Policy for 6-Month GST Freeze for Restaurants, Hospitality, Real Estate & Aviation Sector

The experts have informed that the government is considering a policy to remove the GST payment compliances for the sectors which are impacted the most by the outbreak of coronavirus. A policy to remove any GST (Goods and Services Tax) payment liabilities for a time period of 6 months arising on the sectors which are impacted the most by the outbreak including sectors like restaurants, hospitality, air traveling, etc. The government is also thinking about reducing the tax rates for the real state sectors.

Many other proposals are being considered by the government like switching to a cash-based system for levying taxes instead of the present GST invoice based system, GST reliefs for those transactions for which the payments were not received by the supplier because of the lockdown and consider such payments as bad debts. The measures considered by the government to improve the liquidity in the hands of the assessees and release the pressure of the taxpayers.

The GST Council is going to take decisions related to the above-detailed measures. A government official said that the government should at least remove the liabilities to pay the GST dues for such service sectors. The government should provide exemptions from the other charges as well at least for some time. A lot of assessments have been demanding the government to remove all the GST liabilities from the heads of the taxpayers. The government is trying to find some other way to help the assessees as total removal of GST will halt the credit line affecting the liquidity of the public.

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The cashless system as stated above will allow the government to charge the GST when the payment is made by the buyer instead of when the invoice is generated by the supplier to ensure that the assessees are not forced to pay the GST liabilities from their pockets. This will help in improving the liquidity in the hands of the assessee and will also help in generating working capital for the business. The scheme will be the most beneficial for those sectors where a lag in payments arises after the bills are generated.

A lot of businesses are facing delays in payments so the scheme will be very beneficial for such assessments. Another way to help the people is to exempt such businesses from all kinds of GST liabilities and the government will consider them as bad debts. Another official said that the government is considering various measures to help businesses in surviving this crisis. The government expects that the states will also support the centre for the betterment of economic situations.

The tax officials are also saying that liquidity is the immediate need of all the businesses and measures should be taken to ensure the surplus of liquidity in the hands of the assessees. A national leader, indirect tax, PwC, Mr. Prateek Jain suggested, “At this time, the industry needs more liquidity and hence deferment in payment of GST Check out due dates of payment under GST for general and composition taxpayers in India. We have included penalty charges on late payment with interest. Read More for next few months (without interest) should be considered”.

He also added that although the option to exempt the GST liabilities is always present it has many flaws as the flow of Input Tax Credit (ITC) gets blocked because of it. Bipin Sapra, the partner at EY, said, “Since the point of taxation in GST is effectively the issue of invoice, the suppliers pay the GST to the government exchequer before they actually collect it from the customers,”