Companies with high input tax claims attract tax department’s attention 

The tax department’s queries relate to a large variation in turnover reported, negative growth in central GST liability & a wide divergence in input tax credit between GSTR 2A and GSTR3B.

Indian businesses that paid most of their goods and services tax (GST) liability using input tax credit or reported a significant variation in turnover are being queried by taxmen, media reports. However, this move has irked the industry and they have petitioned the authorities against such tactics. 

Notably, tax officials have sent emails seeking information from businesses that paid over 95% of their dues using input tax credit to ascertain the key factors responsible for subdued GST collections, media reports said. 

The tax department’s queries relate to a large variation in turnover reported, negative growth in central GST liability & a wide divergence in input tax credit between GSTR 2A and GSTR3B. In some places, businesses have been asked to furnish tax payment challans. 

GSTR 2A and GSTR3B are return forms. Whereas, the first includes all information related to purchases, the second is a simplified return form aimed at making life easier for filers. According to experts, the move is due to revenue pressure on the authorities. 

In the revised budget estimate for FY19, the government pegged GST revenue at Rs 6.43 lakh crore, Rs 1 lakh crore less than initially projected, media reports said. Also, GST collections in February stood at Rs 92,247 crore. Collections in February are typically lower because of fewer days, and March is expected to see a pick up, said the reports. 

However, companies are unhappy as tax authorities are reportedly giving them little time to respond to queries. They are also irked at the high frequency of such emails seeking information. 

The Institute of Chartered Accountants of India (ICAI) western regional council has written to tax authorities questioning the practice, according to media reports. However, tax authorities are relying on multiple sources to verify information and ascertain whether there’s been any deliberate move to suppress tax payments. As per reports, multiple cases of companies trying to evade payments by submitting fake invoices to claim input tax credit have come to light. 

Though extensive use of information technology and an emphasis on making sure accounts were fully squared, ensuring input tax credit claims were legitimate, were expected to reduce the scope for evasion and improve compliance, these high number of suspected evasion cases has taken the authorities by surprise, media reports said.

Source: https://economictimes.indiatimes.com/media reports


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