12.09.2022: Firms can soon file claims for GST credits for Rs. 400 Crores

Businesses are set to get credits for taxes paid in the pre-goods and services tax (GST) era worth about 400 crore, with the government set to open a special window for businesses to file their claims from 1 October.

With this, businesses that could not avail of credits on central excise duty and value-added tax (VAT) at the time of transitioning to GST in 2017, including those who had not filed their claims at that point in time, will get a fresh chance to get their tax credits.

Once a claim is accepted, the quantum of granted tax credit will help them lower their future tax liability.

“Based on information that we have, the amount that is estimated is around 400 crore. We are waiting for the window to open so that people can start filing claims,” said a person aware of discussions in the government.

The GST transitional credit seeks to resolve one of the pain points in the shift towards the new tax system, as mandated by the Supreme Court. During the transition to the new unified national indirect tax system, many companies faced disruptions in their business activity while the new processes remained unfamiliar, due to which many businesses could not claim credits for the taxes paid in the previous tax regime. Also, the IT system had faced glitches then, which have now been resolved.

According to the latest plan, Goods and Services Tax Network, the company that processes tax returns, will open the new window from 1 October for two months for accepting tax credit claims.

Tax officials will examine and decide on the eligible credit on individual cases.

The decision to give a fresh opportunity for businesses to claim their transitional tax credit is based on an order by the Supreme Court.

The apex court had ordered to keep the window open for two months from September but on 2 September, granted an extra four weeks because the IT system needed to get ready for it without causing any problems for the monthly tax return filing cycle.

While granting extra time of four weeks earlier this month to the Centre to start accepting these tax credit claims, the apex Court also ordered to keep open all questions of law decided by High Courts concerning transitional GST credit. That would mean that cases, especially those where rules and subsequent amendments for transitional credit were challenged, will have to be argued on merits.

According to experts, while GSTN will accept claims for tax credits and tax authorities will decide on them, those cases where the eligibility of credit is in question will be heard in courts.

CBIC on 9 September issued a set of instructions to senior officials clarifying the procedures and timelines to be followed while deciding on these tax credit claims.

It said that taxpayers can either file fresh forms or revised version of earlier forms for the GST transitional credit on the common portal.

Businesses are also required to submit self-certified copies of forms within a week of making online filing and no revision will be allowed after filing of the forms.

Source: LiveMint

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