Missing column in GSTR 3B form leaves input claims a shaky edifice
Companies have hundreds of crores of rupees in input tax credit but they may still need to pay the goods and services tax (GST) for July and August in full, potentially disrupting working capital flows. That’s because the relevant GSTR 3B form doesn’t provide any column for carry-forward of credit from the earlier regime of central excise duty, service tax and valuea-dded tax. Companies will thus be unable to adjust the tax paid against their liability. Experts said this does not seem to be the government’s intention and it must clarify this quickly as industry is counting on this adjustment and would now need funds to pay GST in full. Companies such as those in auto sector have hundreds of crores of rupees in such credit. “This will cause substantial cash flow problems for the taxpayers unless the assessees are allowed to utilise transitional credit on a provisional basis,” said Bipin Sapra, partner, EY. The GST Council, the apex decision-making body for the new tax regime, had approved a liberal transition framework to ensure smooth sailing when making the switch.
Any entity can claim credit of service tax or VAT paid in the previous regime against GST liability. If it does not have proof of payment of tax, it can take advantage of the deemed benefit norm. The key benefit of GST is that there is no cascading of tax through seamless availability of input tax credit. Companies have to file form GSTR 3B, a summarised return, for July by August 20. That for August has to be filed by September 20.
The format of this return includes a summary of details of outward supplies, inward supplies liable to reverse charges and input tax credit eligible on various procurements made during the month. But the form does not provide space for carry-forward of credit from the earlier regime. This essentially implies that the GST liability for the months of July and August will have to be settled in cash.
CALL FOR CLARITY
There is a mechanism for claiming credit from the previous regime but that has not been integrated with the GST filing process. This transitional credit will be available only after filing of GSTR TRAN-1 on the GSTN common portal. Even if a taxpayer files TRAN-1 prior to August 20 (that is, prior to filing GSTR 3B for July), the credits would not be allowed to be migrated in GST as there is no specific table for disclosing opening credit in GSTR 3B.
TRAN-1 and TRAN-2 are the forms for transition of input tax credit while GSTR 3B is the form in which actual GST payable is filed. To be sure, input tax credit can be availed of after September in all instances. Tax experts are seeking a clarification or a change in the form. “It cannot be the intention of the government to deny the benefit of input credit,” said Pratik Jain, leader, indirect taxes, PwC India. “It could lead to huge cashflow issues for industry, running into thousands of crores. A clarification or amendment in Form(GSTR) 3B is needed urgently.”