New Delhi, Oct 11 : As the pandemic has severely hit businesses and more so in the case of automobiles, hospitality and real estate sectors, a PwC report has suggested the suspension of Goods and Services Tax (GST) on these sectors for a minimum of six months.
The report titled “Reimagining GST@3” said that such a measure will provide much-needed cash liquidity to these sectors and ensure business continuity.
It noted that considering the impact on the economy, the Centre provided relief to the industry by extending deadlines for payment of taxes. Businesses were allowed to delay their tax payments for 15 days without incurring interest.
“However, several sectors such as hospitality, automobile and real estate have been severely impacted and the government should consider suspending the GST payments of these sectors for at least six months,” it said.
It has also recommended the implementation of a facility to deposit GST to the government treasury on cash basis and suggested dispensation of credit reversal requirement on expired stock during this period.
Among other suggestions, the report has also recommended expanding the tax base under GST.
It noted that a reason for the implementation of GST was to levy a single tax on all goods and services, resulting in free-flowing credit in the country. However, at present, certain items such as petroleum products — petrol, diesel, aviation turbine fuel and natural gas — and alcohol are outside the GST net.
To reassure states regarding protection of their fiscal autonomy, the government had initially decided to keep petroleum products, which form a major part of state revenues, outside the ambit of GST till revenue collections stabilise.
However, it is notable that due to the inward supplies of these sectors being subject to GST and the output supplies being beyond the scope of GST levy, the tax incidence in these sectors is significantly high, it said, adding that moreover, their compliance-related requirements have become fairly complicated.
“This is to some extent defeating the Government’s purpose of implementing the new tax regime. Representations have been made to bring industrial fuel, including natural gas and ATF, under the GST net,” it said.
Noting that bringing the petroleum sector within the GST net requires more consensus-building, however, in the absence of constitutional limitations, it is only a matter of time before this shift takes place and states are assured that they can maintain their levels of tax revenues.
Pratik Jain, Partner & Leader, Indirect Tax, PwC India says that the country embarked upon a very ambitious reform little over three years ago, which has definitely resulted in reduction in overall tax incidence and supply chain efficiencies.
With the wealth of data available with the government and measures such as focused coordination between direct, indirect tax administrations and technological advancements such as e-invoicing and e-way bills, the tax base is likely to expand further, he added.
“That said, there are several issues that still need to be addressed which will require all the stakeholders to work together. We now need a ‘white paper’ articulating what is the form of GST we want in the next few years. The regime requires more stability, simplicity and transparency,” Jain said
Disclaimer: This story is auto-generated from IANS service.