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COVID-19 and GST compliances have left businesses on knees. GST Council is considering a GST relief package to lower the impact of Covid-19 and help boost the economy. The package may include six month suspension of GST liabilities for the most affected sectors such as tour and travel, hotels and restaurants, aviation, real estate etc.

Industry is also hit by the provisions of section 12 & 13 of CGST Act, 2017 which contains provisions related to 'Time of Supply of Goods and Services'. According to these provisions, a taxpayer is required to deposit GST on earlier of the two events i.e. either issue of invoice or actual receipt of the payment. Therefore in most of the cases, supplier has to deposit GST immediately after issue of invoice, whether or not the payment is received by the supplier.

Relief package includes a proposal to switch to a cash based system of levying GST from the current invoice based system. If the same is approved and implemented then Industry will be benefited in two ways.

a) First, no GST will be required to be paid on the bad debts happenned becuase of Covid-19 pandemic.

b) Second, deferrment of GST on goods debts till the time payment is actually received by supplier.

The above measures are expected to ease the liquidity pressure on industry. This will also ensue that suppliers need not to pay GST out of their pocket and get squeezed on their working capital. Most industries are facing delay in payments due to Covid-19 pandemic.

A final decision on the proposals will be taken by the GST Council, which is the apex decision-making body for the GST.