The manufacturer of wagons and other equipment of railways presented their combative grievance to the finance ministry about the inevitable burden of taxes on vendors and Railways because of not passing the input tax credit (ITC) benefits.
According to Industrialists, the absence of input tax credit (ITC) on railway locomotives and rolling stock is leading to Rs 400-500 crore loss per month to the railways and an equivalent amount of loss to the railway’s vendors as well. So the total loss to the railway ecosystem surpasses the amount of Rs 1,000 crore per month.
Therefore the railway rolling stock manufacturers are urging for justified and fair GST regime by permitting input tax credit on supplies made to Indian Railways.
The industrialists proposed the increment in IGST rate on locomotives and rolling stock to 18 per cent (the pre-GST rate), in order to avail the complete ITC. They also suggested the termination of restrictions on refund of accumulated unutilised ITC with the railway locomotives and rolling stock by the revenue department.
Railways vendors expressed the fact that the discrimination and irregular inapplicability of GST on railways locomotives and rolling stock are in opposition to the policy of uniform tax effect.
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One of the main motives of Goods and Services Tax (GST) was highlighted as “the principle of the fiscal neutrality” but expelling the railway machinery and wagon manufacturers from the sphere of refund is contradictory with this principle and is also hampering ‘Make in India‘ initiative of the government.
