About 5,000 companies are under tax authorities’ scanner for claiming GST transitional credit of more than Rs 1 crore.
Revenue department’s apex indirect tax policymaking body Central Board of Excise and Customs (CBEC) has asked its field officers to assess the massive transitional claims worth Rs 65,000 crore for stocks purchased before the implementation of the Goods and Services Tax (GST) from July 1.
Out of the Rs 95,000 crore revenues that the government garnered in July, more than two third of the amount is up for refund as input tax credit for Central GST (CGST).
“We are trying to find out if Rs 65,000 crore transitional credit claimed by companies are genuine or not. 5,000 companies have claimed refund worth more than Rs 1 crore,” a senior government official told Moneycontrol.
“We are probing it. Details should be out by the end of this week,” The official said.
Input credit means at the time of paying tax on output, a producer, trader or service provider can reduce the tax already paid on inputs.
With the implementation of GST, the government allowed availing input tax credit (ITC) on stocks purchased before July 1 or the implementation of the new tax regime. This also meant that an entity can claim credit for—service tax, excise duty, and VAT – taxes that now have been subsumed in GST. However, such a claim can be availed till December.
Businesses can claim ITC on transitional stock through TRAN-1 form available on the IT portal GST Network (GSTN).
According to the transition rules, entities can claim ITC for 60 percent of taxes paid earlier against the CGST or SGST dues where the GST rate exceeds 18 percent. If GST rate is below 18 per cent, only 40 percent deemed credit will be available against CGST and SGST dues.
Besides, the entire ITC can be claimed on items, priced above Rs 25,000, bearing a brand name of the manufacturer with a chassis number.
Source:-Moneycontrol.com
