NEW DELHI: The Centre’s revenue will not go down by transitional credit claims of Rs 65,000 crore, the finance ministry clarified in a statement on Friday. Following a number of reports of possible hit on government revenue, the finance ministry dispelled the concerns. A finance ministry statement pointed out that more than 4.6 million businesses have paid taxes to the tune of Rs 95,000 crore in July. Transitional credit means carry forward of closing balance of tax credit from earlier indirect tax regime to GST.
Businesses also claimed credit for past taxes paid in the form of excise and service tax worth Rs 65,000 crore. This is “not incredibly high”, the finance ministry stated since Rs 1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on June 30, 2017. The announcements and the clarifications remove ambiguities revolving around Rs 65,000 crore, which is the credit claimed by the taxpayers. “This would be used for the next return period/periods including the eligible transitional credit from the pool of Rs 1.27 lakh crore carried forward from the earlier regime,” said Abhishek A Rastogi, partner, Khaitan & Co.
The statement also noted that the credit claimed by taxpayers in the TRAN-1 form does not mean that they would have used all of this credit for payment of their output tax liability for July 2017. Also, some of the credits which are claimed in TRAN-1 form may be under litigation and therefore, it may not be available to the assessee to carry forward. The government assumes that some assessees would have committed mistake in filing the form and hence the revision of TRAN-1 by middle of October.
The GST Council has already extended by a month the date for filing TRAN-1 form till October 31. “The moot point is that the figure of Rs 95,000 crore of tax collected in August 2017 may go down as there will be available credits in the subsequent period. The only exception can happen if the tax compliances in the subsequent period are increased as a lot of the assessees have not complied the first deadline due to different issues,” said Khaitan.