GST field officers will no longer be able to block Input Tax Credit (ITC) on mere suspicion. CBIC has issued guidelines related to blocking of tax credit.
Input Tax Credit: Now GST field officers will not be able to block Input Tax Credit (ITC) on the basis of mere suspicion. CBIC (Central Board of Indirect Taxes and Customs) has issued guidelines related to block of tax credit. Under this, now the tax credit will be blocked on the basis of facts instead of mere suspicion.
CBIC has prescribed five conditions in which senior tax officers will be able to block the credit. This includes availing of credit without any invoice/valid document or availing of credit by the buyer on an invoice on which the seller has not paid GST.
Officers below the rank of Assistant Commissioner cannot take action
According to the CBIC, only the commissioner or the officer authorized by the commissioner will be allowed to block the credit. However, the commissioner will not be able to authorize any officer below the rank of assistant commissioner for this work.
Apart from this, credit can be stopped only after checking all the facts. According to the CBIC, the exercise of provisions under section 86A has to be carefully examined and the process of preventing debit of money from the Electric Credit Ledger will be done mechanically.
Section 86A of the GST (Goods and Services Tax) was introduced by the government in December 2019 and empowered the tax authorities to block the ITC available in the electronic credit ledger of a taxpayer in case of fraud. Till the beginning of last month, the tax authorities had blocked the credit of 66 thousand businessmen of Rs 14 thousand crore under this rule.
Determination of powers by credit
CBIC has said in the guidelines issued on November 2 that the decision to block it according to the amount of tax credit will be taken by officers of a fixed rank or above. The CBI has divided the powers between the Commissioners, Joint Commissioners and Assistant Commissioners on the basis of monetary limits.
Under this, the Chief Commissioner/Commissioner will have the power to block ITC above Rs 5 crore.
The power to block the credit of Rs 1-5 crore will be with the Additional Commissioner or Joint Commissioner and the power to block the credit of less than one crore will be with the Deputy Commissioner/Assistant Commissioner rank officer.
