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*Gunjan Prabhakaran, Partner & Leader, Indirect Tax, BDO India*

  The Hon’ble Finance Minister, in her 3rd term has re-emphasized that Government is continuously working towards simplification of operational issues and is cognizant of the fact that frivolous and excessive litigation has an adverse impact on ease of doing business. Slew of relaxation measures, such as, (i) waiver of interest and penalty for demand notices issued under Section 73 of the CGST Act for FY 18 to FY 20 on payment of tax liability, (ii) allowing input tax credit in cases wherein returns were filed by 30-11-21 for FY18 to FY21, (iii) non-applicability of interest in case of amount available in ECL on due date of filing return and debited for paying tax return, (iv) introduction of Form 1A to report particulars which were missed out during submission of GSTR 1, indicate that through proactive consultation with industry, Government’s intention is to simplify GST law and ease compliances for the assessee 

 

 *Maulik Manakiwala, Partner, Indirect Tax, BDO India* 

The recommendation of GST Council to waive-off interest and penalty for notices issued without allegation of fraud, suppression etc, for FY 2017-18 to FY 2019-20, where taxpayer pays the full amount of tax demand on or before 31 March 2025 is a welcome move since there were many interpretation issues during the initial phase of GST where demands were raised during recent department audits or due to issuance of clarificatory circulars. Such waiver would also help in reducing the litigations for the various manual errors made during the initial periods.

 

 *Gunjan Prabhakaran, Partner & Leader, Indirect Tax, BDO India* 

On the most talked about issue relating to taxation of corporate guarantees between related parties, the GST council has recommended a retrospective amendment with effect from October 2023 to provide that the deemed valuation for levy of GST @ 1% of value of guarantee would not apply in case where the recipient can claim full input tax credit or where transaction qualifies as an export of service (e.g. guarantee given for a foreign subsidiary) would not apply, effectively restoring the status quo. This amendment would help in easing the compliance and record keeping burden and also would reduce the fund blockages in some cases. However, the amendment would continue to apply in cases wherein full input tax credit is not available to the recipient and sectors such as power or real estate would look for reduced rate of deemed valuation.

 

Quote from *Karthik Mani, Partner, Indirect Tax, BDO India* 

It would be interesting to see the impact of the clarification that the valuation of import of services by an Indian entity from overseas affiliates can be considered as 'Nil', where the ITC is available to the recipient, on the ongoing disputes relating to secondment of employees and valuation of brand name, where the Indian entity is eligible to claim full input tax credit.

 

 *Quote from Jaya Amarnani, Partner, Indirect Tax, BDO India*. 

A major relief has been provided to the co-insurance and re-insurance sector by the GST Council, by recommending that Co-insurance premium apportioned by lead insurer to co-insurer and transaction of ceding commission/ re-insurance commission between insurance commission may be declared as no supply, accepting the stand of the industry. Multiple insurance and re-insurance companies had received notices, demanding GST on these issues from 1 July 2017 and the amendment would resolve the dispute for the industry.