The government has finally taken a step towards the clarification of backdated tax credit being due within the transition towards GST scheme. In the latest notification, it is said that all the retailers and traders can declare filing within 90 days and claim a tax credit for transitioning of the stock after the implementation of the GST.
The draft transition rules for Goods and service tax has been decided for the time limit of 60 days. In the rule book approved by the GST council mentioned that, “every registered person entitled to take credit of input tax shall, within 90 days of the appointed day, submit a declaration electronically, specifying separately, the amount of input tax credit to which he is entitled.”
According to the rules, the commissioner has the power to extend this limit to 90 days with suggestion and at the discretion of GST council. The council along with the concerned ministries amended the transition rules and allowed the dealers and traders to claim 60 percent of the SGST or CGST dues in the case of excess of GST rate of 18 percent.
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While in the case where the GST rate is below 18 percent, there will be only 40 percent deemed credit available against the SGST and CGST dues. For availing this, a manufacturer can issue a Credit Transfer Document (CTD) as an evidence for the payment of excise on goods which is cleared before the implementation of GST to the dealer.
For this, a dealer which is availing the credit will have to maintain the proof and copies of invoice related to the purchase and selling from the manufacturers and dealers through the intermediate dealers. And an important point to be kept in mind that, CTD must be issued within a time period of 30 days of 1st July and the details regarding this must be mentioned in the specific forms by the producers and all those dealers and distributors who are availing this credit.
Nangia & Co-Directors (Indirect Tax) Rajat Mohan, mentioned that “This provision comes as a sigh of relief for entire dealers/distributors network of a motor vehicle and other conveyances, as such dealers/distributors would get the entire credit of excise paid by the original manufacturer.”
Whereas the dealers also asked for the hike in the quantum of the ITC for transition stock and the for this GST council amended the transition rules in its 3rd June meeting effectively. In such cases, where IGST paid on the sale of goods the deemed credit will be available at the rate of 30 percent of the Integrated GST paid but if the rate of tax is 18 percent or above while in the other cases, the IGST rate must be above the 20 percent.
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But certain conditions are also levied upon this transition, to claim this deemed credit, goods should be leviable to excise duty or additional customs duty while the goods must not be unconditionally exempt from the whole of the excise duty. And for claiming the credit of service tax or VAT paid in the current tax scheme against GST for supplies made in GST regime, a dealer would be required to furnish details of the proportion of such supply made by his side.
Rajat Mohan said that “The transition rules specify that individual states may insert a new provision giving the details of the methodology of calculation of the VAT paid which would be available as ITC of the state tax under a specified condition.” The government is also ruling that whole refund of 100 percent will be given to the items crossing the 25,000 limit which also carries the brand name of the manufacturer.
