Goods and Services Tax – Transition of Credits – Filing of GST TRAN 1 and 2

INDIA has put into action the biggest Indirect Tax reform since independence i.e. the past structure of indirect taxation for goods and services has been replaced by a comprehensive Goods and Services Tax (‘GST’).

With the introduction of GST Regime, a taxpayer is required to carry forward the balance of CENVAT credit / Input Tax Credit (ITC) to GST regime and adjust it against GST liability. Also, vide section 140(3) of Transitional Provisions contained in Central Goods and Services Tax Act, 2017 (‘CGST Act’), a registered person who was not liable to be registered under the existing law (say Central Excise) is entitled to take credit of eligible duties in respect of inputs and inputs contained in semi-finished/finished goods held in stock as on the appointed date (1st July 2017) subject to certain specified conditions.

Further, with respect to above transition of tax credit and as per clauses contained in Central Goods and Services Tax (CGST) Rules, 2017 (Transitional Provisions), a taxpayer would be required to submit a declaration electronically in Form GST TRAN-1 (within 90 days i.e. up to 28th September 2017) and Form GST TRAN-2 (monthly, for initial 6 months) With respect to the same, following documents/details will be required for ascertaining the amount of CENVAT credit/ITC involved in stock to be transitioned to GST and filing of Form GST TRAN-1 and 2:

TRAN-1

1) Copy of Excise and VAT Returns filed for the period ending June’17 along with backup workings.

2) Copy of Service Tax return filed for the period ending June’17 along with backup workings.

3) Reconciliation Statement of Stock as on 30.06.2017 as per Books of account vis-à-vis Physical records.

4) Summary of Statutory Forms (C Form, F Form, H Form, etc.) for the period Apr’15 to June’17

a) Details of Form received

b) Details of Form not received

5) Details of raw material/goods held in stock as on 30.06.2017 as bifurcated in following categories:

a) Where excise duty paid invoices or any other document are available

b) Where excise duty paid invoices are not available

6) Ratio of inputs required for manufacturing of finished goods (applicable to manufactures only)

7) Details of WIP/Finished Goods held in stock as on 30.06.2017 (applicable to manufactures only)

8) Details of raw material content in above WIP/finished goods held in stock as on 30.06.2017 as bifurcated in following categories (applicable to manufactures only):

a) Where excise duty paid invoices or any other document are available for raw material

b) Where excise duty paid invoices are not available for raw material

9) Details of goods sent to job-worker, if any (applicable to manufactures only)

10) Details of goods sent to Agent, if any

11) Invoice wise details of capital goods procured for which un-availed CENVAT/Input tax credit carried forward to electronic credit ledger

12) Details of transfer of CENVAT credit to each GST registration for registered person having centralized registration under existing law

TRAN-2 (not applicable to manufacturers and supplier of services)

1) HSN code wise Sale of goods made post 1st July 2017 from the stock held as on 30.06.2017 for which excise duty paid purchase invoices are not available (stock on which deemed credit is to be taken)

2) Monthly Stock statement (required for initial 6 months only indicating Opening Balance, quantity sold and Closing balance in respect of goods held in stock as on 30.06.2017.

Points of caution:

  • Taxpayer would be required to maintain records/details of stock as on 30.06.2017, separately in the books of account.
  • The details of sales made from above stock to be recorded separately or in a manner that such sales may be distinguished/identified separately from the available records.
  • The purchase invoices in respect of stock held as on 30.06.2017 and corresponding sales invoices to be identified and maintained in a separate file.
  • In case of mixed sale of goods (partially from stock as on 30.06.2017 and partially from purchases made after 30.06.2017), it is advisable to issue separate sales invoice for sales out of stock before 30.06.2017 and purchases post 30.06.2017

(Author can be reached at singhaniasourabh40@gmail.com, +91 9503831100 )

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One response to “Transition of Tax Credits to GST Regime – An overview”

  1. Vikas says:

    In case of Manufacturer, if Excise Return file for the month of June 2017 on dated 10/7/17. After filing return we have recd the Excise invoice on dated 12/7/17 and goods against invoice was taken prior to dated 30/6/17. Can we get the ITC for the invoice recd after filing Excise return under GST . Is it that once Excise Return is file for the month of JUne 2017 or Service tax return we will not get ITC incase bill recd after filing return under GST Regime. Please guide .

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