Importers can claim a tax credit for additional taxes paid under the I-T lens

Importers can claim a tax credit for additional taxes paid under the I-T lens Companies that were forced to pay higher indirect taxes on particular imports have been scrutinized again by the taxman in order to claim input tax credit for the additional amount paid as fines previously. The Department of Goods and Services Tax (DGST) has begun distributing notices to importers in order for them to claim a tax credit for the excess GST paid. According to those familiar with the situation, present regulations allow importers to determine the value of their imports and pay GST and other levies on that basis. In most circumstances, importers submit valuation information via the bill of entry, which is a legal document filed upon the arrival of the imported goods. In the last two months, the tax department launched an investigation into the bill of entry and uncovered anomalies in the valuation of several imports. Importers were subsequently requested to pay additional taxes as a penalty for products imported in 2018/19. The question today is whether importers can claim input tax credits for higher taxes paid in previous years. Input tax credit is essentially taxes paid on raw materials under the GST structure (or input services). This can be used to offset future GST obligations. As an example, suppose a corporation imported items worth Rs 100 and paid Rs 18 in taxes. The tax authority determined that the products should have been priced at Rs 150 and that additional taxes of up to Rs 9 should have been paid. The corporation may be able to claim input tax credit for the Rs 18 in taxes paid in the first instalment. However, several businesses have added Rs 9 to their input tax credit, and the tax authority has issued notices in such cases. Hundreds of similar notices, according to sources, have been sent to importers in the last several weeks. According to a show cause notice issued by the DGST to an importer, the department stated that the company was not eligible to obtain input tax credit for the additional tax paid on the import or supply of products. According to tax specialists, the deadline for claiming input tax credit under the GST structure is generating the problems. If the companies do not claim it during the next few months, they will not be eligible for the credit. According to legal experts, this could have an impact on their working capital, and some of them may seek to fight it in court.