The goods and service tax has been taking a toll on various sectors in the fact of its multi favoring on the economic aspects. Still, there are some provisions on which the GST is working and in which it is ensured that a flawless tax credit is supposed to enter along with the safeguarding against the tax evasion practices. But, the twist turns out that the same provision can prove damaging to the small and medium traders and business organizations.
Pratik Jain, indirect tax leader, PwC told the issue in detail, “The ‘liability linkage provision’ allows the buyer credit for tax paid on inputs used only if the supplier has paid the tax within a given window. The provision, to be discussed at the meeting of the GST Council on March 4-5, calls for reversal of credit to the buyer in case of noncompliance by the vendor. That is, a buyer would be penalized for the supplier’s non-compliance. “This seems unfair as it penalizes the buyer for someone else’s fault.”
Tally Solutions managing director Bharat Goenka, “It could lead to preference in terms of dealing with bigger vendors which could hit the SME (small and medium enterprises) sector hard, This simple change will anyway unlock the businesses, improve compliance, and dramatically reduce fraud due to the triangulated nature of GST.” The head also reveled that the provision is just created to ensure that the government has all the supporting documents against the non-verified transactions and can trace the vendors with invalid purchase history. The hurting issue emerges in the scenario of any payment cycle which entangles in the payment issues and have the very chances for getting penalized.
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Presently, the GST council is sorting out all the necessary provisions and draft laws to ensure the smooth flow of the tax regime including all the legal processes by the due date of July 1 and for this the council is determined to clear and pass all the provisions and laws while resolving the pristine issues in the meeting of 4-5 march.