Demonitization, GST May Affect Informal SME Industries: Manmohan Singh | SupportBiz

News

Demonitization, GST May Affect Informal SME Industries: Manmohan Singh

 
Both demonetisation and GST have affected India's gross domestic product (GDP) growth adversely and this would affect a major contributor of GDP - the informal sector and the small scale sector, former Prime Minister Manmohan Singh said on Monday.

"Both demonetisation and GST have had some impact on GDP," Manmohan Singh, who has earlier said the Indian economy has been running on only "one engine" of public spending, told CNBC-TV18 channel.

"So when 86 percent of currency is withdrawn from circulation, plus GST, which was put in practice in haste. There are many glitches which are now coming up, it was bound to affect GDP growth adversely," he said. Former Reserve Bank of India Governor Raghuram Rajan estimated earlier this month that the country's GDP had taken a hit of between 1 to 2 percent due to demonetisation, which translated to a sum of around Rs 2 lakh crore.

Flexile Norms For SME:

The government may introduce a flexible set of norms for small business units with annual turnover of under Rs 20 lakh to make registration under the goods and services tax (GST) more attractive, a media report said Tuesday. Currently, traders with annual turnover of below Rs 20 lakh turnover need not register under GST as they are exempt from paying any indirect taxes.

Recently, Prime Minister Narendra Modi, addressing the tax administrators of the Centre and states at a two-day 'Rajasva Gyan Sangam' organised in New Delhi, had asked taxmen, who even don't have turnover of Rs. 20 Lakh that are mainly micro and small enterprises (MSEs), to work towards registering under the Goods and Service Tax (GST) system. The move is expected to widen the tax base and plug loopholes. Under the new tax regime, a registered company does not get input credit if a sub vendor, which may not have annual sales of Rs 20 lakh, is not registered under GST.