In a move to provide relief to industry, the Central Board of Indirect Taxes and Customs (CBIC) has said input tax credit accumulated on imports can now be availed through refunds.
The clarification was issued after trade flagged that input tax credit claims were being rejected by tax authorities since invoice details of the unused credit in several cases were not getting reflected in the return form – GSTR 2A – which has details of all inward supplies.
As per law, credits not reflecting in GSTR 2A cannot be claimed. CBIC had issued a circular on March 31, stating that refunds related to missing invoices will be restricted, and will be processed in cases where invoices are available.
“The circular does not in any way impact the refund of input tax credit availed on the invoices/documents relating to imports, ISD invoices, and the inward supplies liable to Reverse Charge (RCM supplies),” the Board said.
Tax experts said the move would greatly help India’s foreign exchange earners who were facing serious on ground challenges on refunds claims of unutilized input tax credit.
“The issue of rejection by lower level officers was significantly prevalent in certain jurisdictions where officers had taken a literal interpretation of the earlier circular without giving credence to the practical applicability of the same in certain scenarios,” said Abhishek Jain, tax partner at EY.
Source: indiatimes.com