The Goods and Services Tax Council may consider lowering tax rates on several goods and simplifying return filing rules in a meeting this week. However, the problem of nearly Rs 2 lakh crore of working capital of businesses getting locked up is yet to be addressed, The Times of India reported.
The amount is stuck with the government because of a lack of clarity on how it will refund the excess tax paid by traders, the report said.
Under GST, if a trader has paid more tax than required, he must wait till his next transaction – to which the extra money will be carried forward. With the money stuck, the trader must find more capital to run his daily business.
“Close to Rs 2 lakh crore has been blocked since GST was launched in July,” Praveen Khandelwal, a member of the advisory group of the law committee at the GST Council told The Times of India. “With no working capital, traders are struggling to run businesses. Many have shut shop,” said Khandelawal, who is also the secretary general of the Confederation of All-India Traders.
Tax officials, however, told the newspaper that a solution was being worked out. At an election rally in Himachal Pradesh on Sunday, PM Narendra Modi said many of the remaining problems with the Goods and Services Tax would be addressed in this week’s meeting of the GST Council.
The Council, headed by Finance Minister Arun Jaitley, is scheduled to meet on November 9 and 10 to consider lowering the 28% GST rate on some daily-use items, PTI reported. For small and medium enterprises, the panel may look at rationalising tax rates.