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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 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.
Table of Contents
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;
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.
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:
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.
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.
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.
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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.
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