- The government plans to overhaul GST to make it more uniform and reduce hurdles
- Input Tax Credit will be allowed unconditionally to genuine buyers with invoices and payment
- Reforms aim to include more business costs in ITC and prevent double taxation on resold services
The government is planning to overhaul of the Goods and Services Taxes, with the aim to make the system more uniform and remove procedural hurdles, according to Finance Ministry sources.
In terms of Input Tax Credit, it is proposed that a genuine buyer who holds the invoice, has taken delivery of the goods, and has paid the supplier in full, which will also include the tax component and their credit unconditionally. It should not depend on whether someone further up the chain has paid.
The proposed reforms seek to bring ordinary business costs currently kept outside the ITC chain back within its ambit, reducing the tax burden that is ultimately factored into prices. The changes would also ensure that services resold within the same line of business are not taxed twice, while widening GST refunds to cover tax paid on services as well as plant and machinery.
The government is planning to bring measures to make GST registrations and amendments more automated. Around 61% of GST registrations are already being conducted automatically within three working days, according to Finance Ministry sources. The proposed changes is likely to reduce manual intervention, with 66% of applications for registration amendments expected to be processed without officer intervention.
READ | GST 2.0 Next-Gen Reforms: Five Major Overhauls Await GST Council's Nod On Oct 8
The government is also looking to fast track GST refunds. Asccording to the proposed framework, refund applications would be acknowledged within 10 days and 90% of refunds could be released after a risk-based check.
Some of the other proposals include, measures to rationalise the GST on services provided via e-commerce platforms. Platforms may not be allowed to apply different tax treatment to the same service based on the commercial model or contractual arrangement through which it is delivered.
GST on a booking would be determined by the actual service provided, rather than the platform's contractual arrangement. The government is considering a “same delivery, same tax” approach, under which the same service would attract the same GST treatment irrespective of how it is routed or structured commercially.
READ | GST 2.0: E-Commerce Sellers, Taxpayers May Get Relief As Centre Plans Compliance Overhaul
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