note: this presentation is clarificatory in nature and not meant … · higher education cess only...

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GST Policy Planning Unit Directorate of Commercial Taxes

NOTE: This presentation is clarificatory in nature and not meant for interpretation of provisions of relevant act and rules.

TRANSITIONAL ISSUES WHILE SWITCHING

OVER TO GST:-

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Transitional Arrangement for Input Tax Credit.. Sec.140

Transitional Provisions relating to job work.. Sec.141

Miscellaneous Transitional Provisions.. Sec.142


C/F IN THE LAST RETURN

UNAVAILED CREDIT ON CAPITAL GOODS

NOT LIABLE TO BE REGISTERED UNDER THE EXISTING LAW/ENGAGED IN MANUFACTURE

OF EXEMPTED GOODS/PROVISION OF EXEMPTED SERVICES etc.

ENJOYED COMPOSITION PRE GST, MOVES TO GST UNDER NORMAL SCHEME

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ENGAGED IN MANUFACTURE OF TAXABLE AS WELL AS EXEMPTED GOODS/PROVISION

OF TAXABLE AS WELL AS EXEMPTED SERVICES

AVAILABILITY OF CREDIT OF DUTY/TAX PAID UNDER THE EXISTING LAW IN GST

DISTRIBUTION OF INPUT TAX CREDIT BY AN ISD

AVAILABILITY OF CREDIT TO A PERSON HAVING CENTRALIZED REGISTRATION IN PRE-

GST ERA

RECLAIM OF REVERSED CREDIT DUE TO NON-PAYMENT OF CONSIDERATION IN THE PRE -

GST ERA


CENVAT/VATCREDIT CARRIED FORWARD in the last return

Availability of credit in GST is subject to the following Conditions :

The amount has to be admissible as ITC under the GST Law

c/f VAT credit equivalent to tax relating to unsubstantiated claim u/s 3/5(3)/6/6(2) of the CST Act 1956 will be ineligible for credit to the electronic credit ledger However, refund of such ineligible amount would be available under the earlier law after the aforesaid claims are substantiated

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To declare entitlement of credit c/f CENVAT/VAT credit within 90 days of the appointed day electronically in Form GST TRAN 1

Cannot be a return defaulter for last six months of the existing law

Credit should not relate to goods manufactured/cleared under exemption notifications


CENVAT/VATCREDIT CARRIED FORWARD in the last return……Illustration…

5 GST Policy Planning Unit

Directorate of Commercial Taxes

Description of Credit c/f as on 30/06/2017

Amount c/f (in Rs.)

Central Excise 5, 00, 000/-

Service Tax 2, 00, 000/-

Education Cess 10, 000/-

Secondary & Higher Education Cess

5, 000/-

Krishi Kalyan Cess 5, 000/-

Additional Duty u/s 3(1) of CTA(CVD)

50,000/-

Additional Duty u/s 3(5) of CTA(SAD)

40, 000/-

VAT 1, 00, 000/-

TOTAL: 9, 10, 000/-

What would be the amount of credit available under CGST?

What would be the amount of credit available under SGST?

Will the credit of CGST differ depending on the fact whether I am a manufacturer or a service provider?




Secondary & Higher Education Cess was withdrawn w.e.f 01/03/2015 and credit of such could be utilized with the output liability of Secondary & Higher Education Cess only

Swach Bharat Cess was introduced w.e.f 15/11/2015 in respect of all taxable service except fully exempted services and was only output liability of which no credit was available

Krishi Kalyan Cess was introduced w.e.f 01/06/2016 for absolute service providers only and could be utilized with the output liability of Krishi Kalyan Cess Only




Amount of CGST Credit available

Amount c/f (in Rs.)



(CVD) 50,000/-

(SAD) 40, 000/-

TOTAL: 7, 90, 000/-

For a manufacturer:- For a service provider:-

Amount of CGST Credit available

Amount c/f (in Rs.)



Krishi Kalyan Cess 5, 000/-

(CVD) 50,000/-

TOTAL: 7, 55, 000/-

Amount of SGST Credit available

Amount c/f (in Rs.)

