Change of Tax rate during Mid of the year

[PANKAJ SINGH]

Dear Expert,

Please share your view on following :

The tax payer is providing " rental services of transport vehicles with operators" to the State Govt. As per notification no. 08/2017 dated 28th June 2017, the taxpayer can pay Tax @5% without availing ITC or pay @12% with ITC. The business was started during FY 2019-20 and the taxpayer has opted 2nd option i.e. 12% with ITC.

Now taxpayer wants to shift tax rates option from "12% -with ITC" to "5%-without ITC" from October 2021 onwards. In this regards, please share your view on following :

1. Whether it can be done in mid of the year ? please also share relevant notification, if any.
2. If option one is not doable, can it be done in beginning of the next financial year i.e. April 2022? please supportings, if any
3. Please also suggest procedure if any for informing, change in option to GST deptt, if any required.

Thanks ,

Regards,

Pankaj Singh

AI Summary

GST rate change: a taxpayer may switch between with ITC and without ITC options mid year but must reverse input credit.
The notification does not prohibit switching between the with ITC option and the without ITC option mid year; switching from with ITC to without ITC requires reversal of the electronic input tax credit balance on the date of switch. The change may alternatively be effected at the start of a financial year, the department may be informed by a simple intimation letter, and tax is determined transaction wise so different transactions may be taxed under different options, though practical accounting difficulties may favour an annual switch.