The government has advised taxpayers who have claimed transitional credit “erroneously” under the Goods and Services Tax to revise their incorrect forms by Dec. 27.
The government has asked taxpayers to ensure only correct and bonafide credit is availed in the transition to GST, failing which, the tax administration would be forced to initiate audit and enforcement action against offenders, finance ministry said in a press release.
It has been noted that some taxpayers have availed extraordinarily high transitional credit of CGST which is neither commensurate with the trend of input tax credit of the industry nor as maintained by the taxpayer himself in the past.Finance Ministry Statement
GST TRAN-1 forms are to be filed to claim credit on taxes paid before the implementation of the new indirect tax regime. Taxpayers could use these credits to pay their Central GST liability.
The quantum of opening credit claimed by taxpayers has been a concern for the government, Pratik Jain who heads indirect tax at consulting firm PwC said in an emailed statement. “Large claims would most likely be scrutinised by the authorities in next few months,” said Jain.
The government’s analysis to identify taxpayers who have wrongfully claimed credits is underway, the finance ministry said in the same release.
“Such behaviour leads to breach of trust between the taxpayer and the tax-administration, which is the bedrock of self-assessment regime in GST,” it said .
The credit claimed by the taxpayers in the TRAN 1 form stood at Rs 65,000 crore, the government had said in a clarification issued in September. While Rs 1.27 lakh crore of credit of central excise and service tax was the closing balance as on June 30, 2017, not all of these credits may be admissible under GST, the government had clarified.