Taxpayers listen up! Revise erroneous credit claims under GST by Dec 27

The finance ministry has warned taxpayers to amend any inflated input tax credit claimed in lieu of taxes paid prior to roll out of goods and services tax (GST), failing which it will initiate audit and enforcement action. 

It has been noted that some taxpayers have availed of extraordinarily high transitional credit of CGST which is neither commensurate with the trend of input tax credit of the industry nor as maintained by the taxpayer himself in the past, it said in a statement.The ministry said that some of these high transitional credits may have a bona fide explanation or may be a case of bona fide mistake.

"However, it has been noted that high transitional credit has been claimed in many cases for which perhaps no bona fide explanation exists. Analysis to identify such units is underway," it added.

Here are the key things you should know 

1. The govt has asked taxpayers who have claimed transitional credit "erroneously" under the GST to file revised Form Tran-1 by December 27 or face enforcement action.The finance ministry today asked taxpayers who have claimed transitional credit "erroneously" under the GST to file revised Form Tran-1 by December 27 or face enforcement action.

2.GST TRAN-1 forms are to be filed to claim credit on taxes paid before the implementation of the new indirect tax regime. Taxpayers could use these credits to pay their Central GST liability.

3.The government’s analysis to identify taxpayers who have wrongfully claimed credits is underway, the finance ministry said in the same release.

“Such behaviour leads to breach of trust between the taxpayer and the tax-administration, which is the bedrock of self-assessment regime in GST,” it said .

4. The government has already ordered an analysis of the transitional credit taken by top 100 taxpayers in each jurisdiction. The Centre's revenue on account of GST in July, August, September, and October added up toRs 58,556 crore. 

5. The GST rolled out from July 1. The last date for filing Form TRAN-1 is December 27, 2017, which can also be revised till then.The credit claimed by the taxpayers in the TRAN 1 form stood at Rs 65,000 crore, the government had said in September.