GST Council to hold 57th meet on Sept 12

The GST Council is scheduled to convene on September 12, following a long hiatus of over a year, to deliberate on various reforms. These include easing the process for blocked input tax credit (ITC), simplifying GST treatment for corporate guarantees, and enabling small businesses to register in multiple states. The meeting will take place in New Delhi, with tax officers convening on September 11, as per a GST Council Secretariat statement.

A primary proposal aims to safeguard buyers from losing ITC if suppliers fail to deposit taxes with the government. The solution proposed is for buyers to claim ITC if they can prove that the payment, including GST, was made through banking channels or other approved payment documents. The GST Council may also consider making it simpler for companies to claim ITC on vehicles acquired in the company's name for employee use, as well as on group health and life insurance policies bought for employees.

Another area of discussion could center around the GST framework for corporate guarantees within a group. Businesses are seeking clearer guidelines and a simpler valuation and taxation process for such arrangements. Additionally, the possibility of allowing small businesses to register for GST in multiple states is under consideration, which could help streamline compliance and reduce administrative burdens for enterprises operating across states.

Businesses are also keenly awaiting progress on refund norms, unutilized ITC, and other long-standing issues that have impacted working capital and compliance costs. These proposals are part of the GST Council's broader Ease of Doing Business review and are expected to be considered at the next meeting. Experts suggest that the next phase of reforms should further simplify the GST regime, making it more predictable and straightforward to comply with.

Manoj Mishra, a partner at Grant Thornton Bharat specializing in tax controversy management, believes that the upcoming GST Council meeting presents an opportunity to inject new momentum into the reform agenda. He emphasizes that the focus should shift from incremental changes to improving the overall quality of the GST framework.

Corporates have also called for a mechanism to regularize legacy tax positions, particularly in the online gaming sector, and to address genuine ITC hardships resulting from supplier defaults. Reducing interpretational ambiguities that lead to unnecessary litigation and compliance costs is also a crucial aspect to address, according to Mishra.