NEW DELHI: A key panel under the Goods and Services Tax (GST) Council is expected to examine industry proposals to allow companies within the same corporate group to transfer unutilised input tax credit (ITC) among themselves and exempt intra-group corporate guarantees from GST.
The proposals will first be considered by the GST fitment committee before being placed before the GST Council, the apex decision-making body on indirect taxes, at its next meeting, which is expected in the coming weeks.
Industry has argued that the present GST framework often results in one company within a corporate group accumulating surplus input tax credit while another company in the same group is required to pay GST in cash.
It has therefore sought a mechanism to transfer excess tax credits between companies under common ownership or sharing a common Permanent Account Number (PAN), subject to adequate safeguards.
Intra-group corporate guarantee
According to industry, such a move would enable more efficient utilisation of tax credits, improve working capital management and enhance corporate cash flows without materially affecting government revenues.
Another proposal under consideration is to exempt intra-group corporate guarantees from GST, a step that industry says would reduce compliance costs and simplify transactions within business groups.
Tax experts believe the proposed changes could improve credit utilisation, reduce litigation and compliance costs, and further the government's ease-of-doing-business agenda.
Intra-group GST payments lead to inefficient working capital management. In today's highly competitive environment, improving working capital utilisation across a corporate group is essential.
