The meeting was called by Chairman CBIC, to discuss the GST reforms, rate rationalisation and their implementation. The objective is to ensure their smooth implementation, address technical queries and ensure wider dissemination of these reform measures. PHD Chamber of Commerce and Industry (PHDCCI) has submitted a detailed representation to the Chairman, Central Board of Indirect Taxes and Customs (CBIC), highlighting few concerns and clarifications required on GST- 2.0
The Chamber welcomed the Government’s continued focus on simplifying GST compliance and strengthening ease of doing business, while emphasizing the urgent need to resolve several practical challenges being faced by stakeholders across sectors.
Key Issues Submitted by PHDCCI
1. Accumulated Compensation Cess – Large unutilized balances of Compensation Cess remain in the hands of distributors and retailers in the automobile and beverage sectors, requiring a policy resolution.
2. Inverted Duty Structure in Food & Pharma Industries – Refund of input services and capital goods is presently disallowed, leading to working capital blockage.
3. Anti-Profiteering Applicability – Practical difficulties in implementing anti-profiteering provisions at the distributor and retailer level need reconsideration.
4. Unutilized Cess Credit in Automobile and other Sector – Significant Cess balances remain unutilized, and proposed amendments have led to a slowdown in vehicle purchases. Clarification is required on the treatment of these balances to avoid taxpayer losses.
5. Accumulated ITC due to GST Rate Reductions – With reductions in GST rates, ITC accumulation has become a cost burden on companies. Refund of such ITC should be permitted, since mandatory benefit passing to consumers often leads to financial strain.
6. Passing GST Reduction Benefits – The mechanism for passing benefits should allow flexibility beyond MRP relabeling, such as through discounts or equivalent measures, duly substantiated.
7. Impact of ITC Reversal on Exempt Goods – Clarification is sought on the treatment of costs arising due to ITC reversal and blockage on goods that have newly become exempt.
Clarifications Requested on Post-Sale Discount Issues
In line with the GST Council’s earlier recommendations, PHDCCI has requested the CBIC to issue a comprehensive circular on post-sale discounts to remove ambiguity and litigation. The Chamber has sought clarity on the following matters:
· Non-reversal of Input Tax Credit (ITC) where discounts are passed through financial/commercial credit notes.
· Treatment of post-sale discounts as additional consideration in dealer–customer transactions.
· Whether post-sale discounts given in lieu of promotional or marketing activities by dealers are to be treated as taxable consideration.
PHDCCI reiterated its commitment to work closely with the Government in ensuring GST 2.0 becomes more industry-friendly, transparent, and growth-oriented. The Chamber expressed confidence that with timely interventions and clarifications, the GST framework can further strengthen India’s competitiveness, attract investments, and reduce compliance disputes.