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‘Exempt micro units that do job work from GST’

Ravi has six lathes and about five workers operating these machines, making parts for pumpsets as job work for another company. His monthly turnover is ₹ 1.5 lakh and he files his annual IT returns. Though he is in the exempted category for GST, his job work provider wants him to be registered for the new tax system. “We do not purchase any material. We do work for the drawing and materials given to us,” he says. Yet, if he registers for GST, he has to pay the tax on the labour charges, file returns every month, have someone to do the accounting, etc.

“Nearly 40 % micro industries in Coimbatore are like our unit. The amount we get as labour charges is not much and we need to pay for labour, electricity, rentals, maintenance, etc. Now, we are forced to register for GST and pay the tax, too, to be in business. This system will push many micro units out of business,” he says.

Sankaranarayanan, who has CNC and lathe and does job work for pumpset units, has registered with GST. “I registered as the job work giving unit wanted us to do so. Now, I would have to shell out for the tax every month for the work done. But, I would get payments for the work done only after two or three months. Maintaining accounts and filing returns every month would be a problem,” he says. “We did not have any duty earlier. Now, it is suddenly 18 %,” he adds. For the last 20 days, the unit is idle and the workers do not have any job to do. The bigger industries are yet to give materials as they are sorting out issues at their units.

Though industries with less than ₹20 lakh annual turnover are exempted, the bigger units that give job work want these micro industries to be registered so that they could take input credit. Otherwise, the bigger industries would have to pay the duty on the job work done, these unit owners explain.

According to J. James, president of Tamil Nadu Association of Cottage and Tiny Enterprises, micro industries that do job work should be exempted from GST fully. The rates should also be reduced for micro units.

S. Ravi Kumar, president of Coimbatore and Tirupur District Micro and Cottage Entrepreneurs Association, for job working units of ₹ 20 lakh to ₹ 50 lakh turnover, the GST should be deducted as TDS by the job giving units. Units with less than ₹ 20 lakh turnover should be completely exempted so that the bigger units need not pay the duty for the job outsourced.

V. Sundaram, president of Coimbatore District Small Industries Association, added that several industries are unable to use the GST helpline or help desk. “One of the industry owners went to the help desk and was told the internet connection was slow and that the clarification required had to be referred to higher officials. Another could not get connection on the helpline number given. The personnel should be trained and the help desks and helpline numbers should be easily accessible,” he said.

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