1. Migration of existing tax payers to GST 139
a) One Registration for one state.
b) Multiple registration for one state in case of separate business vertical.
c) Registration in a particular state will be provided for the “principal place of business” other businesses in that state will be termed as “place of business/additional place of business.”
d) One place must be declared as Principal place of business, as the registration will be provided for that place only.
2. CENVAT as shown in return 140(1)
a) Registered person is allowed to take the credit of the CENVAT as carried forward in the return (ER-1, ST-3 or VAT return) relating to period preceding the appointed date.
b) CENVAT includes inputs, input services & capital goods credit.
c) It is advised to book the disputed credit as well in the return.
d) As per SGST acts, credit of VAT and Entry taxes will also be available.
e) The credit which is admissible under GST can only be c/f. Hence those which are covered under negative list of the credits, will not be allowed to be carried forward.
f) Credit of SBC, KCC, E.cess and SHEC will not be available.
3. Credit in respect of Capital Goods 140(2)
a) A registered person can take credit unavailed on the capital goods, which is not carried forward in the return.
b) Unavailed credit means the credit which is not taken in respect of the capital goods.
c) Condition is that the credit is eligible under CENVAT and in GST.
4. Section 140(3) – Very Important
a) Applicable to :
a. Person who was not liable to get registered under the existing law
b. Manufacturer of exempt goods
c. Provider of exempted services
d. Exempt works contract service provider under 26/2012
e. First Stage or Second Stage dealers
f. Registered Importer or Depot of manufacturer
b) Implications :
a. The credit in respect of input as stock, in semi-finished goods and finished goods will be available.
c) Conditions for availment of credit :
a. The person claiming credit must be having the duty paying documents which must be issued within 12 months before A.D. Such inputs must be used in making taxable supplies under GST act.
d) Proviso Under the section : Deemed Credits
a. It provides that credit is available even when the duty paying document is not possession with the claimant.
b. Applicable only to other than manufacturer or supplier of services. – Only pure dealers are covered.
c. These credits in respect of input will be available at the rates provided under Rules for Transitional Provisions.
5. Credit in respect of person making both taxable and exempt supplies under current regime (Excise/S.T.) 140(4)
a) Credit as carried forward by such person in the return furnished will be available – Normal credit in respect of taxable goods/services.
b) In respect of those goods/services which were exempt under current regime credit will still be eligible in respect of inputs (Stock+Semi-finished+Finished goods).- only inputs
6. Input/Input services received after appointed date (in transit) 140(5)
a) In case where, the inputs and input services are received after appointed date and the duty/tax in respect of such supplies is paid before the A.D. under current laws –
a. the credit of such duties will be available if the duty paying document or the invoice is recorded in the books of accounts within 30 days from appointed date. (upto 30-07-2017)
b. Such period of 30 days may be extended by another 30 days showing proper reason.
b) It Must be noted here that credit on only input and input services is available in case they are in transit, but credit in respect of capital goods in transit as on 30-06-2017 will not be appointed.
Hence credit of duties paid on capital goods before A.D. will not be available when the capital goods are received after A.D.
c) The duties for the credit will be available are: Excise, ST, SAD, CVD, additional duties of Excise, NCCD.
7. Credit to person who was a composite dealer in earlier laws 140(6)
a) Credit of duties of input held in stock, inputs contained in semi-finished and finished goods will be available.
b) ITC of such inputs must be available under GST.
c) Invoice/duty paying documents in relation to such inputs must be in possession of the person claiming credit.
d) Such invoice must be issued within 12 month prior to the appointed date.
e) The duties for the credit will be available are: Excise, SAD, CVD, additional duties of Excise, NCCD.
8. Credit by Input Service Distributor 140(7)
a. ISD can distribute the ITC on services which are received before appointed date even if the invoices in relation to such services are received after appointed date.
9. Credit availability to the person with centralized registration 140(8)
a) The assessee having centralized registration, is allowed to carry forward the credit shown in the return of that person, for the period before the appointed date.
b) The return must be filed within 3 months from the appointed date, when such return is original return. E.g. in case of service provider the return needs to be filed half yearly, government will allow filing of the return for the period of April to June 2017 till 25thJuly, hence such credit can be c/f in this return.
10. Reversal of credit due to non-payment 140(9)
a. When the credit availed on Input services is reversed due to non-payment (in 3 month time) – the same can be claimed back after appointed date by making payment of the consideration within a period of 3 months from the appointed day.
11. Transition Provisions in case of Job Worker141(1,2,3,4)
a) Goods (inputs) are removed to the place of Job-worker before Appointed date, and the same are received back after the A.D. – No tax is payable if the goods are returned by the job worker within 6 months from A.D.
b) It’s obvious that the ITC in respect of such inputs must have been taken by the person sending goods to job worker, hence if such goods are not returned within the said time period the ITC availed will be recovered.
c) The manufacturer and job-worker has to declare the details of the inputs or goods held in stock by the job-worker on behalf of the manufacturer.
d) The provisions as explained in respect of inputs are also applicable to semi-finished goods and finished goods as well.
e) The semi-finished goods and finished can also be removed from the premises of Job-Worker on payment of tax in India or without payment of tax in case of exports within the said period of 6 months instead of receiving them back.
12. Duty paid goods returned after appointed date 142(1)
a) The duty paid in respect of goods sold before A.D. and returned to any of the place of business of the supplier after A.D. will be refunded to the supplier.
b) The goods must be sold within 6 months before A.D. (01-01-2017)
c) Goods must be returned back within 6 months from A.D. (31-12-2017)
d) The goods must be returned to the supplier by the unregistered recipient.
e) If the goods are returned by registered recipient, the same will be considered as supply of goods from the such person.
