GST and Corona Impact and Way forward

GST and Corona Impact and Way forward

How Corona affected business?

1. Global slowdown

• GST / VAT has a direct correlation to consumption trends
• Global inward and outward travel, transport and trade is severely impacted due to border closures
• Due to corona, the world has literally come to a stand-still
• Corona has affected almost all countries on the planet and business therein

2. Local lockdown

• Many countries have announced lockdown and temporarily shut restaurants, malls, gyms, shops, etc
• Events or exhibitions are getting cancelled and thus, Corona is proving to be a catastrophe
• The income of almost all businesses is immediately impacted without any reduction in their fixed costs
• With continued impact, businesses are struggling to survive

3. Consumers not opening their wallet

• The slowdown in revenue is hampering business sentiments and also employment generation
• As regards, daily wage earners (riksha pullers, construction workers, etc) the situation is much graver
• Aforesaid has already lead to loss of jobs for many
• With eroding business sentiments, in turn, there is a reduction in discretionary spends
• Even non-discretionary spends are being impacted

What kind of VAT/ GST measures can be adopted by the Government?

Measures

Impact of Corona on businesses can’t be avoided

However, with appropriate measures, it can be lessened

Various GST / VAT measures

Substantive

• Rate cuts for tourism, travel and other sectors
• Specific products eg. medical devices are being exempted

Procedural

• Relaxation in the due date of payment of GST/ VAT
• Relaxation in the due date of filing of GST/ VAT returns
• Relaxation in time for reply notices or attending a personal hearing

Which countries have already announced GST/ VAT measures?

GST / VAT measures being adopted

• China: Announced VAT cuts
• Italy: Tax payment deadline suspended
• Germany: Relief in tax payment and filing deadlines

What GST Council in India should do?

• Extension of due dates→ Tax payment and filing

• More time to submit reply/ hearing→ Personal hearing and notices

• For travel, transport, etc→ GST rate cuts

• Medicines/ devices etc→ Exemption/ Zero rating

What taxpayers should do?

Step Plan for Taxpayers

1. Co-ordinate well with internal team members as well as with external consultants

2. As far as possible, meet the deadlines

3. Wherever permissible under the procedures, submit/email the extension letters

4. Email/ submit Representations through the Chamber of Commerce/ Associations

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