GST Returns

ITC Provisions for Fresh Registrations under GST

ITC Provisions

In this article we will talk about ITC provisions relating to dealers who were not registered under any of the previous laws like Central Excise Act, 1944, Central Sales Tax Act, 1956, Value Added Tax, etc. but have applied for GST registration after it was implemented on 1st July 2018.

Under old laws, registration thresholds were different, under Excise laws this limit was set at 1.5 crores, and under VAT laws[1] this limit was stated at 9 lakhs Rupees. Any person whose turnover exceeded these thresholds were required to get registered under the respective laws and pay taxes under them. Under GST, this threshold limit was earlier set at 20 lakh rupees. As GST replaced all these old laws, many suppliers who were not covered under the old laws are now obligated to be registered. After such registration, they gain the right to claim Input Tax Credit on the inputs held by them on the appointed day i.e. 1st July 2017.

Taxpayers who are covered under this category

  • Any taxpayer not liable to be registered under any old Act.
  • A manufacturer whose goods were exempted from taxes under excise laws.
  • Any service provider, who was providing non-taxable services under previous laws.
  • Work contractor enjoying abatement.
  • A first or a second stage dealer.
  • A registered importer.
  • A depot of a manufacturer.

As per ITC Provisions, there are two situations relating to taxpayers who were not registered under any old laws but are now registered under GST who wish to claim Input Tax Credit which they were unable to do under old laws;

  1. If proof of payment of tax or duty is available and
  2. If proof of payment of tax or duty is not available.

Every taxpayer willing to claim such input tax credit must make a declaration of the same in FORM TRAN-01 within 90 days from the appointed day i.e. 1st July 2017. This declaration is to be made irrespective of the fact whether they were registered under any old Act or not, or if they are in possession of any payment proof of taxes/duty paid. Now let’s discuss both these situations and conditions related in detail.

A common Procedure to be Followed in Both These Cases

Any taxpayer who was not registered under any previous law and who wants to claim any input credit on any stock held on 1st July 2017 will first have to provide a notification for the same in Form TRAN-01. Following preconditions are required to be fulfilled for claiming this input credit:

  • Such inputs must be used for the production or supply of taxable goods or services.
  • A taxpayer claiming for such credit must be registered under GST and is eligible to claim Input Tax Credit.
  • He must not be registered under the GST composition scheme.
  • He must be in possession of a document evidencing delivery of such goods.
  • Input credit can only be claimed for inward supplies purchased in the last 1 year directly preceding the appointed day i.e. 1st July 2017.

ITC provisions: Proof of payment of tax/duty is available

In this case, if the taxpayer is in possession of proof of payment of tax/duty, then as per ITC Provisions he can avail 100% input credit held on inputs held in stock, in semi-finished or finished goods. And no additional procedures are to be followed. Only the common procedure stated above, which requires submission of notification in FORM TRAN-1 are to be complied with.

ITC provisions: Proof of payment of tax/duty is not available

If the registered taxpayer is not in possession of proof of payment of tax/duty, then he cannot avail the full credit for the taxes paid on inputs held in stock on 1st July 2017. Following is the percentage of input credit that can be availed in the given situations:

In case of CGST/SGST-

If CGST is imposed at 9% or more – 60% of Input Credit

If CGST is imposed at less than 9% – 40% of Input Credit

In case of IGST-

If IGST is imposed at 18% or more – 30% of Input Credit

If IGST is imposed at less than 18% – 20% of Input Credit

The validity of this scheme-

This scheme can only be availed for six tax periods from the appointed date.

Additional Conditions to be Satisfied

  • These goods were not unconditionally exempt from the whole of the duty of excise.
  • These goods were not nil rated.
  • The registered taxpayer must be in possession of documents for procurement of these goods.
  • The registered person who is availing this scheme must furnish the details of stock held by him at the end of each of such tax period this scheme is valid for.
  • The stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.


Amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the common portal. In case of any other query related to GST or ITC provisions, contact Enterslice.

Read our article: Govt. Allows Taxpayers to File GSTR-3B Returns in a Staggered Manner

Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

Business Plan Consultant

Trending Posted

Our Awards Our Awards

Top 100 Companies in Asia - Red Herring
Top 100 Companies in Asia - Red Herring

Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten,, Xiaomi and YouTube would change the way we live and work.

Top 25 in India - Consultants Review

Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.

Top 25 in India - Consultants Review

In the news