This might be a huge respite to all the companies with big claims on ITC (Input Tax Credit) mostly for pre-GST inventories. The government of India is planning to allow rectifications of the returns filed earlier by the companies as the revenue department is planning to consult the law committee on this matter.
The companies were earlier given 90 days to file the TRAN 1 form to claim the input tax credit for all the stocks and inventories that had been bought before 1st July 2017. The last to file the returns was 28th of August, 2017.
As this form was not available offline, i.e., in the physical form it created a lot of hassle for the companies to punch in details. Over and above that no provision for rectification of transactional credit claims meant that the companies might lose on the credit they could have earned.
A senior government official confirmed that the government was aware of the inability to rectify and was thus working on the same so that various entities could revise their TRAN 1 form as and when needed. The TRAN 1 form has a lot of formalities that go into, such as all the invoices and making manual filing prone to errors.
Current revenue secretary, Hasmukh Adhia commented that the decision for the revision of the filing was being looked into and the public could expect news very soon. There have been cases where various companies chose to sit and wait rather than file incorrect claims. This decision of different companies has disrupted their cash inflows and outflows for the preceding month.
Pratik Jain from PWC had to say that the clarification ideally should have been announced before the last date, i.e., 28th August. Now since there were confusions related to filings, the companies chose to wait and not file as they felt these would not be revised later. Thus a major seniority of the companies did not claim the credit they should have, for July. This has impacted their day to day working capital arrangements, he added.
Mr. Jain said that these companies would now claim the transitional credit for tax payments in August. Also, ₹ 92,283 crores of revenue collected are expected to have a significant chunk of an amount that would have otherwise been claimed as the input credit by the companies.