There are various businesses that furnish discounts, reduced costs, or extended payment cycles to clients in between the covid-19 pandemic who urge the government to define the impact of goods and services tax (GST) upon the amounts.
As per the tax experts, the companies who provide the credit notes under GST or credit memorandums that furnish to the consumers when the money has not been furnished are facing the impact of GST.
GST is furnished when the invoice or bill is provided and the businesses are now seeing it harder to avail the credit or revise the taxes that have been furnished in the former way when they do not obtain the payment via customers or pose the obtained reduced amounts.
“IGST element on the credit note issued is not treated as an input tax credit and as a corollary there is a restriction in the system to adjust IGST with CGST or SGST, the tax expert said.”
GST is divided into 3 segments such as IGST, CGST, and SGST. a portion of the tax is levied on the goods imported. CGST and SGST are major 2 elements of the tax system in which the revenue made is obtained through the central as well as state governments correspondingly.
Beneath the GST platform, the ITC is importantly a tax furnished on the raw materials or the input services. It can be practised to diminish the future GST liability.
“As there is no specific provision in the statute to provide such a restriction, the constitutional validity of this restriction may be tested as the situation is a clear example of tax cascading, which is not the objective of GST, mentioned by the tax expert.”
Firms are not able to avail GST which is furnished in the former way beneath the current GST platform despite if they do not obtain the money or pose to return it or provide the reductions to the clients.
