Government To Refund GST To Businesses For Order Cancellations Due To Covid-19
Furniture sits in an empty restaurant. (Photographer: Billy H.C. Kwok/Bloomberg)

Government To Refund GST To Businesses For Order Cancellations Due To Covid-19

The government will give refunds to businesses for goods and services tax paid on orders that were cancelled by customers due to the national lockdown imposed to control the novel coronavirus outbreak, according to a order.

This will help businesses that will have to return entire payments made to them, including tax. For instance, if a customer made a hotel booking of Rs 10,000 + 18 percent tax, and cancels it due to the lockdown, the hotel will have to return the entire Rs 11,800 (Rs 10,000+1,800), even if the business has deposited GST with the government.

Currently, businesses used to adjust the excess GST paid with other new bookings, but now they will be eligible for a refund, which will be a big relief, said Rajat Mohan, a partner at AMRG & Associates.

Some of the industries that were the most impacted due to Covid-19 and stand to benefit are hospitality and tourism, sports, entertainment, media, advertising and aviation, according to Mohan.

Getting full refund for businesses on cancellation of services contract or return of goods would improve their liquidity position, Mohan told BloombergQuint.

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