Kerala businesses at risk to lose tax credits over goods lost in the floods
NEW DELHI: Businesses that lost merchandise in the floods that ravaged Kerala recently could lose credit for taxes paid on raw materials and capital goods as the finished products are not in the supply chain.
Goods and services tax (GST) officials have started seeking information from businesses and traders in Kerala about merchandise washed away in floods, invoking legal provisions that call for denying credits for taxes paid on raw materials and capital goods when the finished products are destroyed.
Tax officials told Mint that the exercise was only about data gathering for the government to take appropriate decision. However, experts said that, according to law, there is no room for discretion in giving businesses a waiver from reversing the tax rebates they have availed of.
Kerala’s State GST Act says that input tax credit shall not be available for goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. It does not make any distinction between goods destroyed intentionally and those destroyed in a natural calamity and thus forces officials to seek information on the quantum of loss.
An internal communication of the department reviewed by
discussed the steps to be taken by officials under law, how to reach out to businesses and traders seeking information and options for assessees to pay up. The communication issued by deputy commissioner, Mattancherry, Kerala, said further instructions from higher authorities were awaited on the matter. We are looking at financial inclusion as the main mission of the bank. Our focus will be on segments that today have challenges in either accessibility or affordability. From a vision perspective, we are looking to bring the most affordable, accessible and trustworthy bank to the last mile consumer.
The segments that we are looking at specifically include homemakers, senior citizens, urban migrants, people in rural India, including students who come to urban areas for education and need funds. We will also be looking at unorganized retail where payments today are largely dominated in cash. We want to create a less cash system so that DOP becomes very critical for bringing a change of this scale because of its huge physical network and human capital. Today, DOP has around 1.55 lakh points of service out of which 1.30 lakh are in rural India. Today, there are around 50,000 bank branches all put together. Now, if we look at the fact that we bring in around 1.3 lakh points of service, the rural banking ecosystem will get scaled up by 3.5 times. This brings us to a very different comparison on what we can do for the last mile. I think this is a big enough number to begin with. Our biggest leverage is going to be able to make each and every of these 300,000 people financially literate to be able to advise somebody about banking services.