A government regulation that disallows companies to take input tax credit if vendor invoices are not uploaded on the GST network is creating problems for the companies, said people in the know. According to the GST law, invoices have to be uploaded on the GST IT network for every transaction for it to be complete and eligible for tax credits.
Companies are claiming that since the rule does not specify the time period of this calculation, it is creating a situation where some companies may end up losing input tax credit if the vendor has not supplied an invoice.
“Restrictions on input tax credits in case of invoices that have not been uploaded by the supplier to 20% of the eligible credits appear to be an anti-evasion measure driven by revenue considerations. However, this means that businesses would need to establish a real time reconciliation mechanism to avoid working capital blockages," said MS Mani, Partner, Deloitte India.
Tax experts are also complaining that the credit is restricted on the basis of supplier uploading without giving change to the taxpayer to add to details which suppliers have not reported and this could lead to problems during reconciliation. The last date for claiming the input tax credit is October 20, said industry trackers. Many companies are claiming that they would not be able to reconcile the statements as many vendors are not able to give the invoices.
Many companies are also asking the government to extend the date for claiming input tax credit as it could lapse after the due date. “The governance can extend the date or give a clarification around this since this problem is intensified due to the slow IT platform of the GST,” said a tax expert.
“This is unilateral amendment wherein the credit is restricted on the basis of supplier uploading without giving change to the taxpayer to add to details which suppliers have not report. This will be applicable to all the taxpayers,” said Manoj Malpani, senior advisor with Bizsolindia Services
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12 Comments on this Story
aaaa bbbb407 days ago
Companies do not consider this as an issue. This can be resolved and working capital can be easily managed.
The last date for taking credit i.e. 20th Oct is for the purchases made in FY 2018 19.
On a maximum side purchase Invoices for FY 2018 19 will be received by May 2019. Also the vendors would file their GST return by then.
It takes just one day with the help of software to reconcile both the data. So by May 2019 you have the list of vendors who have not uploaded their invoices.
You still have 5 months to followup with the vendors and ask them to upload their invoices. Alternatively companies hold their payments upto the GST amount. This ensures that no fund are block due to GST regulation . This is how practically things are worked out by companies.
Venkitaraman Govindarajan408 days ago
When suppliers fail to upload the invoices leading to a company not being able to get GST credit, the company can recover the GST credit amount from the supplier payment. As a Nation all of us, the entire business community should fall in line on compliance issues. Just because we can’t control our supplier, we can’t blame GST & Govt. Earlier we ended up in paying difference in tax, when we fail to collect C / D forms? Did we blame Govts at that time? Come on. The tax experts & media should not mislead public through such reports. Our trade practices must change & discipline must set in and become order of the day
Dilip 408 days ago
Forget 5 trillion economy, even 2 trillion would be distant target. All because of Jaitley''s ill-digested notions of GST.