Introduction of one nation – one tax, reduction of cascading tax effects, and introduction of E-invoicing and E-way bills are some of the major achievements of GST, Bhansali said
Input tax credit (ITC) availment under the Goods and Services Tax (GST) has become quite a task today and seamless flow of credit still seems to be a distant dream even five years after the introduction of the indirect tax regime, according to Arvind Bhansali, Group Head – Indirect taxation, Reliance Industries Ltd., and Reliance Retail Ltd.
Speaking at a session ‘Input Tax credit – Industry wishlist’ at the National GST Symposium 2022 here on Friday, Bhansali said introduction of one nation – one tax, reduction of cascading tax effects, and introduction of E-invoicing and E-way bills are some of the major achievements of GST.
He, however, added that the indirect tax regime still has several bumps including challenges in seamless flow of credit, frequent tinkering of the GST law, and tightening of compliances causing hardships to genuine taxpayers.
The two-day symposium was organised by the Institute of Chartered Accountants of India (ICAI) aimed at bringing central, state tax, union territory tax officers on one platform to foster synergy, discussions, and exchange ideas.
Bhansali said earlier taxpayers need to satisfy only basic conditions like availability of tax invoice, reflection of vendor invoice details in GSTR-2B, receipt of goods/ services and filing of GST returns to avail input tax credit. He said the recent amendments to the GST Act has made the ITC eligibility conditions more stringent.
The new ITC conditions require taxpayers to ensure that their vendors have furnished invoice in GSTR-1 within prescribed time period of registration, ensure vendors are not be a continuous tax defaulter among many other conditions.
Bhansali said to avail themselves of a simple ITC, companies need to comply with so many conditions but sometimes the connectivity or the GST Network (GSTN) itself is not equipped enough to all these information.
“Eventhough I am representing a company, which has presence in 29 states and Union Territories with a robust inhouse tax system, I still need to have 200 people to ensure all these things are compliant,” he added.
Concurring with views on ITC, K Vaitheeswaran, Advocate, said, instead of enforcing compliance on suppliers the easy route of denying ITC in the hands of buyers is adopted. “It is not the job of the buyer to check whether all their suppliers have filed returns or paid tax,” Vaitheeswaran told Business Line.
Bhansali further said at the industry level there is a huge accumulation of ITC and tax officials and policy makers need to look into this aspect and ensure these blocked money are released for investments and working capital purposes.
He said earlier taxpayers had the choice of setting off the tax credit on State or Central tax (SGST/ CGST) towards integrated GST (IGST) but as per the latest amendment, it is mandatory to utilise the entire IGST available in electronic credit ledger before utilising ITC on CGST or SGST. “This is causing huge accumulation SGST balances.”
Bhansali said the new method of ITC utilisation is very stringent and the old method was more flexible.
Terming ITC as the ‘lifeline’ of GST, Vaitheeswaran said but its availment has been complicated through very stringent conditions. “If ITC is denied or restricted for any reason, it results in a cascading effect of tax and completely defeats the purpose of GST. “