New Delhi: With the graded opening of lockdown and resumption of business activity in certain sectors, the demand for a fiscal stimulus package to help the industry survive in this difficult time has gained momentum.
Tax experts suggest that the Coronavirus outbreak is going to be a litmus test for the GST and it will be difficult for the government to revive the economy within the existing framework of the GST. They demand substantial relief on the lines of measures announced by countries like UAE, Greece, and Australia among others.
"Coronavirus is likely to be a litmus test for the GST and any delay in making substantive changes may prove fatal for taxpayers as well as for the economy," said Pritam Mahure, a Pune based chartered accountant who has written several books on the GST.
He points out that even before the outbreak of COVID-19 pandemic, the country was experiencing a slowdown. A view that echoes in the measures suggested by another Hyderabad based GST expert and author CMA Mallikarjuna Gupta.
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“If the government thinks that it can revive the economy within the existing framework of the GST then it is not possible,” said CMA Mallikarjuna Gupta.
“The government will have to think some out of the box solution otherwise economic revival will not be possible,” Mallikarjuna Gupta told ETV Bharat.
GST experts advise a multi-pronged strategy on the lines of countries like UAE, Australia, Malaysia and Greece, which combines several relief measures including a reduction in GST rates, reduction of GST on imports and speedy processing of ITC refunds among other things.
Reduction or waiver of GST, VAT liabilities
According to a list prepared by Pritam Mahure, several countries have announced a waiver in the GST, VAT itself. For example, Greece has announced a 25% waiver in GST liability while in Lithuania, taxpayers can apply for writing off the VAT liability.
In India, Congress government in Rajasthan has announced refund of the SGST component on certain specified items.
Tax experts say that waiver of GST-VAT liabilities will certainly help the sectors hit hard by the outbreak of Covid-19 such as travel and tourism, airlines, and hospitality.
How Australia, UAE helping taxpayers
GST Experts also point out that a speedy processing of Input Tax Credit (ITC) refunds to exporters will certainly help the struggling businesses.
Australia, UAE and several other countries are processing faster refunds without insisting on HSN, SAC data or invoice matching.
“Early GST refunds will provide the much needed working capital boost for the cash starved businesses,” Mahure told ETV Bharat.
CBIC increases compliance burden amid the lockdown
Contrary to the relief given to taxpayers in other countries, the Central Board of Indirect Taxes and Customs (CBIC) implemented a new direction in March this year that made it even more difficult to claim input tax credit refunds amid a nationwide lockdown.
The CBIC made it mandatory to provide the HSN, SAC data, that is required to be submitted as an annexure, along with the GSTR-2B forms for claiming the input tax credit (ITC) refunds.
Contrary to the Modi government’s policies to give relief to taxpayers, the new requirement made it difficult for exporters to claim ITC during the lockdown period.
GST relief on imports
In addition to faster ITC refunds for exporters, countries have also announced substantial relief to importers by either exempting certain products from import VAT or deferring its collection.
For example, China has announced that importers registered in special zones can defer import VAT and duties till the end of this year, while the UK has announced relief in import VAT on medical equipment.
Greece, which announced a 25% waiver in the GST liability, has also announced a reduction in VAT rate on the import of medical and other related equipment by 75%.
(Article by Krishnanand Tripathi)
