Several infrastructure companies which construct highways have come under the tax division’s scrutiny for misinterpretation of the phrase ‘annuity’ within the items and providers tax (GST) framework.
The tax division had stated that annuity is outside the range of the GST framework. By this the federal government meant that the toll paid as annuity or in bulk may even be exempt.
Now, many building and infrastructure firms additionally obtain annuity funds from the federal government after a profitable bid, and these too are known as “annuity” within the monetary statements and enterprise parlance.
Last month, the federal government had come out with a clarification which distinguished between two annuities. The round issued by the finance ministry offered that the exemption could be obtainable solely when this quantity is paid for utilization of the street and never when such an annuity is paid by the freeway authority to the development firm.
Following the clarification, many tax officers have begun questioning infrastructure and building firms. Many firms have been requested to pay the GST due on these quantities.
RS 92,849 Crore GST Revenue Collected in June