts Committee’s report serves as a timely reminder that GST, while revolutionary, must continue to evolve to match the needs of India’s vast and diverse business ecosystem.
By reducing red tape and accelerating refunds, the government can empower MSMEs and exporters—the true engines of India’s economic growth.
At CaptainBiz, we are dedicated to helping MSMEs and exporters overcome GST hurdles through simplified compliance, automated solutions, and expert support.
For hassle-free GST compliance and refund tracking, explore CaptainBiz today!
FAQ’s
1. What challenges do MSMEs and exporters face under the current GST system?
MSMEs and exporters struggle with complex return filing, delayed refunds, multiple state registrations, and unclear compliance norms. These issues lead to working capital stress and increased operational costs.
2. What recommendations has the Public Accounts Committee (PAC) made for simplifying GST compliance?
The PAC has suggested reducing the number of return filings, improving the GST portal, and providing compliance support for businesses with low digital literacy.
3. How will fast-tracking GST refunds benefit exporters?
Faster refunds will improve cash flow, reduce financial stress, and enhance export competitiveness by ensuring that businesses have funds available to fulfill international orders on time.
4. What role does AI and analytics play in GST administration?
AI and data analytics can help identify tax fraud, predict tax collection trends, and improve refund processing accuracy, ensuring a more efficient GST system.
5. How does the PAC propose to address multiple GST registrations across states?
The PAC recommends a unified business identification system and a consolidated tracking mechanism to simplify multi-state GST compliance.
6. How will implementing these recommendations impact MSMEs and exporters?
These reforms will enhance ease of doing business, boost voluntary tax compliance, improve liquidity for exporters, and strengthen India’s export sector.
7. How can CaptainBiz help businesses with GST compliance?
CaptainBiz provides automated GST filing, refund tracking, and compliance solutions, making it easier for MSMEs and exporters to stay compliant with minimal effort.
