Tax officials may examine high usage of ITC to set off GST liability

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Concerned over a decline in GST revenues, the issue of high ITC was flagged at the meeting of the Group of Ministers (GoM) which was set up by the GST Council to look into the reasons for revenue shortfall being faced by a large number of states as availing ITC ideally should not result in loss of revenue but there could be possibility of misuse of the provision by unscrupulous businesses by generating fake invoices just to claim tax credit.

According to sources, during the meeting of the GoM, it was pointed out that as much as 80 per cent of the total GST liability is being settled by ITC and only 20 per cent is deposited as cash.

Currently there is a time gap between ITC claim and matching them with the taxes paid by suppliers. Hence there is a possibility of ITC being claimed on the basis of fake invoices,” a source said.

The revenue department would now analyse the large number of ITC claims to find out if they are genuine or based on fake invoices and take corrective action, sources said.

Read more at : https://economictimes.indiatimes.com/news/economy/finance/tax-officials-may-examine-high-usage-of-itc-to-set-off-gst-liability/articleshow/67707693.cms