Telcos seek tax relief on unpaid bills

Mumbai: India’s telecom operators want the goods and services tax to be levied on actual payments received from customers – and not on invoices raised – so that they don’t have to pay GST on delayed payments or defaults, which are on the rise due to the Covid-19 outbreak. The operators, including Reliance Jio Infocomm, Vodafone Idea and Bharti Airtel, are seeking the change for the 18% GST levied on telecom services for a six-month period. Experts said the problem of rising defaults is causing financial stress in telecom companies, given the tough economic conditions after the nationwide lockdown was imposed in March. Many customers have defaulted or postponed bill payments due to job losses, salary cuts, business closures and also a general breakdown in corporate payment cycles, they said. “Various taxpayers including the telecom companies are demanding that they should be allowed to pay GST on actual receipts as against on the date of raising invoice as there are huge cashflow and working capital issues,” said Abhishek A Rastogi, a partner at Khaitan & Co. “GST on bad debts is a real issue amid the Covid-19 pandemic and unless something is done, this could result in litigation.” “With most businesses having apprehensions on recoverability or anticipation of delayed collections, the government could consider relief proposals sought by businesses on GST being payable on receipt basis vis-a-vis milestones/ billing prescribed currently,” said Abhishek Jain, a tax partner at EY.

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