Protecting Your ITC: Understanding Rule 86A of CGST Rules

Rule 86A of CGST Rules, 2017: How to protect your input tax credit from being blocked Introduction Rule 86A of the CGST Rules, 2017, plays a crucial role in protecting the input tax credit (ITC) of taxpayers. It empowers the Commissioner or an authorized officer to block the ITC if it has been fraudulently availed or is ineligible. In this article, we will delve into the circumstances under which ITC can be blocked, the safeguards and legal judgments favoring taxpayers, and the importance ..

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Tax authorities investigate shell firms for fraudulent ITC claims

According to a report officials have prepared a detailed list of entities and their beneficiaries that allegedly created multiple shell firms to represent fake transactions and the tax authorities will target such entities during the next two months. Tax authorities are planning stricter actions on companies that allegedly created multiple shell firms to represent fake transactions without any underlying goods and services for availing input tax credit (ITC), Business..

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GST officers issuing notices to insurers for availing ITC on fake invoices

GST officers have started sending notices to over a dozen insurance companies for availing input tax credit on the basis of bogus invoices in the last six years, sources said. These insurers have availed input tax credit (ITC) on the basis of invoices issued by intermediaries for providing services like advertising and marketing, although no such services were actually provided.   As per the GST law, such availment of the ITC is not permissible as the supply of said service di..

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Section 16 of CGST Act 2017: Eligibility and conditions for taking ITC

What does Section 16 say? Section 16 of CGST ACT 2017 talks about Input Tax Credit mechanism, which allow Taxpayers to offset the GST Input Tax Credit with the GST Output Tax Liability. This helps in avoiding the cascading effect of taxes and promote seamless flow of credit through the entire supply chain.   The reference from the GST Law has been described as below (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the man..

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ITC eligibility of CSR expenditure under GST and Finance Bill, 2023

The simple meaning of CSR is charity. The companies undertake CSR activities either by way of donating money to charitable organisation, or by providing goods or services free of cost. Upto March 2014, the companies were undertaking CSR activities as per their internal polices. However, from 1 April 2014, the section 135 of Companies Act, 2013 made mandatory for certain categories of companies to undertake CSR. Also, the activities which should be undertaken as part of CSR are listed in Sched..

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Supreme Court Ruling on Input Tax Credit

The Supreme Court of India has issued a ruling that has significant implications for businesses claiming input tax credit (ITC) under the Value Added Tax (VAT) regime. The court has overturned a Karnataka High Court order that allowed dealers to claim ITC by producing invoices and cheque payments, ruling that dealers must prove the genuineness of the transaction and the actual physical movement of goods to claim ITC. The Supreme Court stated that the occurrence of the actual transaction and t..

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Clarification: Composition taxpayers cannot issue taxable invoice or collect GST from customers and claim ITC

A recent tweet by the Central Board of Indirect Taxes & Customs (CBIC), stated that, As per the Goods and Services Tax (GST) law, a person registered as a composition taxpayer cannot issue a taxable invoice and can neither collect GST from his customers nor can claim the input tax credit on his purchases. The fact as to whether a person is a regular taxpayer or a composition taxpayer can be verified on the GST portal under the "Search Taxpayer" -> "Search by GSTIN..

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Reversal of ITC on non-payment to vendors within 180 days

Background Under the GST law, the Input tax credit [ITC] can be availed by registered person on goods/services used in course of business subject to satisfaction of conditions and restrictions set out therein. Accordingly such a person can avail the ITC on the inwards supplies of goods/services, to extent used in course of business of making taxable supplies/zero-rated supplies[exports or supplies to SEZ unit or developer]. A recipient of goods/services who receives goods and services on s..

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Penalty on issuance of fake invoice and wrong ITC claim

This article describes the Fake GST Invoice and measures to address them. Also it helps to understand the applicability of GST Penalty on Fake Invoicing or ITC claim. It will also helpful to understand penalty imposition of Penalty u/s 73(5) and 74(5) or Section 122 of GST Act 2017. Introduction In recent years, many fraudulent cases of claiming input tax credit (ITC) are brought to the notice of GST authorities. It is seen that registered suppliers under GST follow a tendency to obtain..

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Uttarakhand businessman sentenced to 5 years for ITC fraud of Rs. 17 crore

A businessman in Uttarakhand's Haridwar district has been sentenced to five years in jail for an input tax credit fraud of ₹17 crore. The state's Goods and Services Tax department said this was the first conviction for GST evasion in Uttarakhand. Businessman Surendra Singh has been convicted by the chief judicial magistrate Mukesh Chandra Arya under the Uttarakhand Goods and Services Tax Act, 2017 for producing fake bills to claim input tax credit to the tune of ₹17.01 crore. Singh ..

