GST registration problems tarnish Tamil Nadu's industry-friendly reputation

Chennai: The Federation of Indian Small and Medium Enterprises (FISME), in collaboration with the Tamil Nadu Chamber of Commerce, hosted a virtual media briefing to discuss the significant challenges faced by online MSMEs and potential sellers in Tamil Nadu in obtaining GST licenses.

Tamil Nadu stands out for housing the country’s third-largest number of MSMEs, flaunting an impressive 8% share, totalling five million enterprises. Even so, many MSMEs in the state are encountering significant hurdles in obtaining GST registration. Bureaucratic inefficiencies and stringent, often misinterpreted, requirements from state authorities pose challenges for sellers. These include excessive scrutiny regarding shared business spaces, the necessity of constant workstation presence and the obligation to justify Tamil Nadu as their primary state of registration. Moreover, the requirements for physical offices mandated by Principal Place of Business (PPoB) registration and the complex process for updating GST certificates for Additional Place of Business (APoB) registration further compound operational complexities and inefficiencies.

Online sellers voice concerns over license cancellations amid physical presence requirements. They emphasized a significant gap between GST guidelines and their practical implementation by authorities, leading to unwarranted challenges for legitimate sellers. Speaking on this, Manish Singla, CEO & Founder, Healthy18, said, “Despite our earnest efforts to obtain GST registration in Tamil Nadu, we’ve faced repeated rejections, hindering our ability to serve the region. The short notice and inexplicable reasons further exacerbated the challenge. It’s disheartening as India strives to promote MSMEs, yet barriers persist.”

Adding to it Ankit Sarika Jain (CA), E-commerce Consultant Founder at CAAJIB ECOM SERVICES, said,“As the department struggles to adapt to the concept of shared or cooperative spaces, the MSMEs woes are increasing. The sellers have constantly faced instances of harassment and intimidation by state tax authorities. The requirement for multiple state registrations often perplexes sellers, compounded by cumbersome verification processes that demand physical presence, contradicting the digital era we live in. The sellers do not deny compliance, they simply want a laid down process.”

Ms. Sangita Prakash, Director, Deloitte, emphasized, “As the GST law matures, the government must address the evolving needs of businesses. Simplifying registration processes, understanding and adapting to new business models, like shared spaces, and providing clear guidelines on procedural aspects are essential steps to enhance the ease of doing business. Training for both taxpayers and officials can also improve compliance and understanding of GST regulations.”

Speaking along this line, Mr. Anil Bhardwaj, Secretary General, FISME said, “While GST was expected to bring transparency and simplicity, challenges persist, particularly for emerging business models like e-commerce. Clear and concise guidelines are essential, along with increased awareness among GST officers. Meaningful dialogue between MSME bodies and the GST department is vital to finding common ground. It’s crucial to emphasize that the solution lies not in tax avoidance but in streamlining processes for easier compliance. Simplifying the process will make compliance more manageable for businesses.”

Mr. Chozha Naachiar Rajasekar, President of the Tamil Chamber of Commerce, highlighted, “The session brought out various GST registration challenges confronting MSMEs in our state. We’ve carefully noted all the concerns raised by experts and sellers during the session. Moving forward, we are committed to collectively addressing these issues through official channels with the Tamil Nadu government and the GST officials.”