Revise erroneous credit claims under GST by December 27: Government to taxpayers.

The government has warned the industry 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. 

"Taxpayers who have claimed transitional credit erroneously are advised to avail of the opportunity to revise Form TRAN-1by December 27, 2017 and ensure that only correct and bonafide credit is availed in transition, failing which the tax administration would be constrained to initiate audit and enforcement action against the identified units," said a finance ministry statement on Tuesday. 

The government has already ordered an analysis of the transitional credit taken by top 100 taxpayers in each jurisdiction. The central government's GST collections have been muted, and one reason for the same is high input tax credit claimed for pre-GST regimes. The Centre's revenue on account of GST in July, August, September, and October added up toRs 58,556 crore. 

"It has been noted that some taxpayers have availed 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 adding that some of these high transitional credits may have a bonafide explanation or may be a case of bonafide mistake. 

It has been noted that high transitional credit has been claimed in many cases for which perhaps no bonafide explanation exists. "Analysis to identify such units is underway. Such behaviour leads to breach of trust between the taxpayer and the tax-administration, which is the bed-rock of self-assessment regime in GST," it said. 

A tax payer can file Form TRAN-1and avail input tax credit on the basis of closing balance of the input tax credit declared in the last return under the pre-GST regime. 

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. Tax experts see closer scrutiny of credit claims by authorities in the coming months. 

"Quantum of opening credit claimed has been a concern for the government," said Pratik Jain, leader-indirect tax, PwC. It is therefore nudging businesses to carefully look at their claims and revise it if needed, he said.