GST panel may consider allowing transfer of unused tax credit within corporate groups

New Delhi: A key panel under the goods and services tax (GST) council is likely to consider suggestions from the industry on transfer of unutilised input tax credit (ITC) within a corporate group and giving exemption to intra-group corporate guarantees from any tax levy.

These recommendations, once approved by the GST fitment committee, will be placed before the GST Council, the apex decision-making body on the indirect tax, at its next meeting, said people familiar with the matter. The meeting is likely in the next few weeks.

Industry has submitted that the current GST framework often leaves one group company with surplus tax credits, while another is forced to pay tax in cash, resulting in inefficient credit utilisation. It has thus sought a mechanism for transfer of excess ITC between companies with common ownership or a common PAN, subject to safeguards.


The move, if approved by the council, can boost corporate cash flows for investing in business, without materially affecting government revenues.

Experts said the proposed changes would improve credit utilisation, reduce litigation and compliance costs, and further the government's ease-of-doing-business agenda, while making the GST framework more efficient without.

"Intragroup GST payments lead to inefficient working capital management, and in today's highly competitive environment, it is essential to improve all efficiencies including working capital utilisation efficiency across a group," said MS Mani, partner, direct tax, Deloitte India.