VAT 1, 00, 000/-

•SBC not allowed to be c/f •KKC not allowed to be c/f for manf. •SAD not allowed for SPs

UNAVAILED CENVAT/VAT CREDIT ON CAPITAL GOODS

NOT CARRIED FORWARD

Availability of credit in GST is subject to the following Conditions :

The amount has to be admissible as ITC under the GST Law

UNAVAILED CENVAT credit = Aggregate amount of CENVAT credit to which the person was entitled minus Amount of CENVAT credit already availed under the existing law



The amount has to be admissible as CENVAT credit under the existing Law

Transitional Arrangement for Input Tax Credit *s.140(3)…CGST+

SHALL BE ENTITLED for (100%) Credit of eligible duties on

Inputs held in stock on the appointed day

Inputs contained in semi-finished /finished goods held in stock on the

appointed day

(i) Not Liable to be registered under the existing law/ (ii) Engaged in manufacture of Exempted goods/provision of

Exempted services which are Taxable under GST (iii) Providing works contract service & was availing of benefit of

notification no.26/2012 –Service Tax dated 20-06-2012/ (iv) A first stage or a second stage dealer/registered importer/depot of

a manufacturer

CONDITIONS: 9

A registered person in GST who was


Transitional Arrangement for Input Tax Credit *s.140(3)….CGST+

Inputs are used/intended to be used for making taxable

supplies

Eligibility of input tax credit on such inputs under the GST Act

Is in possession of valid invoice, or other prescribed documents evidencing payment of duty/tax which were issued not earlier than 12 months from the appointed day

The supplier of services is not eligible for any abatement under the GST Act[specific for s.140(3)]

To declare entitlement of credit within 90 days of the appointed day

electronically in Form GST TRAN 1, also to specify stock details in TRAN 1

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Credit would be available on goods (on which central excise/CVD was leviable) held in stock to a registered person other than a manufacturer/supplier of services if he is not in a possession of an invoice

etc. evidencing payment of duty/taxes in respect of inputs subject to fulfillment of prescribed conditions/ limitations /safeguards The said taxable person passes on the benefit of such credit by way of reduced prices to the recipient provided

Credit to be allowed = @60% of CGST applicable on supply of such goods where tax rate is 9% or more & @ 40% in the remaining slabs[@30% & 20% respectively in case of payment of IGST] To be credited after payment of the applicable CGST on such Conditions : Scheme shall be available for six tax periods from the appointed date Such goods were not unconditionally exempt from the entire Central Excise duty(as specified in the 1st schedule to Central Excise Tariff Act, 1985) or were not nil rated in that schedule

Document for procurement of such goods is available

Details of stock held to be submitted at the end of each off six tax periods in TRAN2

Stock on which credit is availed to be stored so that such is easily identifiable GST Policy Planning Unit



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Illustration:

The excise duty on “Rusks, toasted bread and similar toasted products”[190540] was ‘nil’ which has subsequently been made taxable in GST. A manufacturer of the product [190540] takes registration in GST and as on the appointed day Suppose, he has stock of sugar (an input, say) on the appointed day on which duty of Rs.10, 000/- was paid he is in possession of the duty paying document and such document is not more than 12 months old Such sugar is used or intended for use for making taxable supplies There is eligibility of ITC on sugar in GST


Is this person entitled to take ITC of the duty paid on sugar?? If So at what will be the amount of ITC?? In what form the credit will be available??

Yes, this person is entitled to take ITC of the duty paid on sugar amounting to Rs.10, 000/- and it will be available as credit of CGST


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Illustration:

X Co. is trader of sugar He has stock of sugar on the appointed day He is not in possession of a document evidencing payment of duty There is eligibility of ITC on sugar in GST


Is this person entitled to take ITC of the duty paid on sugar?? If So at what will be the amount of ITC?? In what form the credit will be available??

Suppose X Co. sales the identifiable stock of sugar at Rs.1, 00, 000/- CGST payable @2.5% on sale of such = Rs.2, 500/- 40% of Rs.2, 500/- = Rs.1, 000/- will be available to him as credit after he pays the output tax

Transitional Arrangement for Input Tax Credit *s.140(3)…SGST+

SHALL BE ENTITLED for (100%) Credit of VAT on


Inputs contained in semi-finished /finished goods held in stock on the

appointed day

(i) Not Liable to be registered under the existing law/ (ii) Engaged in sale of Exempted goods/tax free goods/goods which

suffered tax at the first point of their sale subsequent sales of which are not subjected to tax & which are Taxable under GST/

(iii) Where the person was entitled to take credit of input tax at the time of sale of goods if any,

CONDITIONS: 14



Transitional Arrangement for Input Tax Credit *s.140(3)….SGST+

Inputs are used/intended to be used for making taxable

supplies



To declare entitlement of credit within 90 days of the appointed day electronically in Form GST TRAN 1, also to specify stock details in TRAN 1

