Delay in input tax credit claims leading to losses: Survey

Eighty three per cent of enterprises have not been able to optimise Input Tax Credit (ITC) claims correctly, as per a survey conducted by ClearTax.

The survey that sampled 1,200 enterprises across the country was aimed at finding the pain points of availing input tax credit without any delay.

It is a strong indicator of the hiccoughs in optimising ITC claims and filing GST returns that are affecting profitability in a significant way. These trends have affected large enterprises significantly.

A multinational company faced a total loss of Rs 850 crore due to suboptimal ITC management which includes Rs 50 crore of ITC not filed and Rs 800 crore of interest loss on delayed filing by vendors.

Mid-sized enterprises also faced similar issues and reported losses between Rs 15 and Rs 20 crore.

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The study revealed that almost a third of companies find the process of ITC claims extremely laborious and cumbersome.

“It points towards the inefficiencies in the return filing journey of an average enterprise. 40 per cent of the GSTINs file quarterly returns which also delays ITC,” a ClearTax statement said.

As many as 30 per cent of the respondents stated that small vendors not filing invoices was another major reason for the inefficiency in the ITC optimisation process.

The survey found that 10 per cent of total eligible ITC claims gets held up due to delay in the filing by vendors. According to the survey, three in four enterprises were emphasising proactive vendor management to avoid delayed or suboptimal ITC claims.

Over 80 per cent of large enterprises now intend to hold payments of non-compliant vendors and follow up with them at least once a month.

“A large cement firm has started holding the GST amount during vendor payments until the vendor uploads invoices and it reflects in GSTR-2A,” it said.