The government is preparing to announce a GST relief package for worst-hit sectors due to the COVID-19 pandemic. The worst hit sectors which includes aviation, restaurants and hospitality, may see a suspension of GST for up to six months.
At the same time, some sectors including real estate will pay lower GST if the plan is given a go-ahead by the government, The Economic Times reported. The proposal will need a final nod from the GST Council as well.
The relief on GST could not only help the worst-hit sectors but also several small businesses that are not in a condition to pay the GST. The decision to suspend GST for six months will help firms increase their businesses for the period before they again start paying GST.
Another relief being considered by the government involves a cash-based system for levying tax rather than the ongoing system based on invoices. This will help businesses pay GST only when they get cash for service and not when an invoice is raised.
Both these measures are expected to help firms revive and raise liquidity, which is the need of the hour, especially for small-scale firms which have been worst hit.
The relief measures which need to be approved by the GST Council based on the state governments' inputs are likely to cause a significant loss of GST revenue to the states.
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