- The Telangana high court has ruled that no input tax credit will be available unless GST(Goods and Services Tax) returns are filed.The court has also said that the taxpayer is liable to pay a penalty on the total liability.
- The ruling came after a company had delayed filing the GST returns.The tax authorities demanded 18% interest on the entire amount.However,the company argued that interest should only be calculated on the net tax liability after deducting input tax credit(ITC) from the total liability.
- The ruling is expected to have a significant impact on all businesses that use tax credits available on inputs and raw materials to reduce payment in cash.
- Input tax credit is the tax that a business pays on a purchase and that it can use to reduce its tax liability when it makes a sale.In other words, businesses can reduce their tax liability by claiming credit to the extent of GST paid on purchases.
- GST (Goods and Services Tax) is an indirect tax that has replaced many Central and State taxes like excise duty, VAT and service tax. It is a single comprehensive tax levied on all goods and services produced in India as well as those imported from other countries.
