Claim ITC in GST on Old Stock

(GST Form TRANS–I : To Be Filed On Or Before 31^st Oct, 2017)

Cascading of taxes, means ‘tax on tax’. Under the old system of taxation, credit of taxes being levied by Central Government is not available as set-off for payment of taxes levied by State Governments, and vice versa. Input Tax Credit means reducing the taxes paid on inputs from taxes to be paid on output. When any supply of services or goods are supplied to a taxable person, the GST charged is known as Input Tax. During pre-GST era, cross-credit of VAT against service tax/excise or vice versa was not allowed.

Input tax credit (ITC) is a mechanism to avoid cascading of taxes. Input tax credit (ITC) is one of the key features of GST Goods and Services Tax. One of the most important features of the GST system is that the entire supply chain would be subject to GST to be levied by Central and State Government concurrently. As the tax charged by the Central or the State Governments would be part of the same tax regime, the credit of tax paid at every stage would be available as set-off for payment of tax at every subsequent stage.

Transition Provisions under GST :

GST is a multi-stage value added tax on consumption of goods or services or both. As GST seeks to consolidate multiple taxes into one, it is very essential to have transitional provisions to ensure that the transition to the GST regime is very smooth and hassle-free and no ITC (Input Tax Credit)/benefits earned in the existing regime are lost.

The transition provisions can be categorised under three heads:

A. Relating to Input Tax Credit

B. Continuance of existing procedures such as job work

C. All claims (pending as well as future) pertaining to existing laws filed before, on or after the appointed day

T R A N S – I

How to file : Stock details

Previous year i.e. from 1^st of July 2016 to 30^th of June 2017

(Input Tax claim on stock – to be filed on or before 31^st Oct. 2017)

(A) To claim previously paid VAT/Central Excise/Service Tax

If already filing Returns of State VAT/Central Excise/Service Tax.

To show and carry balance input/mod-vat in Return as on 30th June, 2017.

(B) If registered under State VAT but not under Central Excise.

May claim entire payment of Central Excise, on closing stock of 30-06-2017, subject to submission of excise invoices, but such excise invoices should not be prior to 01-07-2016.

(C) Raw material taxable and Finished Goods Exempt under VAT Act, but now in GST Finished Goods are taxable.

Closing stock of 30-06-2017, subject to submission of invoices, but such input, invoices should not be prior to 01-07-2016 of finished/semi-finished/raw material – VAT – Central Excise.

(D) Central Excise paid stock from 1st July, 2016 to 30th June, 2017

Central Excise not separately shown on invoice. However, goods are excisable, if GST rate of goods is less than 18% then 40% credit of total input of excise of stock, if GST rate of goods is in excess of 18% then 60% credit of input of Central Excise.

On Central Sale of the above goods credit will reduce to half of the mentioned figures.

This benefit may be claimed within a period of 6 months beginning from 1st July 2017.

This credit is not available to manufacturers.

NOTE – INPUT CREDIT MUST BE PASSED ON TO CONSUMERS.

(E) 01-04-2015 to 30-06-2017 i.e. assessment year 2015-16, 2016-17 and 2017-18 of the VAT regime.

Details of Forms C/F/H/E-1/E-2 filed/to be filed with complete details for future claims. Otherwise for the mentioned form not filed input credit will be detained as applicable. Otherwise on submission of form refund is allowable.

(Author can be reached at GstGuruJi@gmail.com