COVID-19 Impact: Businesses Fear Losing Out on GST Credit
30 May 2020 |
| SURFACES REPORTER
2 Min Read
Of the many problems that businesses are facing due the COVID-19 pandemic, losing out on GST credit is one such problem. The ensuing lockdown to curtail the spread of COVID-19 has meant that a number of small and medium business entities are either staring at bankruptcy or are facing disruptions in their respective businesses. Many such entities may not be in position to pay their GST and this is a cause of worry for many a large businesses. As per the rules, companies, who buy raw materials and products from SMEs, are denied their GST credits if their respective suppliers and vendors default on paying GST.
Many small and medium enterprises are not be in position to pay their GST. This is a cause of worry for many a large companies who source their raw materails from these SMEs.
Accordingly many a large companies have been reaching out to their vendors and suppliers to check on the possibility of them defaulting on GST payments. To safeguard themselves, a few companies are working on indemnity arrangements with their suppliers and vendors. Going forward companies will re-evaluate their vendor selection process based on payment history. However, to tide over the current problem many are using pressure tactics such as holding back on payments to the vendors/ suppliers. While this may not be the best of options, but nevertheless companies are using it so that they are not denied their share of GST credit.
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