Finance Ministry Confirms No Maximum GST Liability

Last Updated at: Jul 06, 2021
GST liability

GST registration and filing can be confusing because of the constant changes being brought to the system. Many of us trust what we hear from authorities blindly because we think of them as experts. So, what happens when the authorities step out of line?

There has been talk about people being asked to pay maximum GST liability in cash by the authorities. The Finance Ministry has put out this fire through an announcement made on Saturday. Let’s see what the commotion was all about.

The Issue

It was reported that people had received phone calls as well as WhatsApp, or normal messages asking them to pay their maximum GST liability in cash and as soon as possible. 

Maximum GST liability is the highest amount you could be liable for without making deductions like input tax credit (ITC). ITC is the tax paid by an entity on a purchase and it can be used to set off the tax liability on sales made by it. While there are many limitations to using ITC, it still helps in reducing the amount of tax that one needs to pay.

 So, when people were asked to pay that in cash, there was confusion and concern.

Meeting the Targets of the Financial Year

When these authorities were questioned about it, the authorities had one common answer: ‘To meet the target for GST collection for this financial year’.

Despite the pandemic, the government has received over Rs. 1 lakh crore in GST for the past five months, which is a great number. For the last three months, the GST collected crossed Rs.1.1 lakh crore consecutively. This is a clear indication that our economy is recovering from the hit it took during the pandemic.

While that is good news, it is not fair to ask people to pay up their maximum GST liability in cash just to meet the revenue collection targets. And asking people through channels like WhatsApp or phone calls is unacceptable. 

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Clarification by the Finance Ministry

This issue was finally cleared when the Finance Ministry made an announcement on 20 March 2021 (Saturday). 

It was confirmed that people can use input tax credits (ITC) to set off their tax liability for the month of March. Use of ITC will be subject to the limitations as given in GST rules. 

It was also clarified that neither the Central Board of Indirect Taxes and Customs (CBIC) nor the government had given instruction or powers to any authority to make such informal communications to collect the maximum GST liability in cash. 

How to Avoid these Confusions

Things like this can be frustrating and misleading. The first rule you need to remember to avoid falling prey to such messages is to be aware of the mode of communication. If the officials contact you and ask you to pay through unofficial means of communication, don’t act on it immediately. Do some basic research or ask the officials to contact you only through official channels.

But all of these can be a hassle. Registering and filing for GST is a complicated process as it is and confusions like this make it more difficult. The best way is to get professional help for filing your GST returns. Our team at Vakilsearch can do it for you.

Vakilsearch has a steady stream of clients for whom we do GST registration and filing. Since we are constantly involved in GST filing and have a great network of legal experts, we are always up to date with all the rules and regulations of GST. No new update escapes us and we have better resources to check if any information circulated is true or false. 

This way, you don’t have to break your head to figure things out. Once you opt for our GST filing service, you can forget about it. We will keep track of your due dates, ask you for all the required documents. And, we will file for GST returns correctly and on time. Our team will stay in touch with you and keep you updated on all the latest information and answer any questions that you may have about GST filing.

You can get our GST filing service by visiting this page.