Pune, Aug 2 (KNN) With the Goods and Services Tax (GST) entering its second month after it was rolled out on July 1^st, the Micro, Small and Medium Enterprises (MSMEs) in Pune are facing crisis under the new tax regime, industry body Pimpri Chinchwad Chamber of Industries said.

Talking to KNN, Appasaheb Shinde, President of Pimpri Chinchwad Chamber of Industries explained the situation.

He informed that under the GST, the tax rates are not in sync with the tax rates that were there in the earlier VAT regime. Because of this, there is a ripple effect in the cost of the products, which the market isn’t willing to absorb.

“The MSMEs procure raw materials from different sectors, under GST there are many items on which the tax rate is higher than what it was in VAT, this is causing a higher cost of input,” he said.

Explaining further Shinde said that the prime reason for the problem is that the government did not hold any significant discussion with the MSMEs in his region with regard to the tax rates, instead the tax rates were finalised by a small group of industrialists and government officials and imposed on the larger sector.

With such a scenario prevailing, the government expects the prices of commodities to go down as there is an elimination of the multiple taxes that existed under the previous regime. But the government needs to understand that because of the high tax slabs, the raw material cost has also gone up, he added.

Citing sectors that are in bad shape due to GST, Shinde said that construction and gold and jewellery sectors are already registering losses.

He informed that his association has submitted a representation to the GST council and the Prime Minister’s Office (PMO) demanding a roll back until a rate structure isn’t planned that goes in sync with the earlier tax regime. (KNN/ DA)