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According to recent development, the Finance Ministry clarified on Saturday, 20th March 2021, that it had not issued any instructions to officials asking taxpayers to pay the maximum GST liability in cash.
There have been reports that some GST officers are making unauthorised phone calls, WhatsApp messages, and text messages to taxpayers. They are requesting them to pay the maximum tax liability in cash. According to the media reports, this was done to ensure that the GST revenue collection targets for the current fiscal year 2020-21 were met. According to a Finance Ministry statement, neither the government nor the Central Board of Indirect Taxes and Customs (CBIC) has issued any such directions to their field formations.
According to a PTI report, the Finance Ministry said on Saturday that GST taxpayers could use the Input Tax Credit (ITC) available in their electronic credit ledger to discharge their GST dues for March 2021. The CBIC also reiterated the same through a separate statement.
The GST collections surpassed Rs.1 lakh crore for the fifth month in a row in February 2021, with the mop-up recorded at Rs.1.13 lakh crore. According to the GST Act and Rules, there are only two ways to pay GST: one by adjusting tax dues with accrued ITC and the other by paying in ‘cash.’ Under the GST, most of them make payments digitally.
The accumulated ITC is with the Government, so officials maybe pressurising taxpayers to pay in cash. As a result, when tax liabilities are adjusted with the ITC, the Government does not receive any extra revenue. Suppose a taxpayer pays in cash rather than adjusting his liabilities with ITC. In that case, the GST department receives extra revenue in the Government’s books, even if only for a short time.
Suppose the ITC is used as per the law. In that case, payment by adjusting with accumulated ITC is also the payment of GST. However, the GST department’s software is intended to target taxpayers who pay large GST sums through ITC rather than cash for scrutiny.
For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in
Annapoorna, popularly known as Anna, is an aspiring Chartered Accountant with a flair for GST. She spends most of her day Singing hymns to the tune of jee-es-tee! Well, not most of her day, just now and then.
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