Income Tax Department is seeking information on past transaction details from banks and financial institutions. Through past transaction details, tax department will be able to determine Goods and Services Tax (GST) calculations.
Officials who have the knowledge regarding this matter said that the tax department feels that it is essential to provide transitional credit details claimed by banks and financial institution in the month of July under the Goods and Services Tax (GST) Regime.
Deputy Commissioners and Assistant Commissioners (Central Taxes) have been asked to issue data in five specific areas either through e-mail or hard copy. These data consisting past sales tax records, the summary of closing balance of tax (June month), details of the nature of credits, details of vendor invoices made before 1st July, description of payments made to vendors and service providers after the implementation of GST, i.e., 1st July. Transitional credit means a tax credit made on sales tax, excise, and value-added tax (VAT) on pre- GST stock before 1st July.
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Tax officials suspected that some companies are misusing the new regime and have filed false returns for claiming high transitional credits from the government. The government had collected a total of Rs 95,000 crore as GST in the month of July, out of them Rs 65,000 crore was claimed by the companies as refunds or transitional credit.
The companies have complained to the government that they are not getting enough time to furnish the transaction details. The Finance Head of the major multinational bank said, “We had received the notice a few days back and haven’t been able to submit it due to the enormity of information sought.” By adding that, “A tax officer called me today (on Friday) and asked me to submit the required documents by Saturday.”
Head of multinational bank cited the tax experts by saying that the transitional credit claimed by the financial institutions was very high. “I tried to explain that transitional credit has to be viewed in the context of our monthly tax outgo. But we will be submitting the required information nevertheless by Saturday”, said the finance head. Tax officials said that Many of the companies still haven’t submitted their transaction details to the government, which can be done via Transform.
“Since the date for filing the Tran-1 form has been extended to October 31, it would be prudent to commence any inquiries thereafter,” said MS Mani, partner, Deloitte India. “It is advisable to consider the data submitted in the Tran-1 form and then inquire into those cases where any anomalies are detected instead of subjecting the entire data submitted by erstwhile service taxpayers to any form of scrutiny.”
Previously this week on Wednesday, A senior member of the Central Board of Excise and Customs (CBEC) sent a letter to all tax commissioners, a Letter has enhanced the burden of all tax officials.
According to the letter “In view of the urgency of the matter kindly have the verification of transitional credit completed on priority (in respect of the list of taxpayers forwarded on 11/9/2017) and a report on the same to be sent to this office not later than 15/10/2017.” Under the letter it is also mentioned, Tax officials are required to provide information details of transitional credit claims. It is anticipated to be submitted by 3rd November.
Previously, in the month of September, the CBEC sent a list to Joint commissioners and commissioner which includes state-wise details of the company’s, transition credit amount and the GST number. Tax officials began calling to firms regarding those, whose transitional credit was very high.
