S. Maheswaran. B.Sc., B.L., Superintendent of Central Tax & Central Excise, Chennai

S. MaheswaranNow the much awaited tax reform , the GST in India has completed  almost 40 days  and still implementation of the same, is yet to be streamlined in the following areas;

(a) Tax payment heads for CGST/SGST/IGST for payment of tax in cash is yet to be announced by the Govt, though the due date for payment of GST for the month of July 2017 is fixed as 20.08.2017.

(b) Online filing of Declaration in form viz., GST TRAN -1,2 for availing transitional credit available in the assessee’s account for existing assesses and for the non assesses having duty paid documents/without having duty paid documents on 30.06.2017, is yet to be made ready in GSTN portal.

(c) The assesse base is yet to be segregated between the states and centre for administration to implement the GST Act and Rules. In other words the assesses do not know whether they will be administered by Central govt or State govt and are keeping their fingers crossed till date.

In this article I would like to highlight the plight of the taxpayers who have sufficient ITC credit in their account/eligible to avail the same as on 30.06.2017, but in a fix whether to utilize the same for payment of tax for the month of July 2017 or not due to non issuance of clarification from the department.

Section 140 of the CGST Act, 2017 provides transitional ITC available as on 30.06.2017 for the registered persons by filing Transitional ITC / Stock Statement declaration in Form GST TRAN -1 [ rule 117(1), 118, 119 & 120] by the existing registrants/exempted goods manufacturers/service providers/non registrants having duty paid invoices within 90 days of appointed date or further period of 30 days after getting permission from the department.  And Form GST TRAN -2 [rule 117(4)] to be filed by the existing non registrants for the six  consecutive tax periods. who do not have duty paid documents in their possession. Till today these modules have not been activated in GSTN portal.

 As per the afore said rules, the said stock statements filed by the registered person through online will provide automatic credit of eligible ITC to the said persons in their respective electronic credit ledger (FORM GST PM-2). It will reduce their cash payments towards  tax liability which will be auto populated in the GSTR-3 Return for the respective month.

The GST TRAN -1 and 2 have not been activated till date in GSTN portal. The temporary return form GSTR-3B for the month of July 2017 does’nt contain any column to mention the transitional credit lying in the  tax payers account as on 30.06.2017. As no clarification has been issued in this regard by the department, the registered persons who are having considerable ITC in their account as on 30.06.2017 are in dilemma whether to pay the tax in cash, except to the extent of  ITC availed on receipts of goods and services during July 2017. If this happens then this will create financial burden on those existing registered persons having substantial ITC as on 30.06.2017.

 To avoid this financial hardship, it is suggested that CBEC may issue clarification in this regard and some temporary method like, filing  the declarations in Form GST TRAN-1 and 2 manually with the concerned authorities and allowing the assesses to adjust the credit claimed in the temporary return GSTR-3B may be announced. This temporary credit can be regularized once the GSTN portal is ready with declaration in Form TRAN-1 & 2. (Even if any credit is wrongly availed it can be recovered initiating proceedings under Section 73 or 74 of the afore said Act). We hope that CBEC will come up with clarification shortly.

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12 responses to “Transitional credit of ITC Vis-à-vis GSTR-3B”

  1. A N Parnaik says:

    An excellent article clearly bringing out the issues. It is heartening to note that it is from a Government official.

  2. A N Parnaik says:

    Excellent article clearly bringing out the issues. Indeed heartening to note that it is from a Government official.

  3. Manish Jain says:

    Sir, Finally what is to be done ? Should we deposit the tax liability? If yes how and when.

    Pareshaan ho gaye hum to !

    • S.Maheswaran says:

      Sir please refer Notification No.23/2017 Central Tax dated 17.08.2017 now issued extending due date of filing of GSTR-3B to 28.08.17 for those willing to avail transitional credit.

  4. A. Gangatharan says:

    What is the use in furnishing GSTR-3B without making payment by cash, as necessity, when the Govt. has so far not notified the accounting heads for payment of duty in CGST / SGST / IGST / UGST. For no fault of the assessee who pays the taxes and accumulated the input credit under Central Excise / Vat regime, they are now denied its utilisation by not properly making the home work in implementing the GST with much fanfare. Further where is the One Nation / One Tax and One Market – may be the market is one but taxes are not. It appears that the Govt. likes to collect more from the manufacturing states and spend the same on the consuming states. There is no point in not including the Petroleum products in the GST regime as it shows that the Central Govt. succumbed to the pressures of State Govts. by leaving the taxation of petroleum products to the mercy of States.

  5. mukesh says:

    I am of the opinion that there are several areas where the implementation and clarifications are still awaited. And it may take two to three months to set everything in some order. Hence, instead of creating double forms and increasing the work without any necessity, they can make a provision to make the monthly payments via self assessment by the dealer. When all the formats are in place, and if there is any differences to be recovered, the same can be recovered with interest.

    It should be noted that such a vast base of dealers will take some time to fall in line for the smooth operation of Good and Simple Tax.

    Mr. Prime Minister and Mr. Finance Minister, here is a request to be little graceful in implementation.

    Thank you Sir for nice updates and concern.

  6. JAGANATHAN G says:

    sir we wish to know what is the rate of tax on freight paid by us as receiver of goods transport service.if it is taxable when we have to pay by cash and on reverse charge mechanism whether we can avail input credit

  7. Vikash Shaw says:

    Dear Sir,

    I want to know the GST rates on Semi Stitched suits & Unstitched Lehanga

  8. KAMAL GUPTA says:

    GSTR-3B is self assessment return and transitional ITC should be allowed in other ITC column. It may be adjusted after TRANS-1 and GSTR-3 return.

  9. Prashant Bastodkar says:

    Very bold to highlight the lapses of govt. Being a part of the the system. Bravo.

  10. Rajesh Sharma says:

    Most of the things outdated like , GSTR 1 and 2 is active on system. Pls update the knowledge base.

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