Gujarat: Clarity needed on tax credit as GST return filing deadline nears


As per the provisions under GST Act, any delay in payment of tax or filing of the return attracts 18 per cent interest per annum

Many businessmen have not yet started filing annual returns under Goods and Services Tax (GST) for the fiscal 2017-18 because of lack of clarity, say tax experts. If businessmen try to play safe, they will end up paying hefty taxes, which may not be needed in the end, or else they may fail in compliance, fear experts.

As per the provisions under GST Act, any delay in payment of tax or filing of the return attracts 18 per cent interest per annum. In case, they overdraw their tax credit, an annual interest rate of 24 per cent is being levied. These provisions are proving to be harmful to honest taxpayers, say experts.

Giving an example, tax advocate Axat Vyas said that if a trader ‘X’ buys goods worth Rs 100 from two different traders and the goods are subjected to 12 per cent GST, then the buyer has to pay Rs 12 as GST to each of the sellers. He is now entitled to a tax credit of Rs 24. He then sells the same goods at Rs 300, his total tax payout is Rs 36. Since he is entitled to a tax credit of Rs 24, he is supposed to pay only additional Rs 12 as tax. However, if one of the seller files returns, but the second seller does not file return on time then the GST system would show that trader X is entitled to a credit of Rs 12 and not Rs 24. Trader X would be then charged 24 per cent interest for overdrawing credit. Whether he has to pay the interest over the difference amount of Rs 12 or total claim or Rs 24 is still not clear.

Monish Bhalla, founder and director of Taxolegal said the mismatch in return filing is reasonable for a couple of months. Since this is an annual return for 2017-18, if there is a fear of discrepancy, it is a serious matter. Sunil Keswani, secretary of Tax Advocate Association of Gujarat (TAAG) said that such concerns are prevalent among the business community. “GST does not have any provision to amend the entries, as was the case in VAT. If there is a dispute between the buyer and the seller and the seller does not mention the tax paid, then the buyer cannot claim the credit. We expect the new government to make changes,” said Keswani.

“The meeting of GST Council in December saw in principle agreement for amending the said provision. However, the amendment has to pass in Parliament. With elections going on, it could not be before the Monsoon session of Parliament that it could be passed. All the state legislative assemblies need to pass an amendment. Only then it can come into force,” said Vyas.


Hyderabad High Court ordered Megha Engineering and Infrastructure Ltd to pay an interest of Rs 30 lakh for claiming wrong input tax

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