By ADITYA RAJ DAS / NEW DELHI

The All India Tax Advocates Forum (AITAF) has urged the Finance Minister to restore the procedural arrangement for set-off of the Input Tax Credit (ITC), that existed prior to the amendment of Section 49A of the GST Act, for the benefit of the small time manufacturers and traders.

“The current amendment to the section 49A of the GST Act is deeply denting the working capital of the manufacturers and traders thereby causing manifold financial strain to them,” the AITAF President M K Gandhi said in a statement issued here.

It is being noticed that in the case of CGST even though the ITC is available and could have been utilised fully, the new system will not allow the same for the set -off, as left over ITC of IGST shall be first utilized. Gandhi- a noted tax consultant said.

Since CGST credit is not being utilised at all this is putting an additional burden on the amount of SGST to be paid as CGST credit cannot be utilised to pay SGST, Gandhi explained.

Further it is being noticed that as a result of the said amendment, there can arise a possibility of indefinite carry forward of unutilized ITC of SGST or CGST, the refund of which unutilized ITC is also not permitted under the GST Act.

“So this affects the working capital of the business as cash flow will increase from month to month due to the new rules of set-off,” Gandhi said.

This will greatly impact the business of the manufacturers and traders, the AITAF Chief said urging the Centre to restore the previous procedural arrangement of ITC utilisation. End