Transition provisions under the GST laws address three important issues, related to all those Transitions of registrations, Transition of credit of central taxes paid on goods in stock and Transition of credit of state taxes paid on goods in stock.
The Transition of GST Registrations
- Any dealer who is registered under the State VAT, central excise, service tax etc having a valid PAN shall be given provisional registration.
- Dealers who have been given provisional registration would be given final registration on submission of prescribed documents.
The Transition of Credit of Central Taxes Paid on Goods in Stock
- A manufacturer having an existing registration can carry forward this Cenvat credit as CGST credit. He is also entitled to take the balance of Cenvat credit on capital goods
- A dealer who was not registered earlier or a first stage or a second stage dealer can take cenvat credit paid on inputs if he has an invoice or any other document such as credit transfer document evidencing payment of central excise duty on the stock
- Credit transfer document can be issued by a manufacturer for goods having a value of more than INR 25000 per item, bearing a brand name of the manufacturer, if verifiable inventory and supply chain records are maintained
- A dealer who was not registered earlier can take input tax credit of 60 percent of CGST paid where the CGST rate is 9 percent or more and 40 percent of CGST paid in other cases for a period of six months, on stocks which were not unconditionally exempted earlier but no Cenvat paying document is available
The transition of credit of state taxes paid on goods in stock
- A dealer can claim balance input credit of VAT reflected in the return subject to submission of prescribed information. He is also entitled to take the balance of VAT credit on capital goods.
- A dealer who was not registered earlier can claim a credit of VAT paid on stock at hand on the basis of purchase invoice of goods in stock.
- Credit in relation to stock received in the interstate sale is subject to submission of information regarding the value and a serial number of forms E, H etc.
Credit on Goods in transit
- The credit of both central and state taxes paid on goods in transit on the day of the transition i.e. 1-7-2017 is available on the basis of duty paying documents.
Recommended: Problems a Businessman May Face in GST After Implementation
Transition without double taxation
- No tax is payable on the supply of goods and services under GST to the extent the tax was paid on such supply under the earlier law.
- No tax is required to be paid on return of goods within six months where taxes were paid and goods removed prior to 01-07-2017.
- No tax shall be payable on return of goods from job worker to the principal within six months, where the goods were sent for job work before 01-07-2017.