GST Council to rank firms on tax payment track record
NEWDELHI: Businesses will soon be able to know which company they should not deal with if tax hassles are to be avoided.
Federal indirect tax body the Goods and Service Tax (GST) Council is planning to implement from January a ranking of businesses based on their track record of tax payments.
This ranking will enable businesses to judge how likely a material or service supplier will default on its tax payment obligations which could result in blockage of tax rebates if these items are sourced from them, an official who attends Council meetings said on condition of anonymity.
The ranking system is being worked out as a solution to complaints from firms that the tax rebates due to them are getting blocked for no fault of theirs since their suppliers who charged taxinclusive prices have not remitted taxes to the government.
Although tax authorities rec- ognise that it is unfair to deny rebate to a company which has already paid the indirect tax to its vendor, they are unable to grant the benefit as it will hurt the exchequer. Firstly, the tax that ought to have come in from one of the parties to a transaction hasn’t been received and secondly, the other party may claim refund from the government of what has been paid to its vendor.
The Council believes the best way is to encourage businesses to avoid dealing with crooks.
Experts said the ranking system may have a flip side or two. While it will facilitate a company to know the compliance level of its vendors, it is possible that businesses that have not paid certain taxes due to genuine alternative interpretation of law may get a poor score.