In a relocation anticipated to settle tax uncertainty around highway monetisation and offer higher certainty to facilities tasks, the GST Council on Thursday clarified that concessionaires gathering toll tax will have no tax direct exposure as the toll paid by users is exempt.
The exemption will use to both kinds of agreements, whether the concessionaire pays in advance or with time, and the 2 kinds of agreements will be dealt with alike, it stated.
“If the toll itself bears no tax, the right to collect the toll cannot bear tax either, because the concessionaire is paying for nothing other than the toll he expects to collect,” the council stated.
The council likewise stated tax on roadway upkeep services will fall due when the concessionaire in fact draws cash versus expense sustained, getting rid of obscurity over whether simply reserving funds in an escrow account makes up a tax liability. “The special procedure will be notified to give effect to this,” it stated.
Under a nationwide highway agreement, a specific percentage of cash is reserved in an escrow represent roadway upkeep and launched just as it is invested.
Kuljit Singh, partner and nationwide facilities leader at EY India, stated that in the lack of clearness on whether GST used to toll collection, some risk-averse concessionaires were developing the tax into their costs.
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