GST Transitional Claims

GST Transitional Claims of Over Rs 1 Cr to be Scrutinised

While tax collections in July were Rs 95,000 cr, transitional credit claims are Rs 65,000 cr

As much as Rs 65,000 crore out of the nearly Rs 95,000 crore tax collections in July -the first month of GST -have been claimed as transitional credit by taxpayers, prompting 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 from 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.

Central Board of Excise and Customs (CBEC)

The Central Board of Excise and Customs (CBEC), the body which deals with formulation and implementation of policy concerning the levy and collection of indirect taxes, in a letter dated September 11 has asked tax officials to verify GST transitional credit claims of over `1 crore. 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 implemented from July 1.

As per the GST law, carry forward of transitional credit is permitted only when such credit is permissible under the law.

“The possibility of claiming ineligible credit due to mistake or confusion cannot be ruled out… It is de sired that the claims of ITC (input tax credit) of more than Rs 1 crore may be verified in a time-bound manner,“ the CBEC emphasised. It asked the chief commissioners to send a report to the CBEC by September 20 on the claims made by these companies.

CBEC

To ensure only eligible credit is carried forward in the GST regime, the CBEC has asked field offices to match the credit claimed with closing balance in returns filed under the earlier law. They are also required to check if the credit is eligible under the GST laws.

Till last week, as many as 70 % of 59.57 lakh taxpayers had filed returns for July, amounting to maiden revenue of Rs 95,000 crore under the GST regime.

However, out of this, the input tax credit (ITC) data for Central GST (CGST) claimed in TRAN-1 has shown that registered businesses have claimed over Rs 65,000 crore as transitional credit.

The government, in late August, had come out with form TRAN-1for businesses to claim credit for taxes paid on transition stock.

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Unlisted companies on black money radar

Startups, unlisted companies on black money radar, probe on 200 entities

New Startups and unlisted auxiliaries of some real Indian organizations and multinationals find themselves in the crosshairs of the income tax department for raising funds through preference shares in excess of what it considers the fair market value.

Startup Registration

The examination arm of the income tax department has sent the notification to around 200 entities under Section 56(2)(vii)(b) of the Income Tax Act, 1961, in August, two individuals with coordinate information of the issue told ET.

In cases where deals have been done at valuations higher than the fair value arrived at by tax authorities, queries have been raised

Startup India

Fair market value is evaluated by the tax department in light of past exchanges and the record of comparable organizations. The Section is frequently connected when it’s presumed that organizations might be issuing shares at a premium over the reasonable incentive for washing unaccounted money.

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GST breather for Railways

GST breather for Railways; no tax on transfer of goods for self-consumption

No exemption would be available if the dealing is classified as a decent


In a welcome break for the Indian Railways, no goods and services tax (GST) are going to be applicable on inter- or intra-state transfer of equipment/materials (without transfer of title) for self-consumption. This is often a serious relief for the railways, with annual internal consumption calculable to be concerning Rs 20,000 crore.
In a notification to field units on July 11, the railways said,

Transfer of goods/stores from one state/Union Territory (UT) associateother|to a different} state/UT is taken into account to be an exempted activity.

The notification cited section 7 (1) of the CGST Act 2017, along side clause 1(b) the Schedule II of the CGST Act, 2017 for the said exemption.
Experts supported this, claiming that according to the GST Act, transfer of products by any government — Centre or state — or government agency to an analogous government unit, is exempt from the taxation.

Transfer of such equipment (without transfer of title) qualifies as a service as per the CGST Act.

Railways claiming transfer of products as a service.

But here’s the catch: GST consultants said the railways claiming transfer of products as a service could lead on to disputes.

The offer dealings between 2 interstate branches might not essentially be accepted as a transfer of right in goods (defined as ‘service’), and a lot of likely to be treated because of the transfer of products.

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