The government is trying its best to address the issue of goods and services tax (GST) under the reverse charge mechanism for import of services in the upcoming GST Council meet to be held on September 9, sources privy to the matter at the department told TNIE.
The Council's decision in this regard is expected to give major relief to stakeholders, such as Infosys, foreign airlines, and international shipping companies.
According to top Government sources, the law committee and fitment committee is looking into the issue of GST under reverse charge mechanism for import of services and based on their analysis, they will make the recommendations to the GST Council whether it should be taken up for discussion or not.
Recently IT major Infosys was served a pre-consultative paper by the DGGI for the GST payment of Rs 32,403 crore for the period ranging between 2017-2022. After the company submitted its documents for 2017-18, the DGGI withdrew the tax demand of Rs 3,898 crore pertaining to that year.
The sources quoted above told TNIE that Infosys needs to submit its documents for FY19 against the tax demand by November 30, which is the deadline for the companies to file their annual return.
"Once Infosys submits its documents against the tax demand for FY19, before November 30, we will review the tax liability on the basis of input tax credit available. If full ITC is available to them, then there won't be any liability for them for that year," a top Finance Ministry official said.
In the meantime, the government aims to finalize the process of GST rate rationalisation by the end of the year, as per sources. There have been ongoing discussions regarding the potential merger of existing slabs or the introduction of new slab rates.
In the most recent GST Council meeting held in June, the government made adjustments to the tax rates on specific items." The government's approach is to enable ease of compliance in the country. In the last meeting the Council took several decisions in that direction. In the next meeting too, the Council is likely to address various industry concerns," the Finance Ministry official added.