13. Price revisions during GST of the contracts before A.D. 142(2)
a) The supplier has to issue debit note in case of upward revision and credit note in respect of the downward revision.
b) The debit note issue will be considered in respect of the outward supply and hence needs to be declared in GSTR-1
c) Credit note will reduce supplier’s liability only if the corresponding credit has been reduced by the recipient of the credit note.
14. Refund of claims: 142(3)
a) The refund amount will be administered as per the current statues only. Such refund is to be paid by the department to the assessee in cash only and not in credit ledger of the person.
b) Lapse and non-availability of credit if rejected: (both proviso 1&2)
i. Consider a situation that a person has total amount of Rs. 4.5 crore credit left in the ledger before appointed date. He also wants to file a claim for the amount of Rs. 2 cr. for the duties paid in respect of goods and services exported.
– if the person decides to carry forward the whole amount of 4.5 cr. credit to the GST on appointed date, the refund application of Rs. 2 cr. will be rejected and the credit balance in GST will become 4.5 cr.
– If the person decides to c/f only 2.5 cr and continue with the appeal, the appeal will be dealt in accordance of the provision of the current provisions. Although if the appeal of refund is rejected he will no more be able to take the credit of the amount of 2 cr. and hence the same amount will get lapsed.
15. Claims of rebate/refunds filed after appointed date: 142(4)
a) The claims of rebate/refund filed after appointed date are to be administered under the current law only.
b) Such rebates and refund will be filed for the duties paid on export of goods or services.
16. Revision of return filed under current regime :142(9)
a) The return filed under current tax laws can be revised within specified period of time. If such return is filed and revised after A.D. the following consequences will happen :
i) If the amount is recoverable from the assessee, same will be recovered as dues of GST law. Such recovered amount is not available as credit to assessee.
ii) If the refund is due towards the assessee, the same will be paid to the assessee in cash.
iii) The amount of refund rejected will lapse and will not be eligible for credit under GST.
17. Tax ability in respect of long term contracts: 142(10)
a) Goods or services supplied after appointed date, in pursuance of a long term contract awarded before 30-06-2017, will be liable to tax under GST.
b) It is very difficult for the contractors to realize the higher rate of taxes from the party awarding the contracts. – hence this provision is a difficulty for the contractors.
c) The direct impact of this clause is, the contract will be charged at high rates under GST, as against they are under current tax system – VAT+ST+ED. This will increase the overall cost of the contracts for them.
18. Tax liability when the POT is after appointed date (01-07-2017): 142(11)
a) If the payment of the tax – VAT or Service tax or Excise – in respect of supply is done before 1st July and the point of taxation as per section 12 or 13 of CGST act, is after 1st July, then such supplies will not be liable to tax under GST. – It means if tax is already paid and supplies are made after A.D. then no tax will again be payable under GST on such supplies.
b) The credit in respect of supplies on which both VAT and service tax is paid, the tax will be levied on such supplies under GST and credit of either VAT or Service tax will be available to the taxable person (as per rules prescribed).
19. Goods Sent to customer on sale or approval basis:142(12)
a) Goods sent to the customer on sale or approval basis, and are still lying with the customer for his approval – up to six month before appointed date
a. Such goods sent to the supplier by customer within six month after appointed date i.e. upto 31-December-2017 , No tax needs to be paid.
b. If goods are sent after 6 month time to the supplier, such customer will be liable to tax under GST on these goods.
c. If goods are not returned at all, then supplier will be liable to tax after the end of 6 months. – Assuming the supplier will use this period at least.
1. Details of goods sent on approval basis
Applicable in case of 142(12): Within ninety days of the appointed day, submit details of such goods sent on approval in FORM GST TRAN-1.
2. Declaration of stock held by a principal and agent
Applicable in case of 141 and 142(14): Within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, specifying therein, the stock of the inputs, semi-finished goods or finished goods, as applicable, held by him on the appointed day.
3. Declaration to be made under clause (c) of section 142(11)
Applicable in case of clause (c) of sub-section (11) of section 142: shall within a period of ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1 furnishing the proportion of supply on which VAT or service tax has been paid before the appointed day but the supply is made after the appointed day, and the ITC admissible thereon.
[Individual States may insert a proviso giving the details of methodology of calculation of the VAT paid which would be available as ITC of State Tax].
4. Deemed credit rules : in relation to section 140(3)
As discussed earlier person covered under 140(3) is eligible for the credit in respect of inputs for which the person is not in possession of tax paying documents :
Credit @ 60% of the CGST – For goods which have CGST at 9% or more.
Credit @40% of the CGST – For other goods
Such credits are available after paying the CGST amount on the goods.
Credit @30% and 20% in case IGST is payable respectively.
This scheme is available for 6 months from the A.D.
Similar provisions exists for the SGST act. – Exactly same rate.
Mandatory conditions for availment of credit under this rule :
a. Goods on which such credit is claimed must not be unconditionally exempt or should not be nil rated under CETA, 1985.
b. Document for the procurement of the goods must be available with the registered person.
c. Details of the stock must be furnished
d. Details of the supplies effected during 6 tax period during which this scheme is applicable. – in GST TRANS – 2
Do you think CBDT should extend Tax Audit Report and relevant ITR Due Date? Please Comment, Vote, Retweet and Like.— Tax Guru (@taxguru_in) September 18, 2018