Page 14 - Banking Finance November 2017

GST UPDATE

GST regime must have fewer rates: International Mon- Banks start to accept GST

etary Fund input claims to grant
IMF has lauded India's efforts to lower the compliance burden under the Goods working capital loans
and Services Tax, but said that efforts should also be
After 3 months of the roll-out of GST,
made to lower the tax slabs and minimise exemptions.
lenders
"GST is an important reform. It has had some teething
are gravi-
issues. The GST Council's decision to lower the compli-
ance costs is a good move…," Ranil Salgado, Assistant tating to
Director, Asia and Pacific, IMF, told. sanction-
ing work-
However, there is also scope to simplify the tax structure and bring down the ing capital loans, especially to micro
number of tax rates, he added. The IMF also called for further broadening the and small units, against documents
tax base and including all sectors under GST. used in the new tax regime.
"The objective of GST should be to have a broader base with minimal exemp- They are no longer looking at just sales
tions. At present, electricity and fuel are out of GST, which creates issues for of the units concerned to decide on
companies in the sector as they do not get input tax credit," said, Andreas Bauer, loan sanctions. Banks are looking at
Senior Resident Representative for India, IMF, adding that reducing the number input credit in deciding how much work-
of rates under GST over the medium term will also simplify the tax. ing capital loans they should advance.
The current model of GST with numerous exemptions and a four-tier rate struc- The country's largest lender, State
ture - five per cent, 12 per cent, 18 per cent and 28 per cent - apart from a Bank of India, and Union Bank of In-
compensation cess and exempt items and different rates for gold (three per cent) dia, have started giving loans, espe-
and rough diamonds (0.25 per cent), is very different from the original plan of cially to micro, small and medium
one single tax rate. enterprises (MSMEs) after assessing
their input tax credit claims.
AU Bank ropes in Sen Tec to help in GST transition
A public sector bank executive said the
AU Small Finance Bank has tied up with SunTec Business Solutions to help it transit large number of small and medium
to the GST regime and deliver seamless service experience enterprises (SMEs) had been included
to clients. SunTec offers GST management as an over-the-
under the ambit of formal trade with
top (OTT) solution which can easily integrate into the AU
the introduction of the GST.
Bank's existing IT landscape.
SMEs are facing a working capital
This 'out-of-the-box' solution can be nimbly configured, aid-
crunch because in the absence of
ing banks with a hassle-free experience when they transit proper financial returns, they are un-
into the GST regime. AU Bank will use this solution for tax able to access bank credit. Besides
segregation, tax accounting, generating tax invoice and for data filing. K Nanda
this, entrepreneurs are facing a
Kumar, CEO, SunTec, said that its expertise and innovation in customised pricing credit crunch because in the GST re-
and bundling solutions will help AU Bank to analyse, anticipate and cater to
gime SMEs are entitled to input tax
varied customer expectations.
credit, and it is stretching their op-
"With GST now rolled out, it is instrumental that banking and financial institu- erating cycle.
tions improve their service accuracy so as to prevent revenue leakage and main- SBI Chief General Manager (SME) V
tain customer trust through continued customised offerings," he said. Vijendra Ramling said using GST claims by
Singh Shekhawat, Chief of Operations and Technology, AU Bank, said that SunTec banks would give SMEs the time to
has helped the bank achieve enhanced GST compliance with the least amount manage their working capital re-
of interference with existing IT infrastructure and business operations. quirements till the time they got in-
The bank commenced its banking operations on April 19 this year and has a dis- put tax credit. It will also help
tribution network of 284 branches, 119 asset centres, 23 offices and 251 ATMs stabilise SMEs to run their operations
spread across 11 States and one Union Territory. without any hurdles.

14 | 2017 | NOVEMBER | BANKING FINANCE

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