Trade and tax professional organisations anticipate a revision of the late free structure and inclusion of provisions for revised returns in the goods and services tax (GST) in the upcoming Union Budget 2024, which will be presented by finance minister Nirmala Sitharaman in Feb.
Representatives from various trade bodies and tax professionals outlined the challenges faced by traders and proposed solutions to the govt in their recommendations for the Union Budget. The Madhya Pradesh Tax Law Bar Association emphasised the need for a mechanism to adjust input tax credit (ITC) without blocking taxpayer funds.
Madhya Pradesh Tax Law Bar Association president AK Lakhotia said, “Currently, for availing of input tax credit, the integrated goods and services tax (IGST) is prioritised first, followed by central goods and services tax (CGST) and state goods and services tax (SGST). This approach often leaves a balance in SGST while taxes need to be paid on IGST and CGST. Over the past eight years since the implementation of GST, many firms accumulated significant SGST balances, which block their working capital. Despite having SGST balances, businesses still need to pay taxes with interest in other categories. There should be a rule allowing ITC adjustments in any order.”
Another body – the Commercial tax Practitioners Association said – in cases of ITC mismatches, the responsibility falls solely on the recipient, with no mechanism in place to verify the supplier’s accuracy. If the supplier makes a mistake, the recipient is unfairly penalised.
The association also highlighted that for late GST payments, the current interest rate of 18 per cent is deemed excessively high, especially considering that bank interest rates for fixed deposits or other savings are a maximum of 10 per cent, and delayed GST refunds incur a 6 per cent interest rate. The association said the interest rate on late GST payment should be reduced to 12 per cent and prior notice should be given before blocking ITC.
Source: The Times of India
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