Transition to GST, from the appointed day ("AD"), would lead to replacement of the current laws (i.e. "existing law" as referred to in GST Act) like VAT, Excise etc. To facilitate such transition GST laws make certain provisions.
We at Instavat have tabulated briefly summarised the transitional provisions later. They are:
· Credit carried forward (c/f) under existing law
· Job work
· Variations in transactions (returns, price revision and like)
· Continuity of Pending proceedings and the like.
If any transition is not covered, the CGST Act gives power to government to make appropriate Order in that respect.
To take benefit of Transitional Provisions, it may be necessary to:
· Obtain registration under GST law
· File all returns under existing laws upto date
· Maintain detailed stock register and other relevant records and details (like, list of inputs used in goods)
· Preserve supporting documents, maintain proper tax records under existing laws etc.
· Maintain records of price list before and after AD
File refund claim in accordance with existing law
Brief Summary of Transitional provisions for Input Tax credit
| Case / Circumstance (section of CGST Act) | Allowability of Input Tax Credit ("ITC") | To do or compliance conditions |
| CENVAT Credit c/f in return under existing law (Section 140) |
To Registered person ("RP") not opting for composition scheme if: · ITC is allowed under GST law · All Returns for preceding 6 months under existing law filed · Not related to exempted goods |
· Obtain registration under GST law · File all returns under existing law |
| Unavailed CENVAT Credit of Capital Goods (which is admissible under existing law and under the GST law) | To RP not opting for composition scheme if credit is not already admitted in existing law and GST law | · Obtain registration under GST law · Avail credit remaining after subtracting credit already availed in the return |
| RP not required to register under existing law or ineligible to avail ITC under existing law | To RP for inputs held in stock and in semi-finished/finished goods (subject to conditions) |
· Obtain registration under GST law · Maintain detailed stock register · Maintain up to date purchase register · Maintain list of inputs used in the goods · Use such inputs or goods for making taxable supply under GST law · Preserve documents evidencing payment of tax/duty (documents being within 12 months from the AD) |
| RPerson dealing in exempted / non-exempted goods or service under existing law (including works contractor opting benefits under abatement notifications) | To RP for CENVAT Credit c/f and inputs held in stock and in semi-finished / finished goods relating to exempted goods/service | · Obtain registration under GST law · File returns under existing law · Maintain detailed stock register · Maintain list of inputs used in the goods · Preserve documents evidencing payment of tax (documents being within 12 months from the AD) |
| Inputs/Input service received after AD but tax paid under existing law | To RP if invoice/other document recorded within 30 days from AD | · Obtain registration under GST law · Record the invoice/document in Books within 30 days from AD · Furnish the statement for taking credit in prescribed manners |
| RP paying Tax at fixed rate/amount under existing law | To RP, not opting for composition scheme, Credit for inputs held in stock and in semi-finished / finished goods (subject to conditions) |
· Obtain registration under GST law · Maintain detailed stock register · Maintain purchase register · Maintain list of inputs used in the goods · Preserve documents evidencing payment of tax (documents being within 12 months from the AD) · Use such inputs or goods for making taxable supply under GST law |
| Services received by an Input Service Distributor ("ISD") prior to AD | To ISD for distribution of credit | · Invoices received after AD, evidencing services received prior to AD |
| RP having Centralised registration under existing law | To RP for CENVAT credit c/f in return under existing law | · Obtain registration under GST law · File returns under existing law |
| CENVAT credit reversed due to non payment of consideration to service provider | To RP if payment made to service provider within 3 months of AD | · Make payment within said time |
Transitional Provisions relating to Job Work
| Case | Tax Impact |
|
| Inputs/semi-finished goods sent to job worker before AD and received after AD. Excisable goods manufactured at place of business removed for carrying out tests not amounting to manufacturing without payment of duty. |
No tax payable, if received within 6 months from AD or within extended period, if any | · Maintain detailed stock register · Maintain up to date purchase register · Maintain list of inputs sent for job work · Manufacturer and Job worker to make declarations of inputs/goods held by job worker on AD |
Transitional Provisions – Miscellaneous
| Case | Action | To Do |
| Goods cleared within 6 months prior to AD by payment of duty under existing law returned after AD | RP eligible for refund if return is by an unregistered person within 6 months after AD (If returned by RP it will be deemed supply – Hence credit can be availed) |
· Obtain registration under GST law · Maintain detailed stock register · Update sale register (including details of sale return) preferably in real time · Maintain proper tax records as per existing law · Preserve documents evidencing payment of tax/duty
|
| Upward price revision after AD | RP shall issue supplementary invoice/debit note which shall be deemed to be issued for outward supply | · Obtain registration under GST law · Maintain records of price list before and after AD · Issue supplementary invoice/debit Note for differential amount within 30 days
|
| Downward price revision after AD | RP shall issue credit note which shall be deemed to be issued for outward supply (may reduce tax liability only if recipient reduces ITC) |
· Obtain registration under GST law · Maintain records of price list before and after AD · Issue credit Note for differential amount within 30 days
|
| Refund claim (if not c/f to GST) filed under existing law on/after AD (including for exports and services not provided) |
Shall be disposed of as per existing law and amount if any shall be paid in cash (for exports it should be dealt in manner provided in existing law) | · File refund claim in accordance with existing law · Ensure that such amount is not c/f
|
| Proceedings (i.e. appeal / review / reference / assessment / adjudication) under existing law for claim of CENVAT Credit (if not c/f to GST) OR Output tax OR interest / fine / penalty | Shall be disposed of as per existing law. Amount if, · Payable – To be paid in cash · Recoverable – recoverable as arrears of tax under GST law |
· Not to claim rejected / recoverable amount as ITC |
| Revision of return under existing law (within time limit) after AD thereby CENVAT credit being recoverable / refundable | Amount if, · Payable – To be paid in cash · Recoverable – recoverable as arrears of tax under GST law |
· Not to claim rejected / recoverable amount as ITC |
| Supply pursuant to contract before AD made after AD | Taxable under GST law | · Pay tax under GST law and not existing law |
| VAT / Service tax paid as per existing law | No tax payable to the extent it has been paid under existing law (i.e. VAT or Service tax) | · Pay tax under GST if any only for the differential amount |
| VAT and service tax both paid on supply as per existing law | Tax leviable under GST | · Pay GST · Take credit of VAT and service tax for supplies after AD in prescribed manner |
| Goods sent on approval within 6 months of AD, returned to seller | · No tax payable if returned within 6 months after AD · If returned after 6 months, person - returning goods shall pay tax · If goods not returned - seller should pay tax |
· Maintain detailed stock register · Update sale register (including details of sale return) preferably in real time
|
| Supply and issue of invoice before AD for goods liable to TDS under VAT |
|
· Maintain proper tax records as per existing law · Preserve documents relating to payment of tax |
We trust the above facilitates actions needed for Transition.
For a complete and thorough understanding, reference may be made to "Provisions at Glance" and "Explained +" in Instavat's GST laws.
Thanks,
Your Sincerely,
In the Service of Taxpayers
Team, Instavat.