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Credit would be available to a registered person other than a manufacturer/supplier of services on goods held in stock which suffered tax at the first point of their sale subsequent sales of which are not

subjected to tax if he is not in a possession of an invoice etc. evidencing payment of VAT subject to fulfillment of prescribed conditions/ limitations /safeguards The said taxable person passes on the benefit of such credit by way of reduced prices to the recipient provided

Credit to be allowed = @60% of SGST applicable on supply of such goods where tax rate is 9% or more & @ 40% in the remaining slabs[@30% & 20% respectively in case of payment of IGST] To be credited after payment of the applicable SGST on such Conditions : Scheme shall be available for six tax periods from the appointed date Such goods were not wholly exempt from tax under the WBVAT Act 2003

Document for procurement of such goods is available

Details of stock held to be submitted at the end of each off six tax periods in TRAN2

Stock on which credit is availed to be stored so that such is easily identifiable



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Illustration:

A whole-seller of medicine in West Bengal has a stock of medicine on the appointed day on which tax was paid at MRP.

He has purchased the goods from Importer/ manufacturer and therefore he is in possession of the tax paying document [showing payment of tax on MRP] Invoices pertaining to such are not more than 12 months old PTS value of such goods are Rs.1, 00, 000/- whose corresponding MRP value is Rs.2, 50, 000/- evidencing payment of tax of Rs. 12, 500/- on MRP(say)

GST Policy Planning Unit


Is this person entitled to take ITC of the tax so paid?? If So at what will be the amount of ITC?? In what form the credit will be available??

Yes, this person is entitled to take ITC of the tax so paid amounting to Rs.12, 500/- and it will be available as credit of SGST


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Illustration:

X Co. is distributor of medicine He has stock of medicine on the appointed day on which tax has been paid on MRP at the first point He is not in possession of a document evidencing payment of tax


Is this person entitled to take ITC of the tax paid on medicine?? If So at what will be the amount of ITC?? In what form the credit will be available??

Suppose X Co. sales the identifiable stock of medicine at Rs.1, 00, 000/- SGST payable @6% on sale of such = Rs.6, 000/- 40% of Rs.6, 000/- = Rs.2, 400/- will be available to him as credit after he pays the output tax

Transitional Arrangement for Input Tax Credit [s.140(3)]

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Illustration:

X Co. is distributor of medicine He has stock of medicine on the appointed day on which tax has been paid on MRP at the first point He is not in possession of a document evidencing payment of VAT & Central Excise duty


Is this person entitled to take ITC of the tax paid on medicine?? If So at what will be the amount of ITC?? In what form the credit will be available??

Suppose X Co. sales the identifiable stock of medicine at Rs.1, 00, 000/- SGST payable @6% on sale of such = Rs.6, 000/- 40% of Rs.6, 000/- = Rs.2, 400/- will be available to him as SGST credit after he pays the output tax CGST payable @6% on sale of such = Rs.6, 000/- 40% of Rs.6, 000/- = Rs.2, 400/- will be available to him as CGST credit after he pays the output tax So, total credit available = Rs.2, 400/- + Rs.2, 400/-


SHALL BE ENTITLED for Credit of eligible CENVAT/VAT Credit on

[For exempt goods/services]

Inputs held in stock on the appointed

day

Inputs contained in semi-finished

/finished goods held in stock on the

appointed day

A registered person who was Engaged in manufacture of taxable as well as exempted goods/provision of taxable as well as exempted services

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SHALL BE ENTITLED for Credit of eligible CENVAT/VAT Credit that is

[For taxable goods/services] carried forward in the return relating to the period immediately preceding the appointed day

To declare entitlement of credit within 90 days of the appointed day electronically in Form GST TRAN 1, also to specify stock details in TRAN 1


INPUTS/INPUT SERVICES RECEIVED ON/AFTER THE APPOINTED DAY ON WHICH DUTY/TAX PAID BEFORE THE

APPOINTED DAY

CREDIT WILL BE AVAILABLE IN GST Subject to the following Conditions :

Invoice/any other duty/tax paying document for the same has to be recorded in the books of accounts within 30 days(extendable by the competent authority) from the appointed day

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To declare entitlement of credit within 90 days of the appointed day electronically in Form GST TRAN 1



Inputs are used/intended to be used for making taxable supplies



Not paying tax as a composition tax payer under the GST Act

To declare entitlement of credit within 90 days of the appointed day

electronically in Form GST TRAN 1 also to specify stock details in TRAN 1

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Paying tax at a fixed rate/fixed amount in lieu of tax payable under the existing law

