Transition Credit via Transition Forms – A complete Guide

“The possibility of claiming ineligible credit due to mistake or confusion cannot be ruled out… Accordingly, it is desired that the claims of ITC credit of more than Rs 1 crore may be got verified in a time-bound manner,” CBEC member Mahender Singh wrote to chief GST commissioners recently.

With the statement once again transitional credit has become the talk of town, even before this it had been a matter of discussion because of confusion midst taxpayers and the restriction of non revision of the forms once filed. The decision made by the GST council to provide one chance to revise the transitional form, if wrongly filed, has been breathe a sigh of relief for the tax payers especially for those who had made a mistake in filing the forms

Transitional Credit is very important for migrating taxpayer; with correct filing of the transaction forms the tax payer would be able to claim the credits correctly. With this article I would place a point wise and detailed discussion on the various fields of transaction forms with a motive to help you claim your credit properly.

Detailed and point wise analysis of TRAN-1 is as under:-

Particular Remarks
a. Registered Person under Excise /Service Tax

(Column 5A)

• Such person shall be eligible to claim credit of unutilised balance of credit appearing in respective returns as on 30th June 2017.

• Unutilized balance of Credit of KKC shall not be carry forward as transitional credit. There is no restriction of credit of KKC by any ACT however it has been restricted by Rule 117.

Here a question arises as to whether rules can supersede the Act.

b. Statutory Forms Received

(Column 5B)

• Detail of all the Forms C/F/H/I received for sale from 1st April 2015 to 30th June 2107 shall be furnished.
c. Registered Person under State VAT

(Column 5C)

• Such person shall be eligible to claim credit of unutilised balance of credit appearing in the return as on 30th June 2017.

• However credits on turnover, on which Form C/F /H/I are pending, shall be reduced from the transitional credit and subsequently on receiving the Forms credit restricted shall be claimed as refund under the VAT law.

• If the credits on turnover on which Form C/F /H/I are pending exceeds the balance credits in return of state VAT such amount has to be paid in Cash as per the form of TRAN-1

• However, as per my understanding by reading 140(1) of the state acts it is clear that credits available under VAT could only be restricted, there would be no requirement of payment in Cash.

• Whereas practically it has been observed that returns are not allowed to be filed without payment of such amount.

d. Un availed credit of Excise and VAT on Capital Goods

(Column 6A & 6B)

• The un-availed credit on capital goods not appearing the return but available in the books of accounts under the previous act (Excise / VAT) shall be available under this Act.
e. Person not registered under Excise /service but taxing paying document in Hand (Excisable Invoice)

(Column 7A)

• Such person shall be eligible to claim credit of excise duty / CVD and SAD paid on the stock in hand as on 30 June 2017 as evident from the tax paying document in hand (invoice, Bill of entry etc)

• However credits would not be available in stock in hand ageing more than 1 year.

f. Person neither registered under Excise /service Act nor has a taxing paying document in Hand

(Excise Invoice)

(Column 7A)

• Such person shall be allowed a proportionate credit as CGST credit on sale of such goods under GST regime in their credit ledger in the following manner.

• If tax rate on the product is 18% or more – Credit shall be allowed at the rate of 60% of CGST in case of intra state Supply and 30% of IGST in case of Inter-state Supply.

• If tax rate on the product is less than 18% – Credit shall be allowed at the rate of 40% of CGST in case of intra state Supply and 20% of IGST in case of Inter-state Supply.

• This credit shall be allowed only if the stock of such goods is sold upto 31st December.

• Credit shall be available only after sale and payment of tax on such stock and Reporting of monthly sales in Form TRAN-2.

g. Tax Already paid but invoice recorded within 30 days

(Column 7B)

• Input (goods) in transit and Input service received after the appointed day but the tax (Excise and VAT /Service Tax) has been already paid shall be available as transitional credit if invoice has been recorded in books within 30days of the appointed day.
h. Person not registered under State VAT but taxpaying document in Hand

(Column 7C)

 

• Such shall also be eligible to credit of VAT paid on the stock as on 30 June 2017 as evident from the tax paying document in hand (invoice etc).

