Tamil Nadu SMEs hit by notices issued on outstanding VAT-related documents, arrears

Micro, Small and Medium Enterprises (MSMEs) that had pending payments or were late in filing returns during the Value Added Tax (VAT) regime have received notices from the Commercial Tax Office to pay outstanding amounts along with penalties, increasing the financial burden on SMEs.

A small compressor manufacturer in the city cited a notice issued for 2012-13 for late filing of returns. The amount to be paid is now in the millions. “Now where am I going to get the money?” asked the owner of the unit.

There are several MSME unit owners who are fighting this through representation or legal action.

In a statement to the Tamil Nadu MSME Minister, the Coimbatore Federation of Industry Associations said that the Commercial Taxes Department has been sending VAT notices for the past five years. The maximum penalty levied increases to up to 348% and notices are now issued for VAT arrears or late returns for 20 years. Even when the MSME submits the required documents, officials are unwilling to close the cases citing lack of proper documents.

The federation appealed to the Tamil Nadu government to come up with measures to resolve all issues related to the VAT regime and ensure that MSMEs are not affected by the regime.

“Government should prioritize the problems faced by MSMEs and address them,” added J. James, one of the coordinators of the federation.

Coimbatore District Small Industries Association president V. Rangaswamy said he had taken up the issue with the minister and officials concerned. “We hope to get a positive response soon,” he said.

Published – 28 Aug 2026 16:44 IST