Excess ITC inadvertently claimed can’t escape penalty

Excess ITC inadvertently claimed can’t escape penalty
Several taxpayers who have admitted to invalid credit entries in their GST return forms made earlier, and have subsequently corrected their claims continue to receive notices from the tax department asking for interest payments. One such notice seen by FE has been served to a firm that claimed over Rs 1 crore of excess credit in September 2017. However, it rectified the same in March this year and wrote to the tax department in August mentioning the chain of events.


The tax department in its notice has invoked the GST Act, which says that a taxable person claiming undue ITC would have to pay interest on such excess claim. Experts said in the earlier regime, if a taxpayer admitted to his mistake and reversed the claim, there was no penalty.

“Some of the GST law provisions are quite draconian at times, one of which is a mandatory clause for payment of interest even in case the taxpayer has claimed excess credit by clerical error for which neither any rectification is permitted nor any suomotu intimation to tax authorities is of any help. This provision needs a fresh look and policymakers need to correct the provisions by clarifying that interest would be applicable only when such credit is utilised for payment of taxes,” Rajat Mohan, partner at AMRG & Associates, said.

Another business said if an extra digit is added by mistake to the ITC claim and the same is submitted in the return, there is no recourse against imposition of penalty. While this forces assessees to be meticulous in filing returns, it has also pushed many assessees to seek professional help for the same.




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