Indore: It seems that amendments made in GST law to allure traders ahead of crucial parliamentary elections will backfire. The amendments in GST Act and introduction of Section 49(A) is deepening the liquidity crunch for over 12 lakh traders and 3.5 lakh registered traders in MP.
On August 31 last year, GST Council introduced Section 49(A) by replacing Section 49. The changes have been made effective from February 1 this year. Nitesh Gupta, GST expert, said under Section 49 there was provision that that traders could pay CGST and SGST using the ITC claim received under IGST. So, they were not required to pay tax amount from their own fund and in this way their cash position remained stable.
However, Section 49(A) changed the scene. Now, despite having ITC of IGST in the ledger of a trader, he can’t make payment of SGST tax. For the payment of SGST, he will have to use his available capital. This situation is lethal for traders as MP is an importer state (MP not a manufacturing state). This means most goods are brought from other states and sold here. Therefore, their ITC received under IGST is low.
Talking to Free Press, Sushil Sureka, general secretary of Ahilya Chamber of Commerce and Industry, an apex representative body of over 1.5 lakh traders of the city, said provisions are disastrous for traders. In the wake of sluggish business, the availability of extra capital is hard to find.
“As per changed law, they have to pay tax from their own capital despite having ITC credit in their GST ledger. On Tuesday, we submitted memorandum to Neerav Kumar Mallick, CGST Commissioner of Indore and demanded that 49(A) should be withdrawn,” Sureka said.