Publishers seek input tax credit for authors under the GST regime

The applicability of RCMs on transactions done through unregistered entities have been deferred

Publishers have ruled out withdrawing a petition on the constitutional validity of the reverse charge mechanism (RCM) under the goods and services tax (GST) regime even as the GST Council had deferred its implementation till September, 2019. 

A petition to this effect, filed by Meerut Publishers Association and Institute of Management Association, was heard by the Delhi High Court. The court asked the petitioner as to why do they not withdraw the petition since the council had put off its implementation. To this, counsel of the petitioner Abhishek Rastogi replied that the petition will not be withdrawn since it was on the constitutional validity of the provision. 

Under RCM, a buyer pays tax to the government unlike the seller under normal circumstances. While RCM applies to many situations, its applicability to transactions done through unregistered entities have been deferred by the council. 

Its implementation had been postponed till September, 2017. 

The court also heard the issue of non-payment of input tax credits to services for which there is no service rate. The issue in the court related to authors who are denied this credit. It needs to be answered how the benefit of refund is denied to petitioners under the law without approvals from the GST Council, Rastogi said. 

He said the absence of mechanism for refund of input taxes has badly hit sectors where output supply is exempted. 

The publishing sector is worst hit by this unintended omission as apart from the royalty paid to under RCM, they have huge credit pools of paper, ink, printing etc, he added.