9 hrs ago

GST Council May Consider Protecting Buyers From Supplier Tax Defaults

GST Council may consider protection for genuine buyers losing input tax credit due to supplier default: Report · livemint.com

A business can sometimes claim back GST it has paid as input tax credit.

But a buyer may lose that credit if its supplier does not send the tax to the government.

The GST Council may discuss a plan to protect buyers who made genuine purchases and paid their suppliers.

Under the plan, the government would seek the unpaid tax from the supplier instead.

Buyers involved in fraud would not get this protection.

The proposal may be discussed at a meeting on October 7, but it still needs further approval.

The Council may also consider allowing businesses to claim credit for more kinds of expenses.

These could include employee insurance, catering, some vehicles and costs related to operating them.

Key facts

Meeting: 57th GST Council meeting, scheduled for October 7
Buyer protection: A genuine buyer may not lose input tax credit solely because a supplier failed to deposit tax
Recovery: Tax recovery would be pursued against the defaulting supplier
Fraud exception: Protection would not extend to buyers knowingly involved in or benefiting from fraudulent transactions
Potentially eligible expenses: Employee health and life insurance, outdoor catering, telecommunication towers, pipelines outside factory premises and free samples
Vehicles: The proposal could cover vehicles with seating capacity of up to 13 people, including the driver, and related expenses
Other possible credit: Goods destroyed after their shelf life where destruction is required by law
Status: Reported proposals for discussion; further approval would be required

livemint.com · 10 hrs ago