Ledger system soon to check excess GST credit
The Central Board of Indirect Taxes and Customs (CBIC) is likely to introduce a mechanism to track reverse charge liability of businesses under the Goods and Services Tax (GST) framework to improve compliance, and ensure that excess input tax credit (ITC) is not availed by them, official sources said.
According to the sources, the CBIC and the Goods and Services Tax Network (GSTN) are working on creating an “Input Tax Credit (ITC) ledger” to track the quantum of ITC availed by businesses accurately. The ledger is expected to be operational by the GSTN in October or November.
Under the GST framework, certain businesses are required to pay tax through the reverse charge mechanism (RCM), meaning the recipient of goods or services is responsible for paying the tax instead of the supplier. This approach helps extend GST coverage to various unorganised sectors (which act as suppliers) and ensures the taxation of imported services when suppliers are located outside India.
