Telecom operators including Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio Infocomm have been served notices for exaggerated credit claims under the Goods and Services Tax, said two people familiar with the development. 

The indirect tax department has issued notices to all the major telecom companies, including tower companies, for claiming additional transitional credit for capital expenditure incurred under GST. The companies also got separate notices for adding education, Swachh Bharat and Krishi Kalyan cess to their transitional credit balances. The department suspects the companies may have claimed credit even in cases where they are not eligible, such as for capital expenditure incurred prior to July 1, 2017, when GST was introduced. 

Under current rules, service companies can seek tax credit on capital expenditure — there was no such concept for services earlier — and use them to offset their GST liability. Telecom companies had claimed input credit for capital expenditure on erecting towers, cell sites and switching equipment. 

The department alleged that telecom companies claimed credit even on capital expenditure partially incurred after GST was introduced. “In some cases, companies had completed 90% of the work but that did not reflect on their books. But 100% of the capital expenditure came on their books after July 1 as they can claim credit,” said a tax official. 

According to people aware of the matter, the department has disallowed about Rs. 4,000 crore claimed by top telecom companies. The average credit claimed by a company ranges between Rs 800 crore and Rs.1,000 crore, for which tax notices were served. 

Source: Economic Times

We have launched Single Platform on GST Compliances In India, assisting in 4 areas – 1) Migration, 2) GST Compliance, 3) Training and 4) Transition & Implementation. Click this link for any assistance.