MSMEs to be hit by 18% GST for job work

The GST rate for labour charges (job work) has been increased from 12% to 18% and it is expected to hit hard the Micro, Small, and Medium-scale Enterprises (MSMEs).

C. Sivakumar, president of the Coimbatore Tiruppur district Micro and Cottage Entrepreneurs Association, said one of the long-pending demands of the job working/sub-contract industries in the manufacturing sector is the reduction of GST on job work to 5% from 12%. However, the government has increased it to 18%. This will create several challenges for the job working in micro and small-scale industries, he said.

The Coimbatore District Small Industries Association has urged the government to have a relook at the rates for job work. The government should put in place a system so that lower GST rates for job work benefit the MSMEs that are vendors to larger industries and get only labour charges. The 18% duty will block the liquidity for the MSMEs, it said.