GST credit to be lost if vendors go bankrupt due to covid crisis

GST credit to be lost if vendors go bankrupt due to covid crisis Large Companies fear losing out on GST credit if vendors/ suppliers go bankrupt due to covid crisis With many small and medium enterprises staring at bankruptcy or serve business disruption due to the Covid-19 crisis, large companies that buy raw material and products from them now have to deal with new problem: denial of credits if the vendor defaults on paying goods and services tax. According to the GST framework, large companies cannot claim credits unless their suppliers and vendors have paid the tax. Section 16 of the GST law says that if a vendor does not pay GST to the government, input tax credit will be denied to the buyer. [caption id="attachment_89065" align="aligncenter" width="627"] Large Companies fear losing out on GST credit if vendors/ suppliers go bankrupt due to covid crisis[/caption] The nationwide lockdown has broken the back of the SME sector. The coronavirus triggered restrictions that shut businesses abruptly and left smaller companies facing a crushintg cash crunch. Major raw material and labour shortages along with a demand pullback from the industry created an existential crisis for many. Tags : GST