* Small businesses to file tax returns quarterly, not
* Finance minister says duties will be cut on some products
* Government to refund input tax credit for July, Aug to
(Adds details post finance ministers' meet)
By Rupam Jain and Tommy Wilkes
NEW DELHI, Oct 6 (Reuters) - Indian Prime Minister Narendra
Modi's government on Friday eased tax rules for small and
medium-sized companies, as it rushes to address growing
criticism of its stewardship of Asia's third-largest economy.
Modi, in a rare acknowledgment that economic sentiment had
turned negative, this week defended his handling of the economy,
which in the June quarter grew at an annual 5.7 percent, its
slowest rate in three years.
Small and medium-sized enterprises, crucial to Modi's plans
to create millions of more jobs, have been hurt by a massive tax
overhaul launched on July 1 that added layers of bureaucracy for
companies and hit exports.
Finance Minister Arun Jaitley on Friday chaired a meeting of
the council for the Goods and Services Tax (GST), a landmark
reform which turned India's 29 states into a single customs
union for the first time.
After the day-long meeting, Jaitley said small businesses
would be allowed to file tax returns once a quarter instead of
every month. He also said duties would be cut on some products
and the threshold for lower tax would be raised.
"We are not in a denial mode that there is a problem in the
SME (small and medium enterprises) sector," said a senior
lawmaker who has been working with Modi's office to combat the
Ajay Sahai, head of the Federation of Indian Export
Organisation, said before the Jaitley press conference that its
25,000 small and medium-sized members had found the monthly tax
While a mountain of bad loans has crimped bank lending to
India's bigger companies, smaller firms have been hurt by a
government move last November to stamp out "black money" -
untaxed cash that oils many industries - and by GST, whose
complex structure has baffled companies down the supply chain.
"Informal sources of working capital (for smaller firms) has
dried up," said Anil Bhardwaj at the Federation of Indian Micro
and Small and Medium Enterprises.
He predicted that it would be another year before GST began
to have a positive impact on smaller companies.
Jaitley has promised steps to boost economic growth back
above 7 percent and towards the levels economists say India
requires to generate employment for the one million entering the
workforce every month.
Modi built a reputation as an economic reformer capable of
delivering jobs and wealth for an increasingly aspirational
population, but slowing growth will be near the top of voter
concerns in upcoming state elections.
Investment remains low. The government has hiked spending on
infrastructure, but private investment has remained muted.
"It is not easy because our banking system is in deep
trouble and private investment is not picking up," the lawmaker
said. "The government will have to recast all policies that will
activate the public sector."
Commerce Minister Suresh Prabhu said in a tweet his
department was working with Jaitley to address GST-related
issues of exporters.
Jaitley said input tax credit for exporters for July and
August, estimated at $10 billion, would be refunded soon.
(Additional reporting by Manoj Kumar; Editing by Sanjeev
Miglani, Kim Coghill, Larry King)
First Published: 2017-10-06 08:16:18
Updated 2017-10-06 17:48:29
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