The government of India has been resorting to all possible means during the COVID-19 led shutdown in the country to curtail the fiscal menace. The Central Government will release GST and customs refunds shortly so that businesses do not face an acute liquidity crunch.
Several sectors are witnessing a grim future, especially real estate, aviation, travel, tourism, and textile manufacturing. The move is said to benefit over one lakh crore taxpayers across the country. The total pending tax refunds to be cleared works out to Rs 18,000 crore.
On the 9th of April 2020, the CBIC launched ‘Special Refund and Drawback Disposal Drive’ to expedite the process of refund disbursals. During this drive that runs till the 30th of April 2020, the GST authorities shall disburse all the pending GST refund and drawback claims made up to the 7th of April 2020.
A set of instructions have been issued to the GST authorities to ensure that only genuine claims are processed while maintaining the speed. Proper due diligence must be done as per the GST law, and all communication with the taxpayers will be done over email. Further, all the deficiency memos earlier issued may be reviewed, and the refunds/drawback claims may be considered on merit basis.
Additionally, the government also announced an immediate disbursement of income tax refunds equal to or below Rs 5 lakh per person as per the press release issued by the Ministry of Finance on the 8th of April 2020.
On the 7th of April 2020, the centre also distributed its pending GST compensation dues for October-November 2019 to the states. A pending amount of Rs 14,103 crore was allocated among the revenue deficit states such as West Bengal, Kerala, Rajasthan, and Delhi. Accordingly, the central government has cleared a total compensation of Rs 34,053 crore for October-November 2019.
Earlier, Rs 17,789 crore and Rs 27,956 crore was released for April-May 2019 and June-July 2019 respectively. Furthermore, Rs 35,298 crore and Rs 34,053 crore was paid to states for August-September 2019 and October-November 2019 respectively.
The expectations are also growing among the deficit states for the release of GST compensation for December-January 2020. It will help them in funding the combat against the COVID-19 outbreak within their respective states.
States are guaranteed under the GST law to be paid for any revenue loss for the first five years of implementing GST, which came into force on the 1st of July 2017. Nonetheless, in the past two GST Council meetings, the centre proposed the council to come up with the steps to augment revenue due to a shortage in the compensation kitty. The GST Council is yet to conclude the matter.
In March 2020, GST collections slipped under Rs 1 lakh crore for the first time in four months to record at Rs 97,597 crore, mainly induced by the COVID-19 lockdown. The April 2020 and May 2020 collections are expected to go down further fuelled by the complete shutdown across the nation.
Despite reeling under severe pressure, the government aims to mobilise spending among masses and thus help the citizens, businesses and state governments to face the deadly pandemic and its aftermath.
The government’s promptness in releasing the tax refunds to the taxpayers and compensations to the states will ensure that the economy sustains for a strong fightback against the COVID-19 crisis.
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Annapoorna, popularly known as Anna, is an aspiring Chartered Accountant with a flair for GST. She spends most of her day Singing hymns to the tune of jee-es-tee! Well, not most of her day, just now and then.