Trade associations and tax professionals have raised their desires with the approaching Union Budget 2025 which is towards the modifications to the Goods and Services Tax (GST) framework. In February Finance Minister Nirmala Sitharaman will present the budget and stakeholders are advocating for reforms that address challenges encountered by businesses.
Key Recommendations for GST Reforms
Here we have discussed the major key recommendations for GST reforms by trade associations and tax professionals:
Revised GST Returns Provisions
It has been forced by tax professionals to start a process that permits the taxpayers to revise the GST returns addressing the errors without having penalties.
Addressing the GST ITC Mismatches
The other pressing problem that the Commercial Tax Practitioners Association raised is the absence of a process to validate the ITC claims precision.
- At present any mismatch in the GST Input Tax Credit (ITC) is merely the obligation of the receiver even if the supplier is at fault.
- The association asked to introduce checks and balances to ensure that the errors via the suppliers do not penalize the receiver.
Adjusting Mechanism of GST Input Tax Credit (ITC)
It was outlined by the Madhya Pradesh Tax Law Bar Association to revamp the ITC adjustment procedure to rectify the cash flow for businesses.
- Present System: IGST is the priority then it is been followed by CGST and SGST. Sometimes it leaves a surplus in the SGST while firms still owe taxes under IGST and CGST.
- Suggested Modification: The businesses must be permitted to adjust the ITC in any order allowing them to use the collected SGST balances and lessen the blockages of the working capital.
The association stresses that the same problem has endured since the start of the GST in 2017 leaving many businesses with SGST balances facing the tax obligations and interest payments in the additional classes.
Correction in Late Fee and Interest Structure
The Commercial Tax Practitioners Association has asked for a lower interest rate on late GST payments, which at present is 18%.
- It was claimed by the association that the same rate is much more compared to the bank interest rates which is at 10% average for fixed deposits.
- They ask for a lower interest rate of 12% and ensure that businesses obtain a notice earlier than their input tax credit gets blocked.
Industry Opinion
The trade and tax professionals consider that easing the GST compliance will proceed advantage to businesses, particularly small and medium enterprises (SMEs). Lower interest rates, flexible ITC adjustments, and provisions for revising returns will lessen the financial and operational load on taxpayers.
Union Budget 2025 Expectation
The Union Budget 2025 with the suggestions from the trade bodies and tax experts getting the traction may introduce the taxpayer-friendly reforms.
It was anticipated by the stakeholders that such changes would ease compliance improve the cash flow towards businesses and ensure an effective GST framework.
Closure: The Union Budget 2025 expectations show the collective requirement for a more efficient and equitable tax system. If executed then such reforms will not merely simplify the compliance load but indeed promote a growth-oriented environment for the businesses in India.
