Govt Can Suspend GST For 6 Months Due To Coronavirus: 4 Things You Should Know
Signals are coming in from various sources, that Govt can freeze GST collection for the next 6 months, in order to help small and medium scale businesses deal with the coronavirus outbreak, and the subsequent recession which has gripped the economy.
Here are 4 things you should know.
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GST Can Be Suspended For 6 Months, Not Exempted
As per insider reports coming in, Govt is thinking of suspending GST collections for the next 6 months.
Note here, that the term being used in the suspension of GST, and not exemption.
This means that Govt may allow businesses not to file GST for the next 6 months, but after this period, GST can be asked to pay.
In case GST is exempted, then it will impact credit line, and this can induce more financial troubles.
For Which Sectors GST Can Be Frozen?
The sectors which are hardest hit due to the coronavirus impact, can be provided with this suspension benefits for the next 6 months.
This includes aviation sector, food and hospitality and tourism sector mainly.
More details are awaited.
Cash-Based System for Tax Collection
Besides, Govt is also mulling introducing a cash based system for levying taxes, rather than invoice based system.
In the existing invoice based tax collection, the applicable GST is mandatory to be paid on the issuance of an invoice. It doesnt matter whether that invoice has been paid or not.
In cash based taxation, the GST will be asked to provide only if the business has received the cash from the invoice generated.
This will help in solving the liquidity problem.
Real Sector Rate Cut
GST Rates for the real sector can be slashed, to push the economy further.
Currently, 5-12% GST is applicable on real estate, which can be reduced or removed all together.
We are awaiting more details and information regarding the proposals to reduce and exempt GST for small and medium scale businesses.
We will keep you updated, as more details come in.