MSMEs Face Difficulties Filing GST & Income Taxes; Seek Expert Advice: Report

According to a recent survey, business support has become a crucial area where MSMEs look for professional advice on services like “Business Accounting, Tax Filings, GST Calculation & Filing Support.” Due to their lack of knowledge of the rules, MSMEs find it difficult to complete their quarterly GST and income tax files on time.

The top objectives of India’s small business owners were recently revealed by an MSME Sentiment Survey performed by the fintech startup Kinara Capital. The study was performed with input from 2,600 formal, Udyam-registered MSMEs from Karnataka, Gujarat, Maharashtra, Andhra Pradesh, Telangana, Tamil Nadu, and UT Puducherry. These firms span the manufacturing, trade, and services sectors.

According to the report, MSMEs want to develop their companies quickly and are searching for creative and comprehensive services to help them do so. The survey’s results on the topics of Instant Financing, Supply Chain, and Business Services have three primary takeaways.

Services for Businesses

MSMEs look to reputable accountants and tax professionals for advice and assistance with tax filing.

As their top non-financial service need, business accounting and GST filing support was requested by 30% of surveyed MSMEs. With a share of 17% and 13%, respectively, MSMEs nominated Business Accounting Services and GST Tax Calculation and GST Filing Support.

21% of MSMEs wish to improve their online presence by developing websites, listing their platforms online, and signing up for online trading platforms.

According to 15% of MSMEs, building websites and increasing their visibility on digital platforms are their top priorities, while 6% of MSMEs desire assistance becoming listed on MSME trading portals like TReDS and GeM. The top demand for non-financial services according to the services industry is Website Creation and Digital Platform Visibility, which was scored at 27%.

9% of MSMEs desire assistance with their personal finances, particularly with insurance and investments. This is a reflection of the fact that many MSMEs report an average 20% rise in their incremental revenue creation as a result of being able to get formal loans to expand their businesses.

Quick Financing

In the financial services area, MSMEs’ top demand is for Instant Line of Credit, while in the non-financial services category, Industry Networking is at the top of the list. Over 38% of MSMEs cite lack of simple access to or non-availability of short-term loans as the key barrier to their development as the largest challenges they encounter.

One out of two MSMEs that were polled demand Instant Line of Credit to hasten routine business decisions.

More than half (55%) of the questioned MSMEs selected an instant line of credit as their top financial product option for their companies, with roughly 8% of MSMEs explicitly requesting a bill discounting product, according to the survey’s findings.

For MSME owners who need to take quick action, a line of credit can make routine business decisions easier. Examples include buying raw materials to fulfill an urgently needed large order, quickly adding workers for a seasonal product run, renovating the company’s space, or making unanticipated machine repairs.

The demand for Instant Line of Credit is highest among Manufacturing MSMEs, with over 60% of them requesting this product, indicating increased economic development in India.

Additionally, 16% of MSMEs preferred flexible repayment options that would let them choose between making daily/weekly loan payments or variable loan payments depending on their company’s turnover for the chosen time period.

Flexibility was ranked as the second most sought financial product feature by MSMEs in the Trading sector, with a 15% preference.

Supply Chain Connections

One-fourth of MSMEs feel their supply chain ecosystem’s industry networking is essential to their success.

Since less than 5% of India’s supply chain is digitalized, according to industry analysts, MSMEs observed weaknesses with the physical supply chain and trouble identifying appropriate customers and sellers. Particularly, the logistics of freight and the prices of local products transportation are a problem for micro-MSMEs.

MSMEs are looking for all-encompassing support to expand their businesses at an increasing rate. In order to enhance access to buyers and sellers, over a quarter (24%) of the respondents said they would prefer assistance with industry networking, particularly with their supply chain ecosystem. Many of them also said they would be willing to pay for the service.

MSMEs perceive the absence of their own transportation as a major supply chain problem. Despite its rapid economic development, India is severely lacking in truck and delivery drivers. 15% of those polled stated they wanted a special 4-wheeler commercial vehicle for their firm, while 10% said they wanted a 2-wheeler.

The service industry was the most vociferous among all sectors, with over 20% naming commercial vehicle loans as the second most critical concern to address the inability to deliver completed goods or raw materials to clients on time, which may significantly affect their turnover.