GST Council to consider 17-day refund timeline, faster registrations

The GST Council, meeting Thursday, will seek to slash the refund period to around 17 days, which will include a maximum 10 days for acknowledgement, beyond which it will be deemed to have been acknowledged, and seven days for processing, as per a Times of India report.

Currently, acknowledgement itself can take 21-45 days and the idea is to process refunds faster, officials said Tuesday. Currently, around 90% of the refunds are processed quickly.

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Similarly, the idea is to prune the time taken for registering for a GST number through a more automated process. While 61% of the registrations take place within three days, the plan is to automate processes so that the time taken for the remaining 39% of the applications is reduced from several days. But, officials also said that not all registrations take a long time as those for businesses below Rs 2.5 lakh turnover are given within 34 minutes on an average.

For small businesses that operate in more than one state, the GST Council will consider steps that will enable them to avoid the registration exercise across states if an e-commerce platform through which they sell has a recognised warehouse as a place of business. "Overall, nine out of 10 sellers on platforms will gain," an official said, as per TOI.

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In case of an entity looking to cancel its registration, the Centre and the states will discuss a proposal to do away with the physical verification of the premises by an official, where the presence of the businessman is required. If taxes are paid and returns are filed, registration will be cancelled, an official said, adding that the idea is to move to a trust-based system.

Similarly, through a host of changes in the rules, govt is also keen to allow input tax credit on insurance, use of vehicles and other services. "ITC should be allowed in case of supplies, such as supply of passenger motor vehicle, leasing, repair, renting of motor vehicles, health and life insurance, outdoor catering, construction of telecommunication tower and pipelines, free samples and expired goods - as all are used in the furtherance of business," said Sameer Gupta, who leads the EY India tax practice.

This will come along with changes that will allow businesses to claim credit for taxes paid during the entire process even if some entities in the chain have not complied. "Invoice matching system now links what a seller reports with what a buyer claims, and mapping of input and output ledgers with the summary return completes the link. This is a major shift in how GSTN system works. Fake credit can be identified close to where it arises and stopped before it travels down the chain. The system provides the protection the condition was intended to provide," an official said.

(With inputs from Times of India)