INDUSTRY FOCUS AREAS

INVERTED DUTY CYCLE

The Inverted Duty cycle (IDS) refers to the rate of tax on inputs that is higher than the rate of tax on output supplies. Here, the refund of unutilised Input Tax Credit (ITC) on input services is unavailable.

IMPLICATIONS OF IDS

ITC on account of input taxes keeps on accumulating resulting in higher cost of prices. The accumulated ITC adds to the Cost Of Goods or Services (COGS) as ITC remains unutilised. Retrospectively, the amendment to Rule 89(5) CGST, resulted in denial of refund of unutilised, accumulated ITC availed on input services. Select sectors like mining, and EPC in case of large infrastructure projects.

RODTEP

Remission of Duties and Taxes on Export Products (RoDTEP), the Government of India has recently replaced its old incentive structure the Merchandise Exports From India Scheme (MEIS). The World Trade Organisation (WTO) is known to have declared our old MEIS system to be a WTO violation.

DATA CENTRES

Recently, the government has introduced a data localisation policy, meaning all the data collected by the usage of mobile phones, social media, needs to be stored within the jurisdiction of India. Moreover, the government is in the process of notifying data protection law which will apply to various sectors such as automotive.