Clipped from: https://economictimes.indiatimes.com
Industry trackers say that the government is trying to do a balancing act as it needs more revenue through GST but also doesn’t want to create hurdles for companies in terms of compliance.
MUMBAI: The government on Friday announced some leeway for small and medium companies in the Goods and Services Tax (GST) framework during the GST council meeting. The relief came in the form of reduced penalties and intrest for small and medium companies.
The government has announced relief by the way of waiver or reduced late fee and interest for delayed filings and payment of taxes by the dealers who have a turnover of less than Rs 5 crore. Tax experts say that many companies were unable to comply with the regulations and slapping them with interest and penalties was a double whammy for them.
The government also allowed tax credit on the corporate social responsibility, which many say would go a long way at a time when many companies are looking to spend more on Covid related relief work.
“Allowing input tax credit for goods and services used in CSR expenditure, GST paid on additional health insurance premiums due to COVID-19, masks, hand sanitizers etc. to be used in offices, was one relaxation/ clarification that the businesses were looking forward to. Guess, one would now need to wait for the next meeting, to get clarity on this critical business expenditure,” said Harpreet Singh, Partner – Indirect Tax, KPMG in India.
Industry trackers say that the government is trying to do a balancing act as it needs more revenue through GST but also doesn’t want to create hurdles for companies in terms of compliance. The government is worried that it would face a major shortfall in revenue collections due to Covid pandemic at a time when even companies are facing major issues with their revenues and cash flows.
“The Government is faced with a tough balancing act. On one hand, it needs robust GST collections to help meet its regular plus the extraordinary nature of expenses during the pandemic. On the other hand, businesses are looking for reliefs from the Government to help them tide the major disruptions, loss of revenue and uncertainties. The announcements made in today’s GST council meeting are a reflection of the tight balancing act that the government has on hand,” said Saloni Roy, Senior Director, Deloitte India
All the announcements are set to benefit the smaller organisations more than the larger ones, say experts.
Abhishek Jain, Tax Partner, EY said, “While there was not much for larger businesses, the late fee waivers and additional moratorium for smaller businesses is quite a welcome move. With the current financial flu, smaller businesses were aggressively seeking stimulus and some of their requests have been well considered by the council.