New Delhi, Sep 22 (IANS): The Rs 65,000 crore claimed as transitional credit under GST by businesses so far is not "incredibly high" and will not burn a hole in the revenue collections of the government, as the amount will be used up over subsequent months and not in one go, the Finance Ministry said on Friday.

The government's clarification came after it was revealed that traders had claimed Rs 65,000 crore as transitional credit, which could hit the revenue collections under GST. The government had collected Rs 95,000 crore as GST for July with 64 per cent compliance.

"There are lot of speculations in the media about the credit of Rs 65,000 crore claimed by taxpayers in respect of central excise and service tax in the pre-Goods and Services Tax (GST) period. Some people are under the impression that because of Rs 65,000 crore claimed as transition credit, the income of the government this month has plummeted. It may be clarified that this is far from the truth," the Finance Ministry said in a statement.

"Rs 65,000 crore is the credit claimed by the taxpayers in the TRANS 1 form as their balance of credit. It does not mean that they would have used all of this credit for payment of their output tax liability for the month of July," it said.

The ministry said that the amount of Rs 95,000 crore, which was received as GST for the month of July, is the amount actually paid in cash other than availing credit.

"Also, this figure of transitional credit claimed is also not incredibly high, since Rs 1.27 lakh crore of credit of central excise and service tax was lying as closing balance as on June 30, as per department's record," Finance Ministry stated.

According to media reports, the Central Board of Excise and Customs (CBEC) was stumped having received the massive transitional credit claims and thus had written to chief commissioners across the country to check the veracity of such claims of over Rs 1 crore. 

"Of course, some of these credits may not be admissible under GST regime, for example the credits, which are blocked under Central GST Act or which are not covered under the definition of GST. Also, some of the credits, which are claimed in TRAN 1 form may be under litigation and, therefore, it may not be available to the assessee to carry forward or utilisation.

"It is from this angle that CBEC is examining the transition credits, which are claimed by the assessees in TRAN 1 form in certain cases," the ministry said.

It said that it was possible that some assessees would have committed mistake in filing TRAN 1 form of admissible credit as it does not rule out ineligible claims "due to mistake or confusion".

"It has, therefore, been decided to provide facility for revision of TRAN 1 by the GST Council. Assessees are requested to revise their TRAN 1 form before October 31, so that they themselves can remove the error," it said.