Vivek Jalan, Partner with Tax Connect Advisory Services LLP, said “This would have a big impact on corporations who take guest houses on rent or take residential houses on rent for the use of their employees”.
“Furthermore, going by experience in such cases, the input tax credit (ITC) of GST on this rent paid by corporates may be disputed by the GST department arguing on the basis of Section 17(5)(g) of the CGST Act 2017 where the ITC NSE 1.07 % of GST paid for any service for personal consumption is blocked,” Jalan added.
Vivek Jalan, Partner with Tax Connect Advisory, said collection would further rise due to activities of GST scrutinies, summons, investigations, searches and seizures on the basis of data provided by DGARM, the data analytics wing of the GST Council. On, April 1, as many as 35,000 taxpayer’s scrutiny assessments were sent to field formations for initiation. This will be followed up by GST audits which will ensure enhanced collections.
Suspending/cancellation of GST number when there is a mismatch between GST returns, blocking of Input Tax Credit( ITC) of taxpayers where there is a ‘reason to believe’ that some suspicious activity is taking place, etc., have ensured that compliances under GST have improved.
The above, “seems to be a clear indication to trade and industry that robust compliances is the way ahead under GST. The requirement of current business is that it has to concurrently keep its GST and income tax books sanitised and be scrutiny ready at all times,” Jalan added.