The changes drawn in the GST law under the finance bill 2022 can bring the cash inflow to the businesses and make the provision for the taxpayers to be accurate with their Input tax credit report when they file the returns.
The amendments asked in the Union GST act sections concerning Input tax credit have an intention to blocked these credits unless the suppliers remit their share of taxes. And the provisional ITC could be ended, some limitations would be applied to claim the ITC.
For example, the ITC from the enrolled assessee might be blocked for the mentioned duration as will be the credits from any current assessee who were unable to pay their dues. The aim of the amendments was to gauge the tax leakage and horrible businesses from wrongly claiming of ITC were approved by the GST official in the former year.
The tax practitioners on any failure are to precisely report the ITC under GST and that renders towards the demand notches from the council despite the companies are not in the condition to ensure that their suppliers furnish the tax on time.
Ending the compliance of the provisional ITC plan renders the burden on the businesses to precisely report the ITC every month. More and more ITC would point towards the demand notices and fines while cash flows could get hit by the Suboptimal Input tax credit.
The system of 2 way communication between the supplier and the recipient is to assure about the similarity of the corresponding returns is also being missed out.
The deletion of the given provision relevant to the mismatching of the returns would provide the strength to the causes taken by the council in the issues prior to several judicial and quasi-judicial forums relating to ITC that GST is a self-assessment tax compliance and thus the assessee has been liable for the availed tax. Pressing the point the council mentioned that the assessee will now be required to be diligent during submitting the returns.
