GST relief may hit state finances

The most hard-hitting decision taken at the 53rd meeting of the Council was the relief extended to taxpayers for the financial years 2017-18 to 2019-20 waving interest and penalty on tax demands under Section 73.

“We are happy that representations given by our GST committee have been considered in the Council meeting. This step will benefit tax payers in Telangana, particularly those who are in the state GST jurisdiction because 100s of notices were issued for 2017-18 to 2019-20 by the state GST department. It is, however, not clear if the benefit is also available where demand is raised and yet there is a delay in payment of tax in monthly returns. We are hoping that such situations are also covered,” said chartered accountant (CA) Mohd. Irshad Ahmed, the chairman of GST and Customs Committee, FTCCI.

Another significant decision is on the input tax credit (ITC), where the regular time-limit for availing the ITC is six months from the end of financial year. This has been extended for four initial years of the GST implementation that is up to November 30, 2021 for 2017-18 to 2020-21.

This, Irshad opined, is a welcome relief but with some disappointment because many taxpayers have already reversed the ITC along with interest. It would be more prudent to allow one time amnesty to avail the ITC for these financial years. This will benefit only those who have availed the ITC in 3B returns filed up to 30/11/21 and not reversed.

“Such cases though small to understand the full picture we would need to see the detailed notifications which are being issued gradually,” he informed.

Sources in the commercial tax department say that some of these decisions will lead to the loss of tax arrears and those who have paid tax may also seek refund, which could be detrimental for state finances.