Industry keen on amnesty scheme in interim budget after slew of GST demand notices

After a slew of GST demand notices, the industry is keen on an amnesty scheme in the interim budget, though experts are divided on the issue.

Last year, goods and services tax (GST) authorities issued notices for around Rs 1.45 lakh crore to 1,500 businesses, reports said.

The notices claimed inconsistency in annual returns and input tax credit for 2017-18.

Experts said firms would certainly challenge the notices, which would clog the legal system.

An amnesty would help the government garner revenue and spare litigation time, besides sending a positive signal to the industry.

Abhishek Jain, indirect tax head & partner, KPMG said: “Businesses have generally looked forward to amnesty schemes, this being all the more significant in the initial years of the tax.”

“With the recent surge in litigations and a good chunk being linked to uncertainties in the initial years of GST, an amnesty scheme could go a long way in reducing unwarranted litigation and fostering ease of doing business in India.”

Tax expert Bimal Jain said the government should offer amnesty wherever there is a tax demand because of clerical errors with no intention to evade taxes in the initial phases of GST.

“The government should come out with an amnesty scheme in a similar line as done in pre-GST regime i.e. relaxation in tax liability with no interest and penalty.”

Rajat Mohan, executive director, Moore Singhi, sounded a caveat: “An amnesty scheme is not without its pitfalls. There is a risk that such programmes might create a precedent, subtly shaping taxpayer expectations towards future leniency and potentially affecting long-term compliance attitudes.”

Gunjan Prabhakaran, partner and leader, indirect tax, BDO India said this new law does not have much jurisprudence and a lot of litigations involving interpretation issues.

The validity of provisions is either involved in notices or pending before courts, which involve huge amounts.

“If an amnesty scheme is announced now, taxpayers would opt for settling the notices involving procedural issues,” Prabhakaran said.

“The purpose is to obtain clarity on the interpretation of the law from courts/tribunal, which is lacking today with even the GST appellate tribunal not yet being operational.”

“It might be somewhat premature to introduce a one-time settlement scheme and it would be more appropriate to announce such measures once there is some more jurisprudence on various legal aspects,” Prabhakaran added.

Source:-  The Telegraph