Transitional provisions under Goods and services tax

TRANSITIONAL PROVISIONS UNDER GST

Migration of existing taxpayers (Sec 139)

Q1. Is it compulsory for existing registrants to continue under GST ?

Ans: As per provisions contained in Sec 139, every existing registrants will be provided a provisional certificate which will be valid for 6 months from the appointed date.

It is at the option of registrant whether to continue or not under GST regime, if he don’t want to continue he can apply for cancellation of registration under GST in form and manner as may be prescribed.

Transitional arrangement for ITC (Sec 140)

Every registered person is entitled to take credit of ITC , only if he submit electronic application in form GST TRAN-1 within 60 days of appointed date.

Q2. What about the ITC which has been claimed in return filed by registered person before appointed date ?

Ans: In this case as per provisions contained in sec 140(1) if any registered taxable person has claimed ITC in his return (ER1- For excise,ST3-For Service tax,DVAT-16 For DVAT) then the same would be allowed as credit in electronic credit ledger.

But, Credit would not be allowed in the following if:

• Credit id not admissible under GST regime.
• Return for last 6 month has not been submitted.
• Credit related to goods which were manufactured and cleared under exemption notification.
• If the registered person is composition taxpayer.

Q3. What about the ITC which was not claimed (i.e. unavailed ITC) in return filed by registered person before appointed date ?

Ans:As per provisions contained in Sec 140(2), if ITC has not been claimed in the return i.e. Unavailed credit (say in case of capital goods up to 50 % credit can be claimed in 1 st year) but the same is also admissible under GST regime only then it would be allowed to claim unavailed credit in electronic credit ledger except in case of composition taxpayer.

Q 4: What about credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day?

Ans: A registered person, who was not liable to be registered under the existing law, or who was engaged in the manufacture of exempted goods or provision of exempted services,or who was providing works contract service and was availing of the benefit of notification No. 26/2012—Service Tax, dated the 20th June, 2012 or A first stage dealer or a second stagedealer or a registered importer or a depot of a manufacturer, shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions,

(i) such inputs or goods are used or intended to be used for making taxable supplies under this Act;

(ii) the said registered person is eligible for input tax credit on such inputs under this Act;

(iii) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs;

(iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and

(v) the supplier of services is not eligible for any abatement under this Act:

Provided that where a registered person, other than a manufacturer or a supplier of services, is not in possession of an invoice or any other documents evidencing payment of duty in respect of inputs, then, such registered person shall, subject to such conditions,limitations and safeguards as may be prescribed, including that the said taxable person shall pass on the benefit of such credit by way of reduced prices to the recipient, be allowed to take credit at such rate and in such manner as may be prescribed.

In case of unregistered person, who was not possessing an invoice or any other document evidencing payment of such duty , shall be allowed to avail ITC on goods held in stock on appointed date at the rate 60 % on goods which attract central tax @9 % or more and 40 % for others.

Subject to following conditions :

• Goods were not wholly exempted fro excise duty or were not NIL rated.
• Documents for procurement of goods is available with registered person.
• Registered person has furnished details of stock at the end of each of the six tax periods.
• Amount of credit allowed shall be credit to electronic credit ledger.
• Stock of such goods can be easily identifiable by the registered person.
  

Q 5: What about credit in case supplier supplies both taxable as well as exempted goods/services ?

Ans: In this case of ITC claimed in return for taxable supply , it will be allowed as ITC under GST regime also.

In case of ITC in respect of inputs related to exempted goods/services, same treatment would be available as discussed in Q4.

Q6.: whether ITC would be available in GST regime in case payment for Input/service has been made before the appointed date but Input /service is received after appointed date ?

Ans: As per provisions contained in Sec 140(5), (5) A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day and statement is filed in respect of such credit.

Q7: What will be the treatment of credit on goods held on stock as on appointed date in case of person paying tax at fixed rate or amount under existing tax regime ?

Ans: A registered person, who was either paying tax at a fixed rate or paying a fixed amount in lieu of the tax payable under the existing law shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions :

(i) such inputs or goods are used or intended to be used for making taxable supplies under this Act;

(ii) the said registered person is not paying tax under section 10;

(iii) the said registered person is eligible for input tax credit on such inputs under this Act;

(iv) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of inputs; and

(v) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day

Q8: If ISD received services before the appointed date but invoice for the same has been received after appointed date, whether credit would be available or not ?

Ans: As per provisions contained in sec 140(7), Notwithstanding anything to the contrary contained in this Act, the input tax credit on account of any services received prior to the appointed day by an Input Service Distributor shall be eligible for distribution as credit under this Act even if the invoices relating to such services are received on or after the appointed day.

Q9: If a dealer is having centralized registration under existing regime and now he has to take separate registration (i.e. Decentralisation) whether supplied can take such credit under GST regime ?

Ans: Where a registered person having centralised registration under the existing law has obtained a registration under this Act, such person shall be allowed to take, in his electronic credit ledger, credit of the amount of CENVAT credit carried forward in a return,furnished under the existing law by him, in respect of the period ending with the day immediately preceding the appointed day in such manner as may be prescribed:

Provided that if the registered person furnishes his return for the period ending with the day immediately preceding the appointed day within three months of the appointed day,such credit shall be allowed subject to the condition that the said return is either an original return or a revised return where the credit has been reduced from that claimed earlier:

Provided further that the registered person shall not be allowed to take credit unless the said amount is admissible as input tax credit under this Act:

Provided also that such credit may be transferred to any of the registered persons having the same Permanent Account Number for which the centralised registration was obtained under the existing law.

Transitional Provisions relating to Job Work (Sec 141)

Q 10: In case of removal of Input to job worker prior to appointed date for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of existing lawbut the same has been returned after the appointed date, whether liability od tax arises in the hands of job worker?

Ans: Input shall be exempt in the hands of job worker in GST regime also, subject to following :

• Inputs are returned within 6 month from the appointed date.
• Such inputs are taxable in the GST regime.
• Job worker will have to file declaration within 60 days in form GST Tran-1.
  

Miscellaneous Transitional Provisions (Sec 142)

Q11: What will be the treatment of in case duty paid goods has been returned after appointed date ?.

Ans: Where any goods on which duty, if any, had been paid under the existing law at the time of removal thereof, not being earlier than six months prior to the appointed day, are returned to any place of business on or after the appointed day, the registered person shall be eligible for refund of the duty paid under the existing law where such goods are returned by a person, other than a registered person, to the said place of business within a period of six months from the appointed day and such goods are identifiable to the satisfaction of the proper officer:

Provided that if the said goods are returned by a registered person, the return of such goods shall be deemed to be a supply

Q12.: What will be the treatment of price revision of contract in case, contract entered prior to appointed date but revision done after appointed date ?

Ans: In case of Upward revision:

• Supplier will have to issue supplementary invoice or debit note for such revision within 30 days In case of downward revision:
• Supplier will have to issue credit note within 30 days.
• Registered person will be allowed to reduce tax liability that extent only if recipient has reduced his credit by such amount.

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Invoice Format Under GST