Just Rs 12,000 crore, or less than a fifth of the Rs 65,000 crore transitional credit claims received in respect of the central excise and service tax paid in the pre-GST period, has been admitted by the government against businesses’ July GST liability, officials told FE. This dispels the perception in some quarters that the government’s GST income in July would be far lower than the amount collected in cash — till September 9, the July GST collection was to the tune of Rs 95,000 crore. Transitional claims, a one-time facility, can be availed of by businesses against their supplies in six months into GST — till December 31, 2017.
Though a section of taxpayers wanted to utilise a disproportionate part of the claims against their July GST liability, the government was not keen on admitting them, as it wants to release the credit in a staggered manner. There is no verification by the department on calculation or estimation of transitional credit made by the taxpayers, an official said. Instead, he added, what was going on was an exercise in finding out the admissibility and legality of claims only. While tax experts and even the government say that the transitional claims are not abnormally high, more such claims are expected to be made over the coming weeks as a section of the industry, including some large companies, are yet to file the relevant TRAN 1 form. The tax department reckons that “the possibility of claiming ineligible credit due to mistake or confusion cannot be ruled out”. It had therefore told GST commissioners that “claims more than Rs 1 crore may be got verified in a time-bound manner”.
The “credit specifically excluded under Section 17 (5) of the CGST Act is not eligible to be carried forward”. Under the section, ITC is not available for motor vehicles and other conveyance, food and beverages, outdoor catering, membership of a club and travel benefits, among others, unless these are used as input for further supply. Similarly, the law prohibits claiming ITC for works contract not used for further supplies, goods used for personal consumption and goods stolen or lost. For instance, an official said, some taxpayers had claimed credit for education cess and mobile towers, which were not allowed under GST.
The GST collection for August came in at Rs 90,669 crore as on Tuesday, even as only 55% of the eligible registrants paid the taxes.With the data for the two months tallying closely, the GST revenue base is getting stabilised. Even as refunds to exporters and transitional credit in respect of the central excise and service tax paid in the pre-GST period will impact the net receipts a bit, the collections could be positively impacted when the remaining taxpayers also pay taxes, along with 10.24 assessees who have opted for the composition scheme. The taxes are being paid along with summarised GSTR 3B returns, while taxpayers have been given the option to file the detailed returns later.