Vendors for allowing Input Tax Credit under GST for supplies made to railways-DhanTax

The companies engaged in manufacturing wagons and other equipment for railways are pressing for rationalisation of the GST regime by allowing input tax credit on supplies made to Indian Railways.

In a representation to the finance ministry, the equipment manufacturers have argued that in absence of input tax credit (ITC) both vendors and Railways are suffering from avoidable burden of taxes.

It was pointed out that exclusion of railways rolling stock manufacturers from the scope of refund was against the principle of the fiscal neutrality – one of the main objectives of Goods and Services Tax (GST).

The industry has suggested that the IGST rate on locomotives and rolling stock be increased to 18 per cent, which is the pre-GST rate, so that the entire amount of ITC could be availed.

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