Service sector and consulting engineers demands a relook at GST collection regime

New Delhi February 7, 2023 Consulting and services sector in the country has urged the Union government and the Goods and Service Tax (GST) council to have a re-look at its Goods and Services tax (GST) collection regime for Consulting and services sector  and urged them to allow them  to deposit GST after receipt of the payments from the service receiver.

“At present service sector and Consultants pay their taxes as conscientious Professionals and Firms and feel utterly frustrated as Goods & Services Tax (GST) has to be deposited on accrual and  due basis. Goods & Services Tax (GST) have to be deposited within 30 days of raising of Invoice and not on receipt of dues from the Customer/Client. “said Mr Kk K Kapila, former president Consulting Engineers Association of India (CEAI) and past co-chair FICCI Infra committee .

“Consulting engineering companies are engaged in the Service Sector and are totally dependent for  survival on timely receipt of dues from the clients. Banks are reluctant to advance finance to Professionals, and in any case are averse to funding payment / deposit of GST and Income Tax. Delay in receipt of dues from clients adversely affects these organisations’ financial situation leading to delays in deposit of GST.”said Mr Kapila.

“Any delay in deposit of GST leads to threats of Cancellation of GST Registration and/or Prosecution, etc. This is despite the fact that the service sector pays interest on delayed deposit of GST in spite of its tight Liquidity problem.. “said Mr K K Kapila.

“The service sector urges the government to make changes so that  GST is paid by the Service Receiver (Client) directly instead of a provider  on the  similar lines as TDS. If not, the servicer sector should be allowed to pay  GST within 30 days of receipt of payment from the Client. This was the practice in vogue prior to 2012 when the present dispensation was introduced” said Mr Kapila.

“Otherwise the Service Provider may be given a timeline of 180 days from raising the invoice to deposit the GST,  in line with receipt of payments from the Client. The Client may be mandated to make the payment along with the GST to the Provider, with a copy to the concerned GST office.” Mr Kapila added