Every business is waiting to make the transition to the new laws under GST as we get closer to the appointed day.
The provisions are as under as follows:
| Transition of persons registered under excise, State Vat or service tax | Taxable Persons who are paying service tax, State Vat or Central Excise are required to migrate to GST.
They will get temporary PAN based registration number. Final registration will be granted after submitting necessary information and papers – section 139 of CGST Act. Most of the existing taxable persons have already migrated to GST Registration, even if GST Law is not yet made effective. |
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| Input Tax Credit while Switching over from existing tax structure to GST | |||||
| Eligible Cenvat Credit carried forward | Eligible Cenvat credit on inputs and input services can be carried forward – section 140(1) of CGST Act.
Unavailed Cenvat Credit on eligible capital goods not carried forward in a return can taken – section 140(2) of CGST Act. The manufacturer has to submit application in form GST TRAN 1 within 60 days – rule 1(1) of Transitional Provisions. As per section 140 of CGST Act, such carry forward is automatic. However, the rule uses the word ‘apply’.This implies that such carry forward is not automatic and permission is required. |
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| Eligible State Vat Credit and entry tax carried forward | Eligible State Vat credit and entry tax credit can be carried forward – section 140(1) of SGST Act.
Unavailed State Vat Credit and entry tax credit on eligible capital goods not carried forward in a return can taken – section 140(2) of SGST Act. He has to submit application in form GST TRAN 1 within 60 days – rule 1(1) of Transitional Provisions. |
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| Eligible duties and taxes on goods which were held in stock on appointed day, if person was
not eligible to take Cenvat credit or Vat credit earlier |
A registered person who was not liable to be registered under earlier law or who was engaged in the manufacture of exempted goods or provision of exempted service or who was providing works contract service and paying service tax under abatement scheme under Notification No. 26/2012-ST dated 20-6-2012 or first stage dealer or second stage dealer or a registered importer or a depot of a manufacturer, shall be entitled to take credit in his electronic cash register of eligible duties in respect of inputs in stock and inputs contained in semi-finished or finished goods lying in stock.
There should be duty paying document with him which are not more than 12 month old. The supplier of service should not be eligible for any abatement under CGST Act – section 140(3) of CGST Act and section 140(3) of SGST Act. A taxable person who was not eligible to take Cenvat Credit but is now under GST can take input tax credit of excise duty which was paid on the stock with him, if he has Invoice or other documents evidencing payment of excise duty. A taxable person who was not earlier under State Vat but is now under GST can take input tax credit of State Vat which was paid on the stock with him, if he has tax invoices or other documents evidencing payment of State Vat. He has to submit stock statement – section 140(3) of SGST Act. He has to submit stock statement in prescribed form. |
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| Deemed Input tax credit of tax on stock if invoice of supplier showing tax paid is not available | Even if duty paying document is not available, input tax credit will be available on goods held in stock on 1-7-
2017, at such rates and in such manner as may be prescribed – proviso to section 140(3) of CGST Act and section 140(3) of CGST Act. As per rule 1(3) of Transitional Provisions Rules, he can take input tax credit of 40% of his sale price, at the time of making sale. He can make sale within six months after 1-7-2017.
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| Credit if taxable person was manufacturing exempted as well as taxable goods and providing exempted or taxable services | A taxable person who was manufacturing exempted as well as taxable goods and providing exempted or taxable services can take input tax credit of Cenvat credit as per return filed under excise law, if he is liable to pay CGST and SGST. He can also take input tax credit of duty and Vat paid on inputs held in stock and inputs contained in semi-finished goods or finished goods held in stock on 1-7-2017 relating to such exempted goods or tax free goods- – section 140(4) of CGST Act and section 140(4) of SGST Act. |
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| Credit of duty paid inputs or service tax paid on input services received after 1-7-2017 but duty was paid earlier | Credit of duty paid inputs or service tax paid on input services received after 1-7-2017 but duty was paid prior to 1-7-2017 will be available if document was recorded in books of account within 30 days. This period of 30 days can be extended by Commissioner by further 30 days – section 140(5) of CGST Act.
Similar provision in respect of Vat paid on goods which were received after 1-7-2017 – section 140(5) of SGST Act. The taxable person is required to submit details as specified in rule 1(2)(c) of Transitory Provision Rules within sixty days. |
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| Registered person who was paying tax/duty at fixed rate or paying fixed amount | Registered person who was paying tax/duty at fixed rate or paying fixed amount under earlier law can take input tax credit of excise duty paid VAT in on inputs held in stock or contained in semi-finished goods and finished goods – section 140(6) of CGST Act and section 140(6) of SGST Act. Details of stock are required to be submitted within sixty days – rule 1(2)(b) of Transitory Provisions Rules. |
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| Distribution of credit by Input service distributor of service invoices received after GST | Input service distributor can distribute credit in respect of services received prior to GST, even if invoices of such services were received after introduction of GST – section 140(7) of CGST Act. | ||||
| Taxable persons having centralized registration under service tax | Taxable persons having centralized registration under service tax can take input tax credit within three months if included in his return. The credit can be distributed to its branches or divisions having same income tax PAN – section 140(8) of CGST Act. | ||||
| Inputs, semi finished goods and finished goods sent outside for job work before 1-7-2017 but received after 1-7-2017 | A taxable person might have sent Inputs, semi finished goods and finished goods outside before 1-7-2017 for job work or testing. If these are received back before 31-12-2017, GST will not be payable – section 141 of CGST Act and section 141 of SGST Act.
If material was sent for job work and was lying with job worker, input tax credit can be taken on submission of details – rule 3 of Transitional Provisions Rules. |
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| Inputs sent outside on approval basis as on 1-7-2017 | If goods were sent on approval basis and were not with the taxable person on 1-07-2017, details are to be submitted in form GST TRAN-1 – rule 4 of Transitional Provisions Rules. | ||||
BY CA SURENDRA AGRAWAL
(M.com,LLB,ACA)
For Any Inquiry Call/Mail To PH-9313336776, Email-ca.surendra@gmail.com
Author Bio
PLEASE CLARIFY THE PLACE OF SUBMISSION OF TRAN 1 UNDER GST RULE.
My client is a Builder and he had obtained Building Usage Certificate on 15-06-2017. He is registered under VAT act and had opted presumptive Tax Option, where he can not claim for VAT Credit on Input Goods. He is also registered under Service Tax and had paid Tax on booking amount collected by him. Now he is migrating under GST. Can GST will be applicable on goods sold (excuting Conveyance Deed) at the rate prescribed? Can he availed CENVAT Credit on Stock in Trade (Finished Goods)? Please share your expert opnion.
BEING TRADER HAVING INVOICE WHERE AS EXCISE AND VAT WAS CHARGED SEPARATELY AND SOME INVOICE ONLY CHARGED VAT. ASSESSES IS NOT REGISTERED UNDER CENTRAL EXCISE.CAN WE TAKE FULL CREDIT ON EXCISIABEL INVOICE AND ON REST INVOICE WE CAN TAKE CREDIT ON U/S140(3).
PH-9448455324
080-22255531
A taxable person pay Service Tax on labor contract under reverse on 5’th July’2017 for the m/o June’2017.
How can be availed input Service Tax credit paid under reverse charge mechanism.-
1- Under eligible Cenvat credit on input services can be carried forward – section 140(1) of CGST Act.
OR
under Unavailed Cenvat Credit not carried forward in a return can taken – section 140(2) of CGST Act.