The Indian middle class and small businessmen had been watching this interim budget 2019 with a lot of hope for relief and stand-in finance minister. Finance Minister, Mr. Piyush Goyal did not disappoint to the middle class but he disappointed to small businessmen.

Although the Budget 2019 has given special impetus to farmers and unorganized sector workers along with a big announcement on Income Tax Rebate, there have been key announcements like special 2% interest subvention for MSMEs on Rs. loans up to Rs 1 crore, GST at 6% instead of 18% for small service providers with turnover up to Rs 50 lakhs under composition scheme, GST Registration is not compulsory turnover ut to Rs. 40 lakhs and more.

Now a day small businesses are suffering due to compliance and heavy penalties. They are reaching the suicidal stage. They wanted to reduce the burden of compliance and heavy penalties. But the government disappointed to small businessmen.

What are Problems which Small Business is facing now a day

Below are compliance and penalty issues which small business is facing:

1. LATE FEE OF ROC FILING: Registrar of Companies is charging heavy late fees for the filing of an annual return. Rs. 100 every day is a big amount and it goes up to Rs. 5 lakhs. It is very difficult for a small businessman to manage all compliance with ROC because:
   • A) Company Audit is Compulsory:   Company Audit is Compulsory in the Companies Act for all registered companies, even if a business is very small or in the loss. Small Businesses are unable to pay Auditor’s Fees when business is in loss or zero. How can any small business pay CA Fees if a business is very small or in the loss and why the audit is compulsory if a business is very small or in the loss?
   • B) Annual Return Filing: Annual Return Filing on the due date is Compulsory in Companies Act for all registered companies, even if the business is very small or in the loss. Small Businesses are unable to pay the Professional Fees when business is very small or in the loss. That’s why small businesses are unable to file Annual Return on time and heavy late fee charges on them.

   Due to the above facts, Small businessman skips the due dates of annual filing or unable to do the annual filing and come under heavy late fee and penalties.

2. DISQUALIFICATION OF DIRECTORS: ROC Disqualified many directors u/s 164(2) due to non-filing of annual returns. So many directors of small businesses also came under it which business was very small or in the loss and they could not file annual returns.
3. STRIKE OFF COMPANIES: ROC did Strike off many companies due to non-filing of annual returns. So many small companies also came under it whose business was very small or in the loss and did not file an annual return due to the above-said facts.
4. VAT ASSESSMENT: Vat department of all states are sending notice to all business to do an assessment for all previous years. It is very challenging for a small businessman to manage all previous documents and also manage current documents for GST Return. Because GST Return filing is monthly.
5. MISMATCH IN INPUT TAX CREDIT: GST came into effect on 1st July 2017. But GST Returns are not updated till now. Only Sale details are uploading properly. And the summary of output tax and input tax are uploading. But Purchase details are not uploading properly till now. Due to it, businessmen are unable to match input tax credit properly.

What are the Solutions:

Below given solutions will be beneficial for small businessmen to safe them business:

1. The government should abolish all late fees for small businessman immediately and allow to them file all pending annual returns on ROC. They are unable to file annual returns due to heave late fees.
   And
   The government should amend Companies Act and abolish company audit for small businessman and reduce the annual filing process for new companies for which business will is very small or zero.
2. Solution: Remove disqualification of all directors of small business which business was zero or within some limits.
3. Solution: Give to chance to file an annual return without any late fees of all small businesses whose business was zero or within some limits.
4. Small Business should be free from VAT assessment. States can allow turnover up to Rs. 50 lakhs to 1 crore or more.
5. Small Business should be free from Annual Return Filing and Input Tax Credit Matching for at least one or two years. Why will businessmen face problem while Form of GST Returns is not updated till Now.