SHALL BE ENTITLED for (100%) Credit of eligible duties /VAT on


Inputs contained in semi-finished /finished goods held in stock on the appointed day

INPUT SERVICE DISTRIBUTOR

It is AN OFFICE of the supplier of goods/services which receives tax

invoices for the purpose of distribution of credit to a SUPPLIER of taxable goods/services having same PAN

The provision overrides all the other provisions contrary to it

CREDIT of Service Tax

SERVICE RECEIVED - PRE GST will be available for distribution as

credit in GST even if the invoices are received on or

after the appointed day

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Transitional Arrangement for Input Tax Credit CREDIT DISTRIBUTION OF SERVICE TAX BY INPUT SERVICE DISTRIBUTORS

[s.140(7)]

--- this provision is specific to CGST Law


BY A PERSON HAVING

CENTRALIZED REGISTRATION

UNDER THE EARLIER LAW

TRANSFER OF UNUTILIZED

CENVAT CREDIT

•Allowed to take credit of CENVAT credit c/f in the return for period ending with the day immediately preceding the appointed day

Subject to the following conditions: (i) Return for period ending with the day

immediately preceding the appointed day filed within 03 months from the appointed day

(i) The aforesaid return is either original/revised where claim is reduced from the earlier claim

(ii) Amount has to be admissible as credit under the earlier law and ITC under GST Law

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Transitional Arrangement for Input Tax Credit TRANSFER OF UNUTILIZED CENVAT CREDIT BY A PERSON HAVING CENTRALIZED REGISTRATION

[s.140(8)]

Credit is transferable to any registered

taxable person having same PAN --- this provision is specific to CGST Law


CENVAT Credit for Input Services reversed due to non – payment of consideration within three months

CREDIT can be reclaimed Payment of consideration for supply of services has to be made within three

months from the appointed day

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Transitional Arrangement for Input Tax Credit RECLAIM OF REVERSED CREDIT DUE TO NON – PAYMENT OF CONSIDERTION WITHIN 3

MONTHS[s.140(9)]

--- this provision is specific to CGST Law


[s.141]

Conditions:

Removal/Dispatch to the job worker prior to the appointed day&

Returned within six months from the appointed day/extended period (not more than 2 months) Manufacturer & Job Worker both declare the details of Inputs/Semi-finished/Finished Goods held in stock by the Job Worker on the appointed date

No Tax is payable

#To be recovered as arrears of GST

Not Returned within six months /extended

period

Manufacturer can transfer finished goods from the premise where it have been sent for Export - with/without payment of tax within six months as per earlier law

#Provided goods are taxable under the GST Law 26 GST Policy Planning Unit


To declare in TRAN 1 within 90 days

Miscellaneous Transitional Provisions : [s.142(1)]

Goods which were Earlier Exempted but Taxable

under GST

Goods on which Duty/Tax paid under the earlier law

When, Goods were removed/sold within 6 months prior to the appointed day &

Returned within 6 months from the appointed day

Proper Officer can satisfactorily identify the goods, then for

No Tax is payable by the person returning the

Goods

Return is not made by a registered taxable person: Eligibility for Refund of the duty/tax paid under existing law

Return is made by a registered taxable person: Return of goods shall be deemed to be a supply

27 GST Policy Planning Unit Directorate of Commercial Taxes

Miscellaneous Transitional Provisions : [s.142(2)]

Price is REVISED after the appointed day in

respect of a previous contract

Documents that may be issued by the supplier

• Supplementary Invoice/Debit Note

For Upward Revision

• Supplementary Invoice/Credit Note

For Downward Revision

Documents shall be deemed to have been issued in respect of an outward supply made under GST



Miscellaneous Transitional Provisions :REFUND/RECOVERY [142(3) – (9)]

CENVAT/VAT Credit as per Earlier Law

Refund/ Recovery

Liability of Output Duty/ Tax as per Earlier Law

Assessment/Adjudication Proceeding as per Earlier

Laws(any tax/penalty/interest)

Revision of return as per Earlier Law

Proceeding of appeal, revision, review or reference initiated before/on/after the appointed day to be

disposed of as per the earlier law

REFUND CLAIMS FILED BEFORE/ON/AFTER THE APPOINTED DAY for any DUTY/TAX etc. PAID

BEFORE THE APPOINTED DAY to be disposed of as per the provisions of earlier law 29 GST Policy Planning Unit


