Page 34 - GSTL_16 April 2020_Vol 35_Part 3

J54 GST LAW TIMES [ Vol. 35
Temporary relief : SEZs may get I-GST waiver for DTA
supplies
The Government is considering tax sops to encourage Special Economic
Zone (SEZ) units for making supplies to the Domestic Tariff Area (DTA), a
Finance Ministry official said. Additionally, the Revenue Department is also con-
sidering treating a section of MSMEs under the GST scheme for composition
dealers, so that they are taxed at a concessional rates till the COVID-19 crisis
blows away.
Government officials told FE that SEZ units, primarily from the pharma-
ceutical industry, proposed to the Government that they could undertake domes-
tic supplies if a minimal or nil tariff regime is accorded to them as a temporary
measure. Supplies from SEZ to DTA are considered to be imports and are levied
with Integrated GST (IGST), which is in addition to Basic Customs Duty.
While the Government is inclined to approve such a regime, it wants to
restrict it to within a small timeframe and also only to the pharmaceutical sector
without making it a free-for-all. A decision would also have to consider the im-
plication on businesses running in DTA which would be severely disadvantaged
in competing with SEZ units, sources said.
While the Government has extended date deadline for filing monthly
GST returns for March, April and May to the last week of June, it’s also consider-
ing extending composition tax rate to a wider section of the small businesses dur-
ing the crisis period.
Composition scheme is available to firms with less than ` 1.5 lakh turno-
ver and engaged in manufacturing, trading or running non-alcoholic restaurants.
They are offered a simple, compliance-friendly regime with tax payment of only
1% of turnover for manufacturers/traders and 5% for restaurants. It is also avail-
able to service providers with a ` 50 lakh annual turnover but they are taxed at
6% of annual turnover.
Many businesses which otherwise qualify for the scheme may not opt for
it as they can’t claim Input Tax Credit (ITC). Further, it also restricts those mak-
ing inter-State supplies. So far, out of 1.22 crore GST taxpayers, only about 18
lakh are under this scheme.
An official said that many other small businesses could be taxed at com-
position scheme-rates for at least next three months. These firms are likely to be
hit worse than their bigger counterparts, and the relief in tax rates could give
them breathing space, he said.
[Source : The Financial Express, New Delhi, dated 15-4-2020]

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GST LAW TIMES  16th April 2020  154
( A54 )