Indore: Buyer must ensure that seller is also GST compliant, says Expert

Indore (Madhya Pradesh): Chartered accountant Navneet Garg said that CBIC has added a new condition which will make it difficult to draw ITC. The merchant buying the goods will now have to ensure that the trader from whom he is buying the goods has paid his taxes on time and has also filed returns on time. If this does not happen, now it will become even more difficult to take Input Tax Credit (ITC).

Garg was addressing a seminar organised by CA Indore branch of ICAI as a keynote speaker. He threw light on the changes made by the Central Board of Indirect Taxes (CBSE) in the conditions of ITC that have been made applicable from October 1.

The conditions are: 1. A trader who has just got GST registration (new registration) will not get ITC exemption on the goods purchased. 2. ITC will not be available on goods purchased from a supplier who has defaulted in payment of tax. 3. If the supplier has shown higher tax in GSTR 1 and less tax in GSTR 3B, then ITC will not be available on the goods purchased from the supplier. 4. If the supplier has taken ITC in excess of the prescribed limit, then ITC will not be available on the goods purchased from him. 5. Even if the supplier has contravened section 49(12) on utilization of ITC, the goods purchased will not be eligible for exemption of ITC. The department has not notified the sixth condition yet.

However, it is a matter of relief that the board has not yet made rules for the above five conditions.

ITC provisions are becoming complicated in GST

Kirti Joshi, Regional Council Member, said that looking at the kind of changes that are coming, especially related to ITC, it seems that the government does not want to give ITC. It is necessary to stop those who are involved in tax evasion, but it is wrong to harass everyone by bringing such provisions. These provisions should be reconsidered.

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