5,000 companies face queries on GST transition credit
Tax officials have asked about 5,000 companies, including some big manufacturers that figure in the BSE 500 list, to provide explanation on transition credit they claimed in July under goods and services tax (GST), two people familiar with the development said. The move is part of an investigation the indirect tax department has launched after the Central Board of Excise and Customs (CBEC) in a letter dated September 11 asked chief indirect tax commissioners to verify all transitional credit claims beyond Rs 1crore.
Thousands of companies across the country received calls from indirect tax officials last week, the sources told ET. “Tax officers want chief finance officer (CFO) or some senior finance department executive to come to the department and explain how we arrived at the input tax credit we claimed,” said a senior executive at a Haryana-based manufacturer of automobile components. The executive said the official also warned the company that if it did not disclose the details, then a tax notice may follow in coming days. Transitional credits are basically tax credits accumulated before July 1 on pre-GST stock. According to the GST law, the credit can be set off against GST liability.
Taxmen suspect that some companies are misusing the provision and have filed fake returns to claim high transitional credits. Of the total Rs 95,000 crore GST collected in July, about Rs 65,000 crore were claimed in refunds or transition credit by companies.Tax officials are now asking companies to submit their historical data of paying indirect taxes (sales tax, VAT, etc.), invoice receipts for transition credit, and inventory records for the last one year, people in the know said. ET had on Tuesday reported that several Indian companies, including some large entities, may start receiving notices this week on transitional tax credits.
Tax officials are making the calls after a detailed list received from CBEC was passed down to joint commissioners and other indirect tax officials. The list includes state wise details of companies and the GST number and transition credit amount, sources said.
Interestingly, neither the company’s name nor past details or any background of tax history is mentioned in the list.In a note addressed to principal commissioners and commissioners of GST and central excise, CBEC has asked them to verify transition credit that would include “Matching the credit claimed with closing balance in returns filed under earlier laws” and “Checking eligibility of credit under GST regime”.
The Economic Times, New Delhi, 21th September 2017
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