A Review to 2023's GST Development That Mattered MSME's

As 2023 draws to a close, small businesses stand resilient in the face of regulatory changes, particularly in the context of Goods and Services Tax (GST) developments. Here's a concise overview of the significant milestones that shaped the year for MSMEs, showcasing their tenacity and adaptability.

MSMEs' Post-COVID Recovery: The Economic Survey 2022-23, released in January, highlighted a remarkable recovery for Micro, Small, and Medium Enterprises (MSMEs) following the pandemic-induced challenges. GST payments by MSMEs, which saw a decline in FY21, surpassed pre-pandemic levels, reaching around Rs 5.5 lakh crore in FY22. This resurgence underscores both the financial resilience of small businesses and the efficacy of government interventions targeted at the MSME sector.

MSME Economic Activity Index - Sumpoorn: In a significant move, financial advisory and technology company Jocata partnered with the Small Industries Development Bank of India (SIDBI) to introduce the MSME Economic Activity Index – Sumpoorn. Utilizing consent-led and anonymized monthly sales data from over 50,000 MSMEs, reflected in official GSTN returns, the index offers a comprehensive view of MSMEs' economic activity. This data-driven approach stands in contrast to traditional survey methods, providing a more accurate representation.

Formalization of Non-GST Units: A noteworthy achievement in formalizing the MSME sector is the registration of over 1 crore Informal Micro Units (IMEs) on the Udyam Assist Platform (UAP). These units, not covered under the GST regime or exempted from the CGST Act, 2017, sought Udyam certification to become eligible for Priority Sector Loans (PSL). Launched in January, the UAP played a crucial role in bringing these entities into the formal economic fold.

Reduced Turnover Threshold for E-Invoicing: May saw a pivotal development with the Central Board of Indirect Taxes and Customs (CBIC) notifying a reduction in the turnover threshold for e-invoicing. Enterprises with a turnover exceeding Rs 5 crore (reduced from Rs 10 crore) became obligated to generate e-invoices for B2B transactions, including the supply of goods and services and exports, effective from August 1, 2023. This adjustment aims to include more small enterprises within the e-invoicing framework, especially those with turnovers between Rs 5 crore and Rs 10 crore.

Amidst these GST-related developments, MSMEs in India have showcased resilience and adaptability, navigating through challenges and embracing growth opportunities. As we reflect on the key highlights of 2023, the MSME sector remains a pivotal force in the economic landscape.