• However credits would not be available in stock ageing more than 1 year.

i. Goods on which VAT was on single Point and document paying tax is not in hand

(Column 7D)

• If tax rate on the product is 18% or more – Credit shall be allowed at the rate of 60% of SGST in case of intra state Supply and 30% of IGST in case of Inter-state Supply.

• If tax rate on the product is less than 18% – Credit shall be allowed at the rate of 40% of SGST in case of intra state Supply and 20% of IGST in case of Inter-state Supply.

• This credit shall be allowed only if the stock of such goods is sold upto 31st December.

• Credit shall be available only after sale and payment of tax on such stock and Reporting of monthly sales in TRAN-2.

j. Transfer of Credit by person having centralised registration

(Column 8)

• Detail of Transfer of credit to different GSTIN on same PAN by person having central registration shall be furnished.
k. Detail of goods sent to job worker

(Column 9A)

• Detail of goods sent to Job worker shall be furnished in this column
l. Detail of goods held as Job Worker

(Column 9B)

• Detail of goods received as Job worker shall be furnished in this column by the job worker
m. Detail of Goods held as agent on behalf of principal

(Column 10A)

• Detail of Goods held as agent on behalf of principal as agent to be disclosed by agent
n. Detail of Goods sent to agent (Column 10B) • Detail of Goods sent to agent to be filled by principal
o. Detail of credit on which VAT and Service tax both are paid (works contract)

(Column 11)

• Details of Invoices on which VAT and service tax both are paid.
p. Detail of Goods sent on approval basis

(Column 12)

• Detail of goods sent on approval basis sent not earlier than 6 Months.

Credits in Column No 5 and Column 8 shall not be available if return of previous 6 months under the existing law has not been filed by the assesee.

TRAN- 3 Credit Transfer Document

a. Issued as a Manufacturer • Detail of Credit Transfer document issued as a Manufacturer.
b. Received as Dealer • Details of Credit transfer document received by dealer for the purpose of availing credit.

Credit transfer Document would be issued by manufacturer who was registered under Central Excise to a person not registered under excise but registered under GST.

Some essential conditions to issue CDT is as under

  1. Goods Shall be of value more than 25000/- per piece
  2. Every piece shall contain a distinct Number. E.g. Chassis number of cars.
  3. CTD document shall be serially numbered.
  4. CTD shall be issued within 30 days of appointment date.

The above discussion I believe would be helpful to completely understand the transition provision in light of the transition forms, with this those who are yet to file the transition form would be able to properly file and gain the benefit of correctly claiming their transition credits and those who have made a mistake in filing transition form would be able to correct the mistake.

Author Bio

Qualification: CA in Practice
Company: D C J & Co
Location: Delhi, New Delhi, IN
Member Since: 12 Sep 2017 | Total Posts: 3
I am Practicing Chartered Accountant, Partner in D C J & Co Chartered Accountant. I have been deliberating on various forums, trade associations and Government departments. I have been the trainer to CBEC for GST Front end and Back end application training View Full Profile

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7 responses to “A Complete Guide to filing of TRAN-1”

  1. NAGESH CHAVAN says:

    how fill tran1

  2. Kokil says:

    If any client doesn’t want to take the credit than trans form 1 is mandatory or not?

  3. Sridharan G says:

    Dear Sir,

    Under which section of TRAN1 we have to claim the service tax credit taken earlier, then reversed due to non-payment to vendor within 90 days and paid the same between 01.07.17 and 30.09.17.

  4. Manoj Kumar says:

    LOT OF THANKS, REALLY HELPFUL

  5. SHITAL SHAH says:

    sir,
    i want to transfer my VAT amount in GST. in the statutory forms there one column to show VAT % but
    in one form there are may be different tax % such as 5%,5.5%,6%,12.5%,13.5% than which VAT % to show.

  6. Ujjaval shah says:

    Thanks

  7. Vivek says:

    Very well explained

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