A majority of the tax collections post the first month of GST roll out in July have been transitional credit by taxpayers. This has prompted the apex indirect taxes body the Central Board of Excise and Customs to order a scrutiny of all cases above Rs 1 crore.
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 six months from the date of GST rollout.
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 the GST was important.
“The statement received from GST Network revealed that so far, the registered persons have claimed over Rs 65,000 crore as CGST transitional credit. The possibility of claiming the ineligible credit due to mistake or confusion cannot be ruled out. Accordingly, it is desired that the claims of credit of more than Rs 1 crore may be got verified in a time-bound manner,” Mahender Singh, Special Secretary and Member, CBEC, has written in a letter to Chief Commissioners across the country.