Miscellaneous Transitional Provisions REFUND/RECOVERY [s.142(3) – (9)]

REFUND - Pending or accruing from

appeal, etc

To be generally paid in Cash (CGST) & in Cash as per the provisions of earlier law

(SGST)

Rejected Claim of Refund to LAPSE

RECOVERY resulting from proceedings under the

earlier law To be Recovered as an arrear of GST

Amount refundable/recoverable shall not be admissible as ITC under GST 30

No refund in case CENVAT/VAT credit is c/f

Claim for refund after the

appointed day

Duty/Tax paid under earlier law for (i) export before/after the appointed day (ii) Services not provided

To be disposed as per earlier law and

if payable to be paid in cash

To be disposed as per earlier law


• Goods and/or services supplied on or after the appointed date

• Contract entered prior to the appointed date

Supply to be taxed under

GST Law

• Irrespective of the Time of Supply of goods /services

• To the extent Duty/tax leviable under the earlier law

No Tax to be paid under

GST

• Both VAT & Service Tax paid on procurement

• Credit of the above will be available to the extent supplies made after the appointed day….. To declare in TRAN 1 within 90 days

Availability of credit in

certain cases

1

2

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Miscellaneous Transitional Provisions: Taxability in Certain Cases[s.142(10)/(11)] :

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Goods Sent on approval basis

Rejected Goods returned within six

months

Rejected Goods returned after six months/ extended

period(Max. 2 months)

Goods taxable under GST

No Tax is payable on returned goods

Not earlier than six months prior to the appointed dated

Rejected/Not Approved by the buyer

Goods Rejected but not returned within six

months/ extended period

Goods taxable under GST

Tax is payable by the person returning the

goods

Tax is payable by the person who sent the goods on approval

basis

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To be declared by supplier within 90 days in Form GST TRAN 1 GST Policy Planning Unit


MISCELLANEOUS TRANSITIONAL PROVISIONS:

TAX PAID ON GOODS/ CAPITAL GOODS LYING WITH AGENTS TO BE ALLOWED AS

CREDIT [s.142(14)]

Conditions:

Agent is registered under GST

Principal & Agent both declare the details of stock of Goods lying with the

agent immediately preceding the appointed day

Invoices were issued not earlier than 12 months prior to the appointed

day

Principal has either reversed or not availed of the ITC in respect of such

goods

To declare within 90days in TRANS 1

For Goods belonging to Principal lying with the agent on the appointed day

Agent is entitled to take credit of tax paid on such goods

--- this provision is specific to SGST Law



Miscellaneous Transitional Provisions DEDUCTION OF TAX AT SOURCE [s. 142(13)]

Tax was required to be deducted on such sale

under earlier law

Goods sold/invoice issued prior to the

appointed day

Payment made against such sale, on or after the appointed day

Will not be considered for TDS under GST Law

--- this provision is specific to SGST Law

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Eligible duties for the purpose of s. 140(3)/(4)/(6)

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(i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957[was leviable on sugar, tobacco, cotton fabrics, rayon or artificial silk fabrics and woollen fabrics produced or manufactured in India]

(ii) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975[Additional duty equal to excise duty on imported articles..Countervailing Duty]; and (iii) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975[Additional duty equal to sales tax, local taxes and other charges on imported articles….Special Additional Duty]

(iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 [leviable on various textile articles] (v) the duty of excise specified in the First Schedule to the Central [Chapters 1 -98 of the

Central Excise Tariff]

(vi) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985;[ a special duty of excise, in addition to the duty of excise as in (v) above on products like Unmanufactured Tobacco etc.]

(vii) the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001; [Duty of excise imposed on Panmasala, Cigarettes, Motor Car etc. as way of surcharge]

First Stage/Second Stage dealer:-

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(Rule 2 of Central Credit Rule 2004: (j) “First stage dealer" means a dealer, who purchases the goods directly from,- the manufacturer under the cover of an invoice issued in terms of the provisions of Central Excise Rules, 2002 or from the depot of the said manufacturer, or from premises of the consignment agent of the said manufacturer or from any other premises from where the goods are sold by or on behalf of the said manufacturer, under cover of an invoice; or an importer or from the depot of an importer or from the premises of the consignment agent of the importer, under cover of an invoice (s) "Second stage dealer" means a dealer who purchases the goods from a first stage dealer. ]

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GST Policy Planning Unit Directorate of Commercial Taxes;

Govt. of West Bengal

NOTE: This presentation is clarificatory in nature and not meant for interpretation of provisions of relevant act and rules.