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The government has extended to October 31 the deadline for businesses to file transitional credit claims under the Goods and Services Tax system, an official notification said.
"In exercise of the powers conferred by Rule 117 of the Central Goods and Services Tax Rules, 2017, on the recommendation of the Council, the period for submitting the declaration in Form GST TRAN-1 is extended to October 31," the Finance Ministry said in a notification issued late Thursday evening.
TRAN-1 allows traders to claim input credit from the previous indirect tax regime.
An earlier order dated September 18 said the due date for filing revised TRAN-1 was extended up to October 31 only in cases where original TRAN-1 was filed before September 28.
"The revised order clearly states that the period for submitting TRAN-1 is extended up to October 31. Given this, for the time being, taxpayers can breathe a sigh of relief," Jigar Doshi, Partner, SKP Business Consulting, told IANS.
Goods and Services Tax (GST) expert Pritam Mahure, however, said, "The details required to be filled in TRAN-1 are voluminous and festivals like Dusshera and Diwali holidays are lined up in October. It will be advisable that the taxpayers initiate TRAN-1 preparation at the earliest."
The government so far has received transitional credit claims worth a whopping Rs 65,000 crore from traders.
Stumped by the amount of claims, the government and the tax authorities have ordered Chief Commissioners across the country to check the veracity of claims of over Rs 1 crore as it does not rule out ineligible claims "due to mistake or confusion".
Listing out the key reasons for the staggering claims of transitional credit, Mahure said: "One, it could be pertaining to closing stock lying with the manufacturers and traders (such as cars and electronics lying with dealers).
"Second, in certain cases, due to invert duty structure (mainly in pharmaceutical industry), many taxpayers had substantial excise duty credit balances, which may have been claimed as transitional credits.
"Third, the government had allowed traders to avail excise duty credit on the one-year-old stocks, which was not available to them earlier."
Experts also suggested that traders should themselves review their claims, before the government initiates scrutiny and subsequent action.
"The government seems to have concerns with input tax credits claimed in TRAN-1 forms by taxpayers and thus, it is advisable that the taxpayers should immediately get these credits independently reviewed to avoid subsequent penal implications on inadvertently claimed credit," Doshi said.