PHDCCI Urges CBIC for Clarity on GST 2.0 Cess, ITC, and Discounts, ETCFO
The PHD Chamber of Commerce and Industry (PHDCCI) has made a detailed submission to the Chairman of the Central Board of Indirect Taxes and Customs (CBIC) outlining key concerns and clarifications required under the proposed GST 2.0 framework. The meeting, convened by CBIC, focused on GST reforms, rate rationalisation and ways to ensure smooth implementation of the next phase of the indirect tax system.
Ease of Doing Business vs Ground Challenges
While welcoming the government’s continued focus on simplifying GST compliance and strengthening the ease of doing business, PHDCCI highlighted a series of practical challenges faced by companies across sectors on Wednesday. Among the issues raised were large unutilised balances of Compensation Cess locked in the automobile and beverage sectors, the inverted duty structure in industries such as food and pharma that prevents refunds on input services and capital goods, and the practical difficulties in implementing anti-profiteering provisions at the distributor and retailer level.
Working Capital and ITC Concerns
The Chamber in a statement also pointed out that reductions in GST rates have led to an accumulation of input tax credit (ITC), which becomes a cost burden despite the mandatory passing on of benefits to consumers. It suggested that companies should be given greater flexibility in how these benefits are passed—beyond merely re-labelling MRPs—through mechanisms such as discounts or equivalent measures. Clarification was also sought on the treatment of ITC reversal in cases where goods become exempt, which has led to cost blockages for taxpayers.
Need for Clarity on Post-Sale Discounts
Another major area of concern flagged by PHDCCI was the treatment of post-sale discounts. The Chamber requested CBIC to issue a comprehensive circular to remove ambiguity and litigation risks, seeking clarity on issues such as whether ITC needs to be reversed when discounts are passed via financial or commercial credit notes, whether such discounts are to be treated as additional consideration in dealer–customer transactions, and how discounts linked to promotional or marketing activities should be classified.
Call for Industry-Friendly GST 2.0
PHDCCI said that with timely clarifications and interventions, GST 2.0 can become more industry-friendly, transparent, and growth-oriented. It added that addressing these bottlenecks would not only reduce compliance disputes but also strengthen India’s competitiveness, attract investments, and create a more enabling environment for businesses.
