SP Services
GST Latest News

Government to Announce Relaxation from GST for Companies under IBC Process

Relaxation from GST for Companies under IBC Process

The government of India along with the Ministry of Corporate Affairs and Department of Revenue has come up with the initiative to permit companies who are undergoing the Insolvency and Bankruptcy Code (IBC) to pay the current GST bill without completing the mandatory payment of the past dues. This particular step of the government has removed hurdles from the overall bankruptcy resolution process and made it hassle-free and simple. This article describes the Relaxation from GST for Companies under IBC Process.

The current GST framework does not allow a firm to file for current tax dues if the firm has unclear dues from the past. Penal action will be initiated in case of non-compliance, wherein the GST registration has been canceled, or the insolvency resolution process has been initiated.

Officials of the Ministry of Corporate Affairs and Department of Revenue (DoR) are having discussions on the matter and are in a process to unveil a framework soon. Two senior government officials said in a statement, “The issue is under discussion…A procedure will be worked out,” said one of them, adding that the officials are expected to meet this week to finalize the contours.    

Though, some industry-related organizations are trying to convince the government for the same issue. They don’t seem happy with the government’s initiative and asking the administration to accept the current GST dues while giving a moratorium for the dues from the past. This comes in the way of efforts to revive a company under the IBC process.

logo enterslice

GST Return Filing

  • Monthly tax calculation
  • ITC Reconciliation
Learn More

Financial experts are of the view that it is high-time to align IBC and GST. It is crucial that during the corporate insolvency resolution process (CIRP), it has to be enclosed from the company’s GST compliances of the past.

Another fact that needs to be taken care of considering taxpayers in mind who somehow missed to complete their GST payments/GST filings in time because of some reasons. A small penalty should be imposed on such defaulters and the primary focus should rely on avoiding business disruptions.

Officials will soon come out with a framework to resolve this matter. A procedure is under construction and it will soon be drafted out, officials are thinking to finalize the contours in this week itself.    

Jain, indirect taxes leader, PWC, said in a statement, “It is important that the period during which the corporate insolvency resolution process (CIRP) takes place is insulated from the past GST compliances of the company.” 

Industry backs invulnerability for corporate borrowers from punishments or indictment for resistance under the GST system. MS Mani, partner, Deloitte India said, “There is a need to recognize the fact that there could be several cases of default in GST filing/payments due to genuine reasons. Such defaults should be condoned, possibly with a small penalty and the focus should be to avoid business disruptions.”

Recently, the Chennai bench of National Company Law Tribunal has asked revenue authorities to allow corporate debtors to approach GST portal[1] so that they can file taxes after the commencement of insolvency proceedings.

Also, Read: 38th GST Council Meeting

Surbhi Vats

With practical and well-versed knowledge in legal and finance, Surbhi has dedicated 3 years of her life in managing financial matters of the companies she has worked in. Lately, she has shifted her focus and now she is keen on spreading her knowledge via writing. Affluent in writing, she now writes on legal and finance related topics.

Business Plan Consultant

Trending Posted

Startup CFO

Our Awards Our Awards

Top 100 Companies in Asia - Red Herring
Top 100 Companies in Asia - Red Herring

Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.

Top 25 in India - Consultants Review

Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.

Top 25 in India - Consultants Review

In the news