Streamlined GST Refunds Process: Majority of Refunds Expected to be Processed in 17 Days
NEW DELHI: The GST Council is set to meet on Thursday to propose a reduction in the refund processing period to approximately 17 days. This new timeline includes a maximum of 10 days for acknowledgment, after which it will be considered acknowledged, and an additional seven days for processing. Currently, acknowledgment can take between 21 to 45 days, although officials noted that around 90% of refunds are processed quickly.
The council also aims to streamline the registration process for GST numbers through increased automation. While 61% of registrations are completed within three days, the goal is to expedite the remaining 39% of applications, which currently take several days. For businesses with a turnover below Rs 2.5 lakh, the average registration time is just 34 minutes.
The GST Council will consider measures to simplify the registration process for small businesses operating in multiple states. If these businesses sell through an e-commerce platform with a recognized warehouse, they may be able to avoid the registration process across different states. An official indicated that this change would benefit nine out of ten sellers on such platforms.
In addition, the council will discuss a proposal to eliminate the requirement for physical verification of premises when an entity seeks to cancel its registration. If taxes are paid and returns are filed, registration could be canceled without the need for an official’s presence. This initiative aims to foster a trust-based system.
The government is also looking to expand the scope of input tax credit (ITC) to include various services and supplies. Sameer Gupta, who leads the EY India tax practice, stated that ITC should be permitted for expenses such as passenger vehicle supplies, leasing, health and life insurance, and outdoor catering, as these are essential for business operations.
Furthermore, changes will allow businesses to claim credit for taxes paid throughout the supply chain, even if some entities do not comply. The new invoice matching system will link seller reports with buyer claims, enhancing the GSTN system’s functionality. This shift aims to identify and prevent fraudulent credits before they propagate through the supply chain.
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