Although the government postponed deadlines for tax payments by 15 days, the report noted that a suspension may help several industries.

It has also recommended the implementation of a facility to deposit GST to the government treasury on cash basis and suggested dispensation of credit reversal requirement on expired stock during this period. Among other suggestions, the report has also recommended expanding the tax base under GST.

It noted that a reason for the implementation of GST was to levy a single tax on all goods and services, resulting in free-flowing credit in the country. However, at present, certain items such as petroleum products — petrol, diesel, aviation turbine fuel and natural gas — and alcohol are outside the GST net.

To reassure states regarding protection of their fiscal autonomy, the government had initially decided to keep petroleum products, which form a major part of state revenues, outside the ambit of GST till revenue collections stabilise.

However, it is notable that due to the inward supplies of these sectors being subject to GST and the output supplies being beyond the scope of GST levy, the tax incidence in these sectors is significantly high, it said, adding that moreover, their compliance-related requirements have become fairly complicated.

“This is to some extent defeating the Government’s purpose of implementing the new tax regime. Representations have been made to bring industrial fuel, including natural gas and ATF, under the GST net,” it said.

Noting that bringing the petroleum sector within the GST net requires more consensus-building, however, in the absence of constitutional limitations, it is only a matter of time before this shift takes place and states are assured that they can maintain their levels of tax revenues.

Pratik Jain, Partner & Leader, Indirect Tax, PwC India says that the country embarked upon a

NEW DELHI/MUMBAI (Reuters) – The Indian government has told the Supreme Court it will waive certain interest levies on loans up to 20 million rupees ($272,888) under a COVID-19 support plan, a legal filing showed, in a move that will bring relief to millions of borrowers.

Gajendra Sharma, 53, an optician, poses inside his shop selling eye glasses in Agra, India, September 11, 2020. Picture taken September 11, 2020. REUTERS/Aftab Ahmed/Files

While the government did not disclose the impact on the banking sector, an analyst at credit ratings firm ICRA estimated it will cost New Delhi a maximum of 50-70 billion rupees ($682 million-$955 million).

“We expect the impact to be minimal on profitability of lenders,” said ICRA’s Anil Gupta.

An Indian optician from Agra had challenged the plan which allowed skipping repayments for six months but levied an additional “interest-on-interest” on delayed payments.

Other borrowers, including real estate companies and power utilities, also challenged the plan.

In a filing on Oct. 2 with the Supreme Court, seen by Reuters, the government said it had decided to waive the compounding interest component on small business and some other loans related to education and housing, and credit card dues.

“The government bearing this burden would naturally have an impact on several other pressing commitments being faced by the nation, including meeting direct cost associated with pandemic management, addressing basic needs of the common man,” the filing added.

If the government were to consider a complete waiver of interest payments over a six-month moratorium period, as some had sought, it would cost 6 trillion rupees ($82 billion), the filing said.

“If the banks were to bear this burden, it would necessarily wipe out a substantial and a major part of their net worth … this was one