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Quantum of Input Tax Credit on stock of goods held on appointed day: 

When invoice of supplier showing tax paid is available:

Following category of registered persons are covered here:

1.   Person who is not liable to register under earlier laws

2.   Person who was engaged in manufacture of exempted goods

3.   Registered importer

Excise Duty State VAT
A taxable person who was not eligible to take Cenvat credit but is now under GST can take Cenvat credit of excise duty which was paid on stock with him, if he has invoices and other documents evidencing payment of excise duty.

As per section 140(3) of CGST Act & SGST Act he must submit stock statement within 90 days.

A taxable person who was no earlier registered under state vat but is now under GST can take Input tax credit on state vat paid on stock with him, if he has invoices and other documents evidencing payment of state vat.

As per section 140(3) of SGST Act he has to submit stock statement within 90 days.

Note: Duty paying documents which are older than 12 months are not eligible for Input tax credit.
When invoice of supplier showing tax paid is NOT available:

Even when duty paid documents is not available Rule 1(4) of transitional provisions Rules enable availing input tax credit.

Conditions:

1.      Scheme is available for 6 Months.

2.      Goods should not be unconditionally exempted under excise or state vat laws.

3.      Details of stock as on 30.06.2017 should be submitted in GST TRANS-1 within 90 days.

4.      Every month registered person shall submit details of supplies of such goods in GST TRANS-2 for 6 months.

5.      Amount will be credited to his electronic ledger in form GST PMT-2, only after paying GST to government.

6.      Benefit of such credit will be passed on to recipient in form of reduced prices (Refer Anti-Profiteering topic in this blog)

Applicable rates of CGST or IGST Central Excise State VAT, where tax Is payable at first point of their sale and subsequent sale are not subject to state VAT (Eg: VAT payable based on MRP basis)
If CGST rate is 9% or above [i.e IGST rate 18% or above] Input tax credit of 60% of CGST payable on such goods OR 30% of IGST payable on such goods. Input tax credit of 60% of CGST payable on such goods OR 30% of IGST payable on such goods.

 

If CGST rate is below 9% [i.e IGST rate below 18%]

 

 

 

Input tax credit of 40% of CGST payable on such goods OR 20% of IGST payable on such goods.

 

Input tax credit of 40% of CGST payable on such goods OR 20% of IGST payable on such goods.

 

  

 Anti-profiteering measures:

Section 171(1) of CGST Act reads as Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.

Section 171(2) of CGST Act reads The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

Declaration to be made under clause (c) of sub-section (11) of section 142

Every person to whom the provision of clause (c) of sub-section (11) of section 142 applies, shall within a period of ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1 furnishing the proportion of supply on which VAT or service tax has been paid before the appointed day but the supply is made after the appointed day, and the ITC admissible thereon.

Declaration of stock held by a principal and agent

Every person to whom the provisions of section 141 or sub-section (14) of section 142 apply shall, within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, specifying therein, the stock of the inputs, semi-finished goods or finished goods, as applicable, held by him on the appointed day.

Details of goods sent on approval basis

Every person having sent goods on approval under the existing law and to whom sub-section (12) of section 142 applies shall, within ninety days of the appointed day, submit details of such goods sent on approval in FORM GST TRAN-1.

Recovery of credit wrongly availed

The amount credited under sub-rule (3) of rule 1 may be verified and proceedings under section 73 or section 74 shall be initiated in respect of any credit wrongly availed, whether wholly or partly.

For any suggestions Author can be reached on bhinang.tejani@gmail.com or whatsapp on 9898054244

Author Bio

Qualification: CA in Practice
Company: K Parekh Associates
Location: Surat, Gujarat, IN
Member Since: 06 Jul 2017 | Total Posts: 3
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