The GST Act saw several amendments last year, which included changes in discharge of tax liability from the existing input tax credit (ITC) in the electronic ledger of an assessee.
The contradictory responses from the Goods and Services Tax Network (GSTN) to assessees’ queries on the unavailability of a new functionality for offsetting tax liability has raised concerns among businesses, which fear that they may be hauled up later by the tax department for non-compliance as GSTN’s advice may not have any legal standing.
The GST Act saw several amendments last year, which included changes in discharge of tax liability from the existing input tax credit (ITC) in the electronic ledger of an assessee. The Act mandated that from February 1, a taxpayer must first extinguish the integrated GST (IGST) credit to pay for liability of IGST, Central GST and state GST.
Earlier, the credit set-off rule said each liability would first be offset from credit accumulated under the same head before credit under a different category could be utilised.
What’s making the situation worse is that GSTN has provided different solutions to assessees for the same problem. FE has seen two GSTN responses on assessees queries regarding new offset functionality. In both the replies, GSTN admits that this functionality was currently not available on the portal. While in one response, it said: “We request you to wait for the same (functionality) and keep yourself updated,”; the second to a different assessee said: “please offset the liabilities as per existing utilisation principle.”
“The taxpayers are worried that GSTN responses can’t be cited as defence if the tax department comes calling as it could be construed as non-compliance,” AMRG & Associates partner Rajat Mohan said.
While the amended Act came into effect from February 1, the taxpayers have found that the functionality for new system of credit offset isn’t yet available on the GSTN — the company that runs the IT backbone for GST.
The amendments were made in an attempt to clear accumulated IGST component in government tax collection which was leading to skewed revenue share as nearly half of total collection would accrue under IGST, which took months to be apportioned. This had led to higher demand of compensation cess to states.
To rectify this, the government changed the credit offset rule and also introduced in June last year the mechanism of provisionally allocating IGST to states and centre which could be adjusted later after the final products reached the consumer. At that time, nearly Rs 1.8 lakh crore of IGST remained unallocated.
A query sent to GSTN for the story remained unanswered.