Transition input credit unlikely to impact July GST collection

The government today rejected the claim that the  Rs 65,000 crore claimed as transition credit under the Goods and Services Tax (GST) in July would hit the income of the government during the month.

It clarified that the amount claimed as transition input tax credit for the month of July is just a balance of credit and it does not necessarily means all of this would have been used for payment of tax liability in July.

The government has collected Rs 95,000 crore as GST in July, but due to input tax claims of Rs 65,000, there are speculation that the tax collection would be much lower than expected raising concern that the government may not be able to achieve the targeted revenue collection in the current financial year.

It further says that Rs 95,000 crore is the amount actually paid in cash other than availing credit.  

The government also clarified that Rs 65,000 crore transition credit claimed is not incredibly high since Rs.1.27 lakh crore of credit of Central Excise and Service Tax was lying as closing balance as on 30 June, 2017.

"Of course, some of these credits may not be admissible under GST regime, for example the credits, which are blocked under Section 17 (5) of CGST Act or which are not covered under the definition of GST.  Also, some of the credits, which are claimed in TRANS 1 form may be under litigation and, therefore, it may not be available to the assesse to carry forward or utilisation.  It is from this angle that CBEC is examining the transition credits, which are claimed by the assessees in TRANS 1 form in certain cases," says a finance ministry release.

TRANS 1 is the form to be submitted by registered persons under GST, registered/ unregistered under old regime to claim input credit on tax paid on stocks leftover on 1 July 2017.