TAX REGIME

Exempt infra and transport sectors from GST: ASSOCHAM

PTI6_20_2017_000074B Union Finance Minister Arun Jaitley with Minister for Parliamentary Affairs Ananth Kumar addresses a press conference regarding Goods and Services Tax (GST) | PTI

Trade and industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM) urged Finance Minister Arun Jaitley to continue with the exemptions to infrastructure and transportation, such as road and railway, sectors in the Goods and Services Tax (GST) regime. They have cited the long gestation period and negative returns for continued exemption.

Seeking similar exemption on direct procurements made by the contractors for use in such projects, ASSOCHAM maintained that withdrawal of the exemption will have a negative impact on business revenues of existing projects. They called for zero-rating the contract value chain in order to protect infrastructure projects from additional tax burden.

ASSOCHAM requested that the rate of GST be retained at the current levels on existing projects in progress as any increase in existing tax cost will adversely impact the project financials, cash flow and margins.

The chamber has pointed out that, at present, highway toll from passengers and annuity amounts received from National Highway Authority of India (NHAI) for construction and maintenance of highways, are exempt from service tax. However, the GST regime provides exemption only to toll charges. Levy of GST on existing contracts with non-recoverable taxes from NHAI will have significant impact on revenue, they pointed out.

Currently the services provided to infrastructure projects are exempted from service tax and wherever service tax is levied, works contract abatement is available. In VAT levy too, abatement is available and the combined effective tax rate comes from 10 per cent to 12 per cent. The rate schedule released by GST council provides for 18 per cent GST rate for works contract services.
 

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Topics : #ASSOCHAM | #GST

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