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GST has wrapped multiple taxes into its arm. It is very important to have rules in place to ensure that a registered business smoothly transitions to GST. There are mainly three types of GST Transition provisions that are discussed later in this article briefly.
Table of Contents
There are following three types of GST Transitions-
Let’s discuss each of these cases in brief-
There are many provisions that are only made for the smooth transitions of the input tax credit available under VAT, Excise Duty or Service Tax to GST. Registered dealers opting for the composition scheme are not eligible to carry forward ITC available in any of the previous regime. Following are the cases where the Input tax credit GST transitions provisions are applicable:
The closing balance of input tax credit as per the last return filed before GST would be getting credit in the GST regime. The credit is only available only if the return for the last few months i.e. 6 months like from January 2017 to June 2017 were filed in the previous regime. The previous regime like VAT, excise and service tax returns had been filed.
FORM TRAN 1 is to be filed by the 27th December to carry forward the Input tax credit. Addition to this, TRAN 1 can be rectified only once.
Before GST, only that part of the input tax paid that is paid on capital goods could be available as credit. For example- if ITC on capital goods purchased in the year 2016-17 is Rs 20000 then 50% i.e. Rs 10000 could be claimed as the ITC in the same year and the balance Rs10000 could be claimed in next year.
In those cases, there could be some amount that is known to be unutilized credit available on the capital goods. This credit is carried forward to GST Transition by just filling the details in Form TRAN 1.
A manufacturer or a service provider that has goods lying in the closing stock, in which duty has been already paid could also take the credit for the same. The dealer has to provide the list of such goods on the GST portal[1]. The dealer should have to invoice in their hand for claiming the credit. Also, invoices should be less than 1 year old.
In case, manufacturer or service providers who do not have an invoice or any evidence of payment of the duty. They cannot claim it with the credit under the GST transition regime. Only those traders can claim the credit in case invoice is unavailable that falls under the following-
Every person who is –
But to enjoy under Input tax credit under GST Transition that following conditions must be fulfilled-
The input tax credit is claim by the manufacturer or dealer for those goods received after the appointed day, the tax on which he has already paid the tax under the previous laws. Therefore, the above-discussed credits would only be allowed if the invoicing or taxpaying documents kept in the accounts of such person within 1st August 2017. A 30 days extension may be granted by the competent authority on the grounds of sufficient cause for delay.
Any appeals or claims pending for the amount of refund on the due amount of CENVAT credit, tax or any interest paid before 1st July shall be disposed of according to the previous laws. Any amount found to be payable under the previous tax regime law will be treated as the arrears of GST and will be recovered according to the GST Provisions under GST transition.
No tax is going to pay on inputs, semi-finished goods that are removed for job work for carrying certain processes and then returned on or after 1st July.
What are the conditions where no tax is payable?
The following are the conditions where no tax will be paid-
The taxes are not applicable if the finished goods were removed before1st July for carrying certain processes and then are returned within 6 months from 1st July. An input tax credit is recovered if the goods are not returned on time i.e. 6 months.
Transition provisions are applied in cases where the service was received prior to 1st July and the invoices received on or after 1st July. ISD (Input Service Distribution) is only eligible tax credit under GST.
When the registered dealer paying tax under composition scheme previously but is a normal taxpayer under GST could claim credits of inputs available as on 1st July by satisfying certain conditions-
Hence, the above discussed are the areas where a user can transit its Input tax credit, revenues or another leftover under GST act in the terms of GST Transitions.
GST Transition is one of the appreciated areas introduced by GST. As, GST Transition gives the opportunity to a user to transit their Input tax credit, revenues, and others leftovers to their account by filling a simple form. We have shared the complete knowledge of GST Transition with you to know more about it or for GST Registration kindly contact us.
Read our article:A Sigh Of Relief For MSMEs: GST Exemption Limit Increased By The Council
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