Skip to main content

Cos Face Queries Over Input Tax Credit Claims

By
India Inc could face a tax landmine with authorities beginning to question input tax credit claimed by companies in lieu of Goods and Services Tax paid by their vendors. The authorities have already started sending notices to businesses, confirming fears that scrutiny will increase in the new financial year as the government looks to plug leakages. Experts said notices have been sent in Gujarat, Telangana, Andhra Pradesh, Haryana and some other states.
The issue has its origin in the provisions of the GST law that warrant a reversal of input tax credit claimed by a business if its vendor has not paid the tax for which credit is being claimed. Currently, there is no mechanism to ascertain if vendors have paid GST. The GST Network Portal allows viewing of the return-filing status of a registered person, but payment of tax cannot be determined. At best, buyers can only verify whether vendors have included the invoice in their GST filings.
Effectively, while a business may have paid the tax to a vendor for which it wants to claim credit, it may not be possible to ascertain if the vendor has deposited the GST. “In such a situation, requiring the buyers to forgo their input credits when they have already paid the GST to vendors and exercised due diligence to the extent possible does not seem like a fair proposition,” said Pratik Jain, national leader indirect tax at PwC.
Jain said given the stakes involved, the issue is likely to result in litigation. “The government needs to perhaps review the law and amend if they deem it appropriate. In any case, there should be some guidance provided to the taxpayers as to how the government expects them to ensure that vendors have indeed paid tax,” he said. Experts said there is a need for a facility to avail of non-reconciled input tax credits on a provisional basis as companies are compelled to pay in cash and block working capital.
Adequate safeguards to check misuse of the facility such as a time limit to complete the pending compliance/reconciliation can also be prescribed to protect revenue,” said MS Mani, a partner at Deloitte India.They said this will induce more compliance.“This will push the sellers to be more compliant and make the buyers put robust processes in place lest they lose credits,” said Bipin Sapra, a partner at EY.
The Economic Times, 30th April 2019

Comments

Post a Comment

Popular posts from this blog

Data storage norm splits digital payments industry

By
Data storage norm splits digital payments industry  India’s nascent digital payment industry could be thrown into disarray due to the demand by the Reserve Bank of India (RBI) that all user data be stored within the country, fears an industry grouping, which has termed the decision as “heavy-handed”, even as others, including the country’s largest digital payment provider Paytm, have hailed the move.  In a bid to narrow the growing schism, the industry is planning to send a formal representation to the regulator highlighting its concerns, a top official told ET.  “We are trying to build a consensus on the issue," said the person adding that the representation to the central bank will be ready this week.  RBI on April 6, mandated all payment companies—global and local—to set up data storage facilities within India by October. The stringent six-month deadline has attracted the ire of several sections of the industry that fear it will lead to a disruption of wel...
18 comments
Read more

Offer’s for all of you

By
Great Bumper Dhamaka Offer’s for all of you... It's Time to see your Business Online, WebeCreator Offer Website Designing with domain & Email @ nominal charges. For a year For More information visit us http://goo.gl/KlpppF call on 9890151261/9773197533  drop a mail to sales@webecreator.com
Post a Comment
Read more

Sebi to finalise options in commodities today

By
The Commodity Derivatives Advisory Committee of the Securities and Exchange Board of India ( Sebi) will meet on Friday with senior officials of the latter, to give a final shape to the rules on options trading in commodity futures, beside revising the warehousing norms to ensure good delivery on settlement. The decision taken, after discussing with the advisory committee, will be placed before the regulator’s board, to finalise the regulations. According to knowledgeable sources, three commodities in each segment, agricultural and non- agricultural, have been proposed for introducing options. It appears commodities from the soya and guar segments are preferred in the former. From the non- agri segment, it is likely that gold, silver and crude oil will be finalised. All these These have better liquidity and both the National Commodity and Derivatives Exchange and the Multi Commodity Exchange, respectively, will be able to introduce the options. In the equity segments, options ar...
17 comments
Read more