With the Union Budget 2026-27 approaching, Rajya Sabha MP Sasmit Patra has urged the government to push the next phase of GST reforms, focusing on simplification, ease of doing business and improved liquidity for small enterprises, particularly those operating across multiple states and on e-commerce platforms.
Speaking at GST Samvaad 2.0, Patra said that while GST has matured as a system, compliance complexities continue to strain businesses, especially micro, small and medium enterprises (MSMEs).
Multi-State Compliance and Working Capital Strain
Highlighting operational challenges, Patra noted that businesses operating across states still grapple with multiple GST registrations, parallel audits and working capital blockages due to unutilised input tax credits.
"For businesses operating across states, GST compliance continues to involve multiple registrations, parallel audits and working capital pressures arising from accumulated input tax credits, particularly in sectors affected by inverted duty structures," he said.
Under inverted duty structures, tax rates on inputs exceed those on outputs, leading to persistent accumulation of input tax credits, which restricts cash flows required for daily operations and expansion.
E-Commerce Sellers and Micro-Entrepreneurs Face Practical Hurdles
Patra also pointed out that e-commerce sellers and micro-entrepreneurs continue to face practical difficulties despite increasing digitisation under GST.
"E-commerce sellers and micro-entrepreneurs also face practical challenges due to continued reliance on physical documentation, despite the availability of digital alternatives," he said, calling for greater system-level trust and reduced procedural friction.
MSMEs Still Burdened Despite GST 2.0
The MP observed that even after the rollout of GST 2.0 last year and ongoing digitisation initiatives, small and medium enterprises remain burdened by complex compliance requirements, affecting both operational efficiency and liquidity.
Emphasising the economic importance of the sector, Patra said MSMEs contribute nearly 30 per cent of India's GDP and provide employment to over 11 crore people, making compliance-friendly tax reforms critical for inclusive growth.
"Policymakers have an opportunity to pursue calibrated, trust-led GST reforms that simplify compliance, improve liquidity and support sustained economic growth as the tax framework continues to evolve," he said.
Call for Trust-Based GST Reforms
Reiterating GST's original vision of 'One Nation, One Tax', Patra stressed the need to rebalance compliance and ease of doing business.
"While rate rationalisation and digitisation have improved, the compliance burden continues to be disproportionately high for small sellers. Simplifying registrations, harmonising audits and enabling faster resolution of accumulated credits are essential to ensure GST genuinely supports growth while safeguarding revenue integrity," he said.
As Budget 2026-27 draws closer, Patra's remarks add to growing expectations that the government will announce GST reforms aimed at easing compliance, unlocking working capital and strengthening India's small business ecosystem.
CAclubindia
