FAQ on Transitional Provisions under GST

GST Model Law was released by the GST Council Secretariat in the month of November’ 2016. Chapter XXVII of The Model GST Law contains various transitional provisions consistent with the need for smooth transition to GST. These provisions of Model GST will help in removing the ambiguity surrounding the transitional impact once the GST implemented.

Below here are the frequently asked questions on Transitional Provisions of GST:

Question1 : A registered taxable person having credit carried forward in a return under earlier law eligible to claim input tax credit under GST?

Answer : Yes, a registered taxable person having input tax credit carried forward in a return under earlier law be eligible to claim input tax credit.

A registered taxable person, other than a person opting for composition scheme , shall be entitled to take, in his electronic credit ledger, the amount of cenvat credit carried forward in the return filled for the period immediately preceding the appointed day.

Provided that the credit will be admissible only if such tax credit is allowed under GST act.

Question 2 : What will be the treatment of incorrect amount of input tax credit claimed under earlier law ?

Answer : The treatment of incorrect amount of input tax credit claimed under earlier law can recovered  as an arrear of tax under GST Act. Provided applicable interest and penalties will be applied

CENVAT Credit = CGST Credit

VAT Credit = SGST Credit

Question 3 : Can a registered taxable person avail the unavailed cenvat credit on capital goods,not carried forward in a return?

Answer : Yes,  the registered taxable person other than a person falling under section 9 (composition scheme) can  avail the unavailed cenvat credit on capital goods,not carried forward in a return furnished under the earlier law by him, for the period ending with the day immediately preceding the appointed day.

Question 4 : Will the existing unregistered taxable person is eligible to claim credit of duties and taxes in respect of inputs held in stock?

Answer : 

CASE 1 Having prescribed documents for input credit –

Yes, the existing unregistered taxable person, or the person engaged in the manufacture of exempted goods or  exempted services, or  providing works contract service or a first stage dealer or a second stage dealer or a registered importer, are entitled to takes, credit of eligible duties and taxes 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:

  • such inputs and / or goods are used or intended to be used for making taxable supplies under this Act;
  • the said taxable person passes on the benefit of such credit by way of reduced prices to the recipient;
  • the said taxable person is eligible for input tax credit on such inputs under this Act;
  • the said taxable person is in possession of invoice and/or other prescribed documents evidencing payment of duty under the earlier law in respect of such inputs;
  • such invoices and /or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day;
  • the supplier of services is not eligible for any abatement under the Act:

CASE 2 Not having prescribed documents for input credit –

where a registered taxable 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 taxable person shall, subject to such conditions, limitations and safeguards as may be prescribed, be allowed to take credit at the rate and in the manner prescribed.

Question 5 : Will the Credit of eligible duties and taxes in respect of inputs or input services during transit available to registered taxable person?

Answer : Yes, A registered taxable 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 before the appointed day, provided that the documents of the same are recorded within 30 days from the date of appointment.

Question 6 : A registered taxable person earlier was under composition scheme ,under GST law he becomes taxable person . Will he be liable to claim input held in stock?

Answer : Yes, A registered taxable person, who was under composition scheme under the earlier 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 date subject to the following conditions:

  • such inputs and / or goods are used or intended to be used for making taxable supplies under this Act;
  • the said person is not paying tax under section 9;
  • the said taxable person is eligible for input tax credit on such inputs under this Act;
  • the said taxable person is in possession of invoice and/or other prescribed documents evidencing payment of duty under the earlier law in respect of inputs; and
  • such invoices and /or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day.

Question 7 : Under earlier tax the good were exempted goods at the time of removal will it be liable to tax on return of such goods under GST?

Answer : No, the goods which were exempt at the time of removal are not liable to tax under GST.

Provided that such goods be returned to the said place of business within a period of six months from the appointed day.

 

 

Question 8 : Will the registered taxable person eligible for refund of duty paid under earlier law for goods returned to the place of business on or after the appointed day?

Answer : Yes, the registered taxable person shall be eligible for refund of the duty paid under the earlier law.

Provided such goods are returned by a person, other than a registered taxable 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 taxable person the return of the goods shall be deemed to be a supply.

 

 

 

 

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