There is no doubt that COVID-19 will have a large impact on Indian economy and presently it looks like that due to Covid-19 crises the Indian economy is in ICU. Even after the government has announced Rs. 20 lakh crores of stimulus package we fell it isn’t enough. Recently Moody has also downgraded Government of India’s foreign-currency and local-currency long-term issuer ratings to “Baa3” from “Baa2”. It stated that outlook remain Negative. Companies are struggling with cash flow. Small business & service providers don’t have money to meet even the regular/fixed expenses.
In the present scenario business specially, service industries are facing twin whammy, once they raise the invoices the liability of Goods & Service Tax arises and on the other hand, they have unpaid invoices (debtors). They have to pay GST liability and on failure to pay they have to face repercussion i.e. interest & penalty, which will be additional burden on them, on the other hand, the recoverability of debtors is not certain, they may turn into bad, doubtful or may recover with significant delay. So, its double whammy for business. Companies have to pay GST based on point of taxation and the tax pay-out precedes the receipt of consideration. Often lead to situation when the supplier ends up paying the tax for which consideration is either not received or received after significant delay or cut, therefore causing great financial & working capital crises for business and more so in case of service industries where default have been arises due to business slowdown, , Covid induced job losses, salary cut, business closure and general breakdown in corporate business cycle.
Business are struggling to survive due to COVID-19 crises and facing severe cash/financial crunch and condition worst for Marco, small and medium enterprises. Therefor through this great platform we request our Hon’ble Finance Minister Smt. Nirmala Sitharaman to consider our request to collect GST on cash basis instead of accrual basis (bill basis), as previously we do under services tax regime. Such arrangement of GST on cash basis may be for specified period say up to March-2020 and again we can move to accrual basis as the situation will improve. Presently business is not in position to discharge GST liability from their pocket and having uncertainty about recoverability of invoices or recoverability with significant delay. So, in present situation it looks more logical & genuine to collect GST on cash basis instead of accrual/billing basis. This move will not only help the business fertility for their survive, will also help in their growth, employments and ultimately for the good health of the economy. This bold move should be taken by the government in the interest of public at large.
Disclaimer: – “The above article is prepared by author after understanding the present COVID-19 crises, their impact on business and the genuine hardship faced by them, this is the personal view of the author & which I feel bold decision should be taken by government in the common interest of the public.at large”.