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Clause by clause analysis of ITC disclosures in Annual Returns - Part 5

Introduction The key foundation based on which the GST law is structured is that the tax is to be levied and collected only on the value-added portion. In India, we have a method by which the tax suffered at an earlier point of time is allowed to be reduced from the tax payable on the subsequent supplies made. This avoids tax on tax at each stage of the supply chain. The statement of objectives at the time of GST bill being introduced in 2014 clearly provided that the intention was to remove ..

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Computation of ITC updated by GSTN based on returns filed by suppliers upto 30th Nov 2022

GSTN has updated the below instructions on GST Portal Annual return in Form GSTR-9 once filed cannot be revised. Computation of ITC has been made based on GSTR-1/IFF/GSTR-5 filed by your corresponding suppliers upto November 30, 2022. GSTR-1/IFF/GSTR-5 filed after the updation date will be covered in the next updation. ..

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Man held for fraudulently claiming refund of more than Rs 27 crore from fake ITC

A 26-year-old man has been arrested by the Maharashtra Goods and Services Tax (GST) department for fraudulently claiming a refund of more than Rs 27 crore through a fake input tax credit involving at least two "non-genuine" firms, an official said on Wednesday. The GST department carried out a special operation against the errant companies availing fake input tax credit and claiming fraudulent GST refunds. During the investigation, it was found that the arrested accused is one of..

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Section 17(5) of the CGST Act, 2017

ITC cannot be available in respect of the following (Section 17(5) of the CGST Act, 2017) MVF(fobhcl)MTW=2CNPGS MOTOR VEHICLES As per Section 2(76) of CGST Act, 2017 Motor vehicle shall have the same meaning as assigned to it in clause (28) of section 2 of the Motor Vehicles Act, 1988. As per Section 2(28) of the Motor Vehicles Act, 1988 Motor Vehicles or Vehicles means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted theret..

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Govt mulls star rating system under GST to curb illegal ITC

Aiming to decriminalise offences under GST, the government is working on a provision to raise the threshold limit for launching prosecution and lower charges for compounding of offence, an official said on 28 September. According to the current law, the amount of Goods and Services Tax (GST) evasion or misuse of input tax credit is more than ₹5 crore for launching prosecution against offenders.   "We are working on making the provision under GST Act for prosecution more s..

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GSTN issues advisory on re-opening of TRAN forms to claim transitional ITC

Background The Hon'ble Supreme Court of India vide order dated 22.07.2022 in the matter of Union of India vs. M/s. Filco Trade Centre Pvt. Ltd., SLP(C) No. 32709-32710/2018 have allowed the aggrieved taxpayers to file Form TRAN-1/TRAN-2 to claim the transitional Input Tax Credit (ITC). In compliance of the Hon'ble court's directive, the facility for filing TRAN-1/ TRAN-2 or revising the earlier filed TRAN-1/TRAN-2 on the GST common portal by aggrieved taxpayers, is now available o..

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Benefit of extended time limit to avail ITC till 30th Nov is applicable for FY 2021-2022 as well

As per notification 18/2022 on the 28th of September 2022, the notification mentions that the 1st of October 2022 shall be the date from when Sections 100 to 114 shall be implemented, except Sections 110(c) and 111 of the Finance Act 2022. The major update that industry and tax professionals were waiting for falls under Sections 100, 102, and 103. These amend Sections 16(4), 34 and 37 of the Central Goods and Services Tax (CGST) Act.   Earlier, the taxpayers could reconcile and m..

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CGST Bhiwandi Commissionerate arrests Rs. 132 crore Fake Invoice racket mastermind

Officers of CGST Bhiwandi Commissionerate in Mumbai Zone have busted a fake invoice racket involving issuance of invoices amounting to Rs 132 crore and availing/passing on Input Tax credit of Rs 23 crore. Officers of CGST Bhiwandi Commissionerate arrested one person on 9.09.22 who has been sent to judicial custody till 23.09.22.  Anti-evasion wing of CGST Bhiwandi Commsissionerate was investigating various fake firms namely M/s Mectech Steel Trading Private Limited M/s UGSK Trader, M/s W..

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GSTN enabled changes in Table 4 of GSTR-3B related to the claim of ITC

The Government vide Notification No. 14/2022 -Central Tax dated 05th July, 2022 notified few changes in Table 4 of Form GSTR-3B requiring taxpayers to report information on ITC correctly availed, reversal thereof and declaring ineligible ITC in Table 4 of GSTR-3B. The notified changes in Table 4 of GSTR-3B have now been implemented on the GST Portal. ..

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ITC reversal in case of supplier found bogus or non existent

Even after completing 5 years, one gets the feeling that GST is still an evolving law. Lot many changes are taking place with almost every GST council meeting. There are still some burning issues which are yet to be ironed out and decisively settled. These burning issues have been a bone of contention between department and the tax payers. One such burning issue is non existence of the supplier in departmental enquiry or verification. In other words the supplier who passed on the input tax cr..

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