Quick Summary
As the Union Budget 2025 approaches, trade associations and tax professionals have voiced their expectations for significant changes to the Goods and Services Tax (GST) framework. Finance Minister Nirmala Sitharaman is set to present the budget in February, and stakeholders are advocating for reforms that address key challenges faced by businesses. Key Proposals for GST Reforms 1. Revision of Late Fee and Interest Structure The Commercial Tax Practitioners Association has called for a reduc
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FAQ :
Key proposals include revising the late fee and interest structure, introducing provisions for revised GST returns, adjusting the Input Tax Credit (ITC) mechanism for better cash flow, and addressing ITC mismatches.
The Commercial Tax Practitioners Association argues the current 18% interest rate is too high compared to bank rates (around 10%) and proposes reducing it to 12%, along with ensuring prior notice before ITC is blocked.
Tax professionals are advocating for a mechanism that allows taxpayers to revise their GST returns to correct errors without facing penalties.
Businesses want the flexibility to adjust ITC in any order, rather than the current priority of IGST, CGST, and SGST. This would help utilise SGST balances and reduce working capital blockages.
Currently, recipients are solely responsible for ITC mismatches, even if the supplier is at fault. Reforms are sought to introduce checks and balances to prevent suppliers' errors from unfairly penalising recipients.
The reforms are expected to simplify GST compliance, reduce the financial and operational burden on businesses, particularly SMEs, improve cash flow, and create a fairer GST framework.
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