The government has come out with an estimate that valid transitional credit claims of taxpayers in July -- the first month of GST -- are just Rs 12,000 crore and not Rs 65,000 crore as previously claimed.
As much as Rs 65,000 crore out of the about Rs 95,000 crore tax collections in July had been claimed as transitional credit by taxpayers, but a close scrutiny has brought down the valid claims to Rs 12,000 crore, a finance ministry official said.
The Goods and Services Tax (GST) regime, which kicked in on July 1, allows tax credit on stock purchased during the previous tax regime. This facility is available only up to 6 months from the date of GST rollout.
The high credit claim prompted the Central Board of Excise and Customs (CBEC), the body that deals with formulation and implementation of policy concerning the levy and collection of indirect taxes, to verify GST transitional credit claims of over Rs 1 crore each made by 162 entities.
"Tax authorities are only verifying transition credit claim. They are not going after any taxpayer," the official said.
No credit on education cess, telecom towers, as claimed by some, is allowed, he said while explaining the figure.
Earlier in the day, the finance ministry issued a statement to allay concerns about high transitional credit claims, saying the Centre's revenue kitty will not go down because of these claims.
Over 46 lakh businesses have paid taxes to the tune of Rs 95,000 crore in July.
However, businesses also claimed credit for the past taxes paid in the form of excise and service tax worth Rs 65,000 crore.
This figure of transition credit claimed is also "not incredibly high" since Rs 1.27 lakh crore of credit of central excise and service tax was lying as closing balance as on June 30, 2017, the statement said.
It clarified that the credit claimed by taxpayers in the TRAN-1 form does not mean they would have used all of this credit for payment of their output tax liability for July 2017. Also, some of the credits that are claimed in TRAN- 1 form may be under litigation and therefore, it may not be available to the assessee to carry forward or for utilisation.
"It is from this angle that the CBEC is examining the transition credits, which are claimed by assessees in TRAN-1 form in certain cases," the ministry stated.
In the transitional credit form TRAN-1 filed by taxpayers along with their maiden returns for July, businesses have claimed a credit of over Rs 65,000 crore for excise, service tax or VAT paid before GST was implemented from July 1.
The statement said some assessees would have committed a mistake in filing the form and hence, the government will allow facility of revision of TRAN-1 by the middle of October.
The GST Council has already extended by a month the date for filing TRAN-1 form till October 31.
According to the ministry, Rs 95,000 crore collected as July GST are the amount actually paid in cash other than availing credit.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.