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Recent change in GST law to impact cash flow for automobile dealers

FADA, the apex body of automobile retail industry, has experessed concerns over the recent GST amendment relating to input utilisation. Newly inserted section 49A, effective from February 1, allows utilisation of CGST and SGST input against tax liability only after fully utilising the IGST credit. Auto dealers mostly purchase cars on IGST basis from OEMs and sell them intra-state levying CGST/SGST. The amendment will create a monthly additional working capital requirement to the tune of Rs 1 crore for 4-wheelers and Rs 50 lakhs for 2 -wheelers for the 25,000 auto dealerships across the country. 

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