While the Government of Andhra Pradesh aims to foster an enabling and thriving ecosystem for Micro, Small, and Medium Enterprises (MSMEs), existing ones have been trying to get the government’s attention to ease some of their most pressing issues.

From VAT litigations to property tax burdens to power tariffs, many of the city’s MSMEs seem to be clamoring for urgent relief.

Speaking to Vizag Industrial Scan, Mr Panduranga Prasad, President of the Visakha Autonagar Small Scale Industrialists Welfare Association (VASSIWA), emphasized: “Before creating an entrepreneur per house, the government needs to make the existing entrepreneurs stable and create a healthy ecosystem for a lucrative business environment, which in turn will inspire future entrepreneurs.”

Long-Pending VAT Litigations

Despite the GST regime being introduced in July 2017, many industrialists, as per Mr Prasad, are still burdened with a huge backlog of VAT-related appeals that have been pending across various levels and under different statutes, both at the State and Central levels.

This, he says, is a double negative: on one hand, there is working capital blockage and increasing litigation costs for the assessee/dealer/taxpayer; on the other, thousands of crores in taxes are blocked for the State and Centre.

According to Mr Prasad, there are over 2,500 entrepreneurs in AP that have been bogged down due to uncertainty in VAT-related cases.

An estimated Rs 7,500 crores, he says, is pending in litigation, with Rs 5,000 crore being the actual amount and Rs 2,500 crore due in penalties.

The association, therefore, has been requesting a one-time settlement scheme similar to other states.

“The extent of waiver in such schemes ranges from partial relief in Maharashtra (20–50% tax, 70–90% interest, 80–95% penalty) to full interest and penalty waivers in Kerala and Karnataka, and a 65% tax waiver plus full interest and penalty waiver in West Bengal,” claimed Mr Prasad.

Property Tax Burden

Similarly, he said that since Andhra Pradesh transitioned from the Annual Rental Value (ARV) model to a Capital Value (CV)–based model, vacant land and setbacks are being taxed on CV—0.20% in municipalities and 0.50% in municipal corporations—further increasing the burden on businesses.

“We have thus been requesting a separate property tax policy for industrial properties based on the nature of the industry, which would help industries grow without the added stress of annual hikes,” said the president of VASSIWA.

Uncertain Power Tariffs

Another pressing issue for MSMEs, he says, has been the miscellaneous power tariffs in the state.

“Units have been burdened with high add-ons, true-up charges, and surcharges on power consumption.

These charges are in addition to the national average power tariff and are neither fixed monthly nor communicated in advance,” noted Mr Prasad.

Additionally, for micro entrepreneurs, the Andhra Pradesh Electricity Regulatory Commission earlier provided a common transformer for power consumption below 20 kW.

Now, due to peak demand load requirements set by respective power department officials, such transformers must be self-owned and installed.

The association has requested relief on many such issues, which it hopes will get the government’s due attention.