Page 10 - Banking Finance May 2020

GST UPDATE

emption would block input-tax credit sumption and demand that is already filing refund claims, filing appeals, etc.
that would have an adverse impact on suppressed due the Covid-19 pandemic specified, prescribed, or notified under
businesses and may not result in any and lockdown. Tamil Nadu Act 19 of 2017 which can-
significant gain to consumers, two fi- It was widely expected that the GST not be completed or complied with
nance ministry officials said. Council could consider raising tax rates due to force majeure, according to a
Input tax credit reduces the tax paid and cess on certain non-essential items release from Commercial and Regis-
tration department.
on inputs from taxes to be paid on to boost revenue for states and the
output of finished goods. The proposed Centre. Several states have reportedly The governor has also promulgated
GST exemption will make output tax taken an over 80-90 per cent hit in GST the Tamil Nadu Taxation Laws (Relax-
zero, blocking the input-tax credit, collections in April, the official data for ation of Certain Provisions) Ordinance,
which will add to the cost of the fin- which has not yet been released by the 2020 to relax the time limit specified
ished goods, the officials with direct Centre. in, or prescribed or notified under the
knowledge of the matter said, re- "The need of the hour is to boost con- erstwhile Acts, such as the Tamil Nadu
questing anonymity. sumption and improve demand. By Value Added Tax Act, 2006, Tamil Nadu

"This will not only be injurious to the categorising items into essential and Betting Tax Act, 1935, the Tamil Nadu
Entertainments Tax Act, 1939, the
industry but also to the consumer at non-essential and then raising taxes on Tamil Nadu Tax on Luxuries Act, 1981,
large and this is certainly not going to non-essential is not what Centre et al that was administered by the
revive demand," one of the officials favours. But, the issue on rates and Commercial Taxes Department till June
said. GST is an integrated levy of indi- relief will be decided by the GST Coun- 30, 2017, and those Acts being admin-
rect taxes and the main source of rev- cil that is meeting next month," the istered with effect from July 1, 2017,
enue for both the Centre and state gov- finance ministry official source quoted for completion or compliance of the
ernments. It makes up about one-third above said. statutory provisions mandated under
of total tax receipts. Over 70% of the The GST Council is chaired by the the said Acts.
GST revenue accrues to the states as Union finance minister and thus the
their own share of the receipts and views of the Centre play out strongly
funds devolved on them by the Centre. in the council meetings. Assam's GST collection im-
Demand generation looms as a major However, the Council will also have to proves in May
challenge after the Covid-19 lockdown balance the expectations of the states After collection of Goods and Service
is lifted and a substantial reduction in whose revenues have nosedived after Tax (GST) had last month nosedived in
GST rates could stimulate demand, the coronavirus outbreak and wide Assam due to the Novel Coronavirus-
some industry associations have ar- scale disruption to businesses while induced nationwide lockdown, the col-
gued. they have still not been paid GST com- lection in the month of May has recov-
Niranjan Hiranandani, president of the pensation since the December-January ered to some extent.
Associated Chambers of Commerce period. Assam Finance Minister Himanta
and Industry of India (Assocham), has Biswa Sarma informed that GST collec-
proposed a cut in GST rates on almost Tamil Nadu extends dates tion in May has been Rs 360 crore,
all products by 50% for six months to for GST compliances against Rs 147 crore in April.
boost demand. The state government has promul- However, the collection for May was
gated the Tamil Nadu Goods and Ser- less by 40 per cent as compared to the
GST Council may not raise vices Tax (Amendment) Ordinance, same period in 2019. It was lesser by
GST rates 2020 to amend the Tamil Nadu Goods 20 per cent in April as compared to
The GST Council is unlikely to make and Services Tax Act, 2017 (Tamil Nadu corresponding month of the previous
major changes in the indirect tax Act 19 of 2017) to extend due dates year. With the phase-wise unlock com-
structure at its next meeting slated for various compliances due to mencing from June 1, the economy is
mid June. A top government source Coronavirus pandemic. likely to recover, the minister said.
said that the Centre is not in favour of The ordinance, promulgated by Gover- He added, "By June-July, we are hope-
increasing tax rates on any goods or nor Banwarilal Purohit, has extended ful that the lost momentum in the
service as it could further impact con- filing statements of outward supplies, economy will recover."

10 | 2020 | MAY | BANKING FINANCE