31.05.2023: Small Business Survival at Stake: GST Drive’s Impact on Licenses and Viability

A two-month nationwide drive has been launched by central and state GST departments in India to detect fake GST registrations and billers. The drive, which began on May 16 and will continue until July 15, has raised concerns among small and micro businesses. Over 700 businesses have expressed fears of suspension and cancellation of their GST registration due to issues such as using co-working spaces or shared warehousing. Critics argue that this physical drive contradicts the effort to make the taxation process faceless and will increase compliance costs for businesses. There are concerns that even genuine businesses could be penalized if there is one fake seller in their supply chain. The cancellation of registration can be a complex process, and small businesses may lack the resources to respond effectively to GST authorities. The use of shared spaces for GST registration is a cost-saving measure adopted by many businesses, but there is no specific rule against it. The drive may discourage small businesses from joining the GST system or prompt them to create multiple companies to avoid its obligations. The industry suggests the need for a simplified application process and reduced compliance costs to encourage more businesses to register. Furthermore, there is a call to eliminate duplication of paperwork across different government entities

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