Many say they may end up losing input tax credit if vendors do not supply invoices
Many companies could face stress on their working capital owing to a Goods and Services Tax (GST) regulation which could lead to hundreds of crores stuck in input tax credit claims.
A government regulation that disallows companies to avail input tax credit if vendor invoices are not uploaded on the GST network is creating problems for companies, said people in the know. According to the GST law, invoices have to be uploaded on the GST IT network for every transaction for it to be complete and eligible for tax credits.
Companies are claiming that since the regulation does not specify the time period of this calculation, it is creating a situation where some companies are likely to end up losing input tax credit if the vendor has not supplied an invoice.
“Restrictions on input tax credits in case of invoices that have not been uploaded by the supplier to 20% of the eligible credits appear to be an anti-evasion measure driven by revenue considerations. However, this means that businesses would need to establish a real time reconciliation mechanism to avoid working capital blockages,” said MS Mani, partner, Deloitte India.
The last date for claiming the input tax credit is October 20, said industry trackers. Many companies are claiming that they won’t be able to reconcile the statements as many vendors are not able to give the invoices.
Many companies are also asking the government to extend the date for claiming input tax credit as it could lapse after the due date. “The government can extend the date or give a clarification around this since the problem has intensified due to the slow IT platform of the GST,” said a tax consultant.
“This is an unilateral amendment wherein the credit is restricted on the basis of suppliers uploading without giving a chance to the taxpayer to add to details which suppliers have not reported. This will be applicable to all the taxpayers,” said ManojMalpani, senior advisor with Bizsolindia Services.
