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    Many companies in a fix as working capital may be stuck due to a GST regulation

    Synopsis

    Regulation disallows firms to take input tax credit if vendor invoices are not uploaded on the GST network. According to GST law, invoices should be uploaded on the GST IT network for every transaction for it to be eligible for tax credits.

    Many companies are also asking the government to extend the date for claiming input tax credit as it could lapse after the due date.
    MUMBAI: Many companies could face a stress on their working after a Goods and Services Tax (GST) regulation may lead to hundreds of crores stuck in input tax credit claims.

    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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    4 Comments on this Story

    Damodaran Kattuparambil395 days ago
    Before the restriction, the recipients were taking credit of the tax mentioned in the invoice, yes, 100% of it, though the underlying tax has not been credited to the Government account by the supplier, who is allowed time to do it till 10th of the following month. The present restriction says, take 20% of the tax mentioned in the invoice, even which is not credited to the Government account, by the supplier. It has to be remembered that under the pre-GST tax law, credit was allowed only if, and after, the tax is paid to the Government. The present restriction has to be seen from the revenue shoring up angle. The GST law provides for correction, deletion etc. of invoices by the recipient, and to prepare next monthly return accordingly. The GST law does not require that the invoices should be uploaded at the time of issue, though they are required to be issued within the specified period and has to be mentioned in the next monthly return.
    Ramesh Shah405 days ago
    THE GREATEST. G S T HAS BECOME A NATIONAL HEADACHES...... EVERYTHING AMBIGUOUS N NOBODY SATISFIED AS COULD NOT UNDERSTAND THE REQUIREMENTS.... ITS NOT A FIX BUT A MOUSE TRAP.....
    Dr Mahesh406 days ago
    do real time reports and get money immediately. remove all credits and exemptions.
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