Council may consider GST cut on EVs

Some of the items on the table are a possible rate reduction to 5% for electric vehicles, from the 12% currently.   | Photo Credit: Reuters

The GST Council meeting on Friday could see rate reductions for electric vehicles (EVs) and the extension of the term of the National Anti-Profiteering Authority till November 2020, according to officials in the Finance Ministry.

Tax experts say that the Council’s real focus should be on addressing concerns regarding the new return filing system recently introduced, while the start-up community is asking for the Council to further streamline the input tax credit refund system since a large portion of their working capital is locked away.

“Since this is the first meeting of the GST Council with the new Minister, there are likely to be a number of issues that will be discussed,” the Finance Ministry official told The Hindu. “Some of the items on the table are a possible rate reduction to 5% for electric vehicles (from the 12% currently), and extending the term of the National Anti-Profiteering Authority to November 2020.”

Apart from this, the official indicated that there could be a discussion on an electronic invoices system, and the revenue position of the Centre and the States. Tax analysts, however, say that the discussion must also focus on the annual return filing form — GSTR-9 — which is due to be filed on June 30.

First annual return

“This is the first annual return that tax-filers will be filing for GST,” Archit Gupta, founder and CEO of ClearTax explained. “It is a very complex return. It requires a lot of detailed information, things that were not asked either in GSTR-1 or GSTR-3B. And, it has undergone various changes.”

Further, Mr. Gupta added that while the government usually runs several awareness-building programmes for GSTR-3B and the other higher-frequency forms, this has not been done for GSTR-9. “Given the complexity of the return form, it should have a lot more focus,” Mr. Gupta said. “We are looking forward to see what the GST Council wants to do regarding GSTR-9, what is the way forward, etc.”

“The annual return was due in December last year and was postponed a few times,” Tejas Goenka, executive director at Tally Solutions said. “It is now due on June 30. But there are many businesses that have not completed their 2017-18 audit yet, so a certain amount of information that has been finalised for that year is not available for GSTR-9. I do hope there is some announcement that this will be delayed further.”

The start-up community had previously highlighted to Finance Minister Nirmala Sitharaman the problems faced by the sector which had to do with input tax credits being held up.

“For start-ups, the input tax is greater than output, so if input tax credits are pending, then start-ups are stuck without a large part of their working capital,” said Sachin Taparia, founder and chairman of LocalCircles.

“If a company is running a services business, their margins are very slim, so input tax credits getting stuck is a major problem for them,” he added.

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Printable version | Jun 18, 2021 10:59:32 PM |

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