Page 14 - Banking Finance August 2024

ROUNDUP

Industry

GPS based toll system will percent over March 2023. The exter- will not be imposed on them, subject
nal debt to GDP ratio too declines to to some caveats.
add Rs. 10000 crore rev- 18.7 percent from 19 percent, But the

enue: Gadkari debt service ratio increased to 6.7 per Additional fees, commissions, or re-
lated payments - over and above the
cent of current receipts at end-March
The global navigation satellite system amount charged as interest - on these
(GNSS)-based toll collection in India will 2024 from 5.3 per cent at end-March loans will attract GST at 18 per cent,
add Rs 10,000 crore to the 2023, reflecting higher debt service the Central Board of Indirect Taxes and
government's toll revenue, road trans- cost. Customs (CBIC) has said.
port and highways minister Nitin At end-March 2024, India's external
The move is expected to end uncer-
Gadkari said. debt was placed at $ 663.8 billion, an
tainties on taxing loans/credit among
Speaking at the international work- increase of $ 39.7 billion over its level group companies - a matter plaguing
at end-March 2023 according to a re-
shop on GNSS-based electronic toll col- foreign entities.
lection in India, Gadkari said since com- lease by the Reserve Bank of India. In taxation terms, the matter involved
mercial vehicles including trucks ac- The valuation impact helped contain valuing services of foreign affiliates
count for 75% of annual toll revenue it India's external debt by one percent- when the Indian recipient can claim full
is important that the new system is age point. Valuation effect due to the
input tax credit (ITC).
implemented on commercial vehicles appreciation of the dollar vis-à-vis the
first. rupee and other major currencies such The CBIC has said the open market
value of such services can be the in-
as yen, the euro and SDR amounted to
"GNSS will add another Rs 10,000 crore voiced amount by the Indian company,
$ 8.7 billion. Excluding the valuation
to the toll revenue and remove 99% of assuming full ITC is available.
the existing loopholes in the system," effect, external debt would have in-
Gadkari said. creased by $ 48.4 billion instead of $ If no invoice exists, the service value
39.7 billion at end-March 2024 over can be considered nil.
"We need to put in place a transpar- end-March 2023, the central bank re-
ent, qualitative and a leak proof sys- lease said. "This clarification was needed to end
tem of GNSS-based toll collection in litigation on taxing loans among group
India to ensure no inconvenience to toll Foreign firms get GST re- companies.
users," he added. Makeover likely to give a
lief on loans to Indian
External debt up 6% at more friendly face to face-
arms
$663 billion In a relief for foreign firms giving loans less I-T assessment
India's external debt was contained to to Indian subsidiaries, tax authorities India is reviewing the 'faceless' income
$663 billion as of March 2024, up 6 have said goods and services tax (GST) tax (I-T) assessment mechanism to

BANKING FINANCE | AUGUST | 2024 | 13