Tax Dept to Scrutinize GST credits availed by IT companies

In a bid to check whether the IT and ITes companies of India are evading their GST liabilities, the indirect tax department has started an investigation into the GST credit claims and liabilities of such companies.

The results of preliminary investigations confirm that many tech companies have been showing wrong (increased) capital expenditure ever since the implementation of GST in a hope to get more credit on taxes.

According to a tax expert, “There could be cases where firms have planned their capex well in advance to ensure that the procurements are done after the GST roll out in a perfectly legitimate manner.”

Information from the sources tells that, there are some other telecoms, banking and IT companies which had held investment due to the GST and later on played technically to counter the GST taxes.

As many as 100 companies are in the loop for GST evasion and the tax department is all ready to issue a notice to them for some explanation in this regard. Also, the commissioner had sent some of those a letter seeking explanation regarding such transactions.

To prove that taking ineligible input tax credit was the main intention of these companies would be very hard for the government. As the expert stated that, “It is debatable whether an IT firm had deliberately placed an order before GST was rolled out and took delivery only to take credit of such an investment.”

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