Of the Rs 95,000 crore in Goods and Services Tax (GST) collections in the first month following its implementation, taxpayers have claimed Rs 65,000 as transitional credit, which has prompted the Central Board of Excise and Customs (CBEC) to scrutinise all cases above Rs 1 crore.
GST regime allows tax credit on stock purchased during the previous tax regime, but this facility is available only upto 6 months from the date of GST rollout, news agency PTI reported.
CBEC is responsible for the formulation and implementation of policy concerning the levy and collection of indirect taxes. The body in a letter directed tax officials to verify GST transitional credit claims of 162 entities, whose claim valuation is over Rs 1 crore.
"The possibility of claiming ineligible credit due to mistakes or confusion cannot be ruled out... it is desired that the claims of ITC (input tax credit) of more than Rs 1 crore may be verified in a time-bound manner," the CBEC emphasised.
CBEC directed the chief commissioners of the tax department to verify claims made by 162 companies and a detailed report by September 20. Moreover, to ensure that the eligible credit is carried forward under the GST regime, CBEC asked field offices to match the credit claimed with the closing balance in returns filed under the earlier law, PTI reported.
The Input Credit Mechanism is available to manufacturers, supplier, agents, e-commerce operators and aggregators covered under the GST Act to claim input credit or reimbursements on tax paid by them while purchasing inputs like raw materials, hardware or software required to create a finished product or offer a service.
Earlier in August, the central government had come out with a form — TRAN-1 for businesses to claim credit for taxes paid on transition stock. To file a claim, traders and retailers have 90 days of time.
PwC India Partner and Leader (indirect tax) Pratik Jain told the agency that the amount of Rs 65,000 crore looked high, particularly given the fact that a lot of large companies have not yet submitted their TRAN-1 forms.
Under the GST rules, traders and retailers are allowed to claim credit to the tune of 60 percent of the taxes paid earlier against the central GST or State GST dues, where the tax rate is equal or more than 18 percent. Where GST rates are below 18 percent, only 40 percent credit would be available against CGST and SGST dues, the agency reported.