Allow ITC claims even if supplier defaults in depositing GST: PHD Chamber

New Delhi: Ahead of GST Day on July 1, industry body PHD Chamber of Commerce has raised the issue of blocking input tax credit and said the buyer should be allowed to claim credit for taxes paid on inputs, even in cases when the supplier has defaulted in the tax payment.

In its representation to the GST council Secretariat, the industry chamber will also seek clarity on whether the excess credit would be refunded to dealers for Covid essential items bought prior to June 14. GST rate was cut to 5 per cent on Covid related items from 12 or 18 per cent with effect from June 14. PHD Chamber of Commerce Indirect Tax Committee Chairman Bimal Jain said a buyer pays the tax to the supplier, but if the supplier fails to deposit the tax, then the buyer cannot claim credit for taxes paid on inputs. "So if buyer's input tax credit (ITC) is blocked, it is double taxation. Then the supplier who has defaulted you are not taking any action against him, rather you are going to a genuine buyer who has paid the taxes, and you are blocking his credit. This is incorrect. This is the most burning issue, which we are going to raise before the Joint Secretary GST Council."

The Central Board of Indirect Taxes and Customs (CBIC) had on June 14 notified reduced GST rate on 18 Covid related supplies, like Remdesivir and Tocilizumab drugs as well as on medical oxygen and oxygen concentrators.