GST Council Oct 7 Meet: What Businesses Want!

As central and state governments prepare for the Goods and Services Tax Council meeting on October 7, industry bodies have stepped up their demand for a system that allows more seamless use of the tax credits available with companies' business units across states, according to four persons familiar with the development.

Businesses are seeking the ability to set off the tax liability of their unit in one state with the unused tax credit available with its arm other states.

Under GST, companies have to take separate registrations in all the states they operate in and therefore may end up with some unused tax credits in some states.

Each registration is treated separately for the purpose of maintaining and utilising input tax credit (ITC).

ITC refers to the credit that businesses receive for GST paid on goods and services used for business purposes.

The credit can be used to offset the GST payable by the business on its sales, subject to riders.

For instance, a company may have Rs.10 lakh in unutilised input tax credit under its GST registration in one state but may be required to pay GST in cash for a project undertaken in another state.

Under the current framework, the credit accumulated under one state registration cannot ordinarily be used to meet the tax liability of another registration of the same company.

This can result in a situation where a company has substantial unutilised tax credit in one state while it has to pay GST in cash in another state because the credit cannot be moved between the two registrations.

Industry representatives have therefore sought greater flexibility in the utilisation of such credits.

Source : https://m.rediff.com/amp/business/report/gst-council-oct-7-meet-what-businesses-want/20260916.htm