GST: CBEC orders verification of large tax credit claims
The Central Board of Excise and Customs (CBEC) has asked its field officers to verify large tax credit claims of companies for July on an urgent basis as these have touched Rs65,000 crore.
Businesses were allowed to claim credit for the taxes paid on raw materials and services under the previous indirect tax regime, which can be used to set off their liability on the final goods under the goods and services tax (GST) system.
A person with knowledge of the development, who spoke on condition of anonymity, said CBEC has asked field officers to verify claims for tax credit above Rs1 crore during the transition to GST by 20 September.
It is, however, not clear how accurate the Rs65,000 crore claim is, as many businesses would have already taken into account the available credits at the time of paying taxes for July. The person cited above added that confusion or mistakes may have led to exaggerated claims.
Experts said an accurate assessment can be made only when the GST system stabilizes. Businesses have an opportunity to revise their tax credit claim.
“Rather than taking a massive verification exercise immediately, it might be good to wait for a couple of months to draw a meaningful conclusion on whether the quantum of CGST transitional credit claimed may be in excess,” said Pratik Jain, partner and leader of indirect tax practice at PwC India.
The government exceeded its combined revenue target for union and state governments for July and collected about Rs95,000 crore. The IT system supporting GST is still to stabilize as businesses face difficulties in filing returns, forcing the GST Council to grant more time to assessees to file returns for July, the first month of the tax reform.
A ministerial panel led by Bihar deputy chief minister Sushil Kumar Modi will examine the problems in the IT infrastructure supporting GST at a meeting in Bengaluru on Saturday.