CBIC allows claiming refunds for event cancellations

In a welcoming move that is set to benefit relief to the tourism, hospitality and entertainment sectors facing business loss due to the nationwide lockdown due to COVID 19, the Central Board of Indirect Taxes and Customs (CBIC) has allowed for claiming of refunds of goods and services tax (GST) paid on advances that entities got for events or bookings that have since been cancelled. Sector watchers said the move is set to benefit several companies across the board. In case GST is paid by the supplier on advances received for a future event which got cancelled subsequently and for which invoice is issued before the supply of service, the supplier is required to issue a “credit note,” the indirect tax Board said in a circular dated April 13. In cases where there is no output liability against which a credit note can be adjusted, registered persons may proceed to file a claim under “Excess payment of tax, if any,” the circular added. A similar principle will also apply where goods have been returned to the supplier but GST has been paid on the sale to the government. This is expected to benefit the tourism, hospitality and entertainment industry. The additional flow of funds to the industry would ease their liquidity position and also could be used to keep up the economic pace pushing across the number of jobs that are in the line of fire,” said Rajat Mohan, senior partner at AMRG Associates. Whilst, the clarification allows for adjustment with tax liabilities, experts added that the adjustment would be difficult in the near future due to a temporary breach of business continuity. On Monday, the Board added that the time limit for filing of letter of undertaking for exporters, for the year 2020-21, has also been extended to June 30, 2020 and the exporters can now continue to export goods and/or services without payment of tax. This will benefit numerous small and medium-sized exporters. Further, government entities have also been given an extension for furnishing of return in FORM GSTR-7 along with the deposit of tax deducted till June 30, and full relief from interest has also been granted in case such tax is deposited by the extended deadline.

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