Transition to GST

Taxpayers registered under VAT/Service tax needs to get registered under GST. Every entity registered under previous indirect tax laws will get certificate of registration on provisional basis.
The Provisional registration certificate will be valid for a period of 6 months. It is mandatory to get registered under GST where the businesses have turnover of more than Rs 20 Lakhs. Small businesses (turnover less than Rs 50,00,000) have an option for composition scheme or to get voluntarily registered under GST.
According to the GST Model Law, All the invoices have to be uploaded online. The process of deduction, payment, and refund under GST would be carried out electronically.

Transition of Input Tax Credit :-

Input tax credit under previous laws for the period prior to the appointed day i.e. 1st July, 2017, would be transferred to the electronic credit ledger under GST. Manufacturers/dealers can claim CENVAT credit for input held in stock, semi-finished or finished goods held in stock if following conditions are satisfied :-

  1.  such inputs and/or goods are used or intended to be used for making taxable supplies under GST;
  2.  the said taxable person passes on the benefit of such credit by way of reduced prices to the recipient;
  3.  the said taxable person is eligible for input tax credit on such inputs under GST;
  4. the said taxable person is in possession of invoices and/or other prescribed documents evidencing payment of duty under the earlier the law in respect of such inputs;
  5. such invoices and/or other prescribed documents were issued not earlier than 12 months immediately preceding the appointed day;
  6. the supplier of services is not eligible for any abatement under GST.

Input tax credit can be claimed by the manufacturer/dealer only for those goods received after the appointed day, the tax on which has already been paid under previous law. Above credits would only be allowed if the invoice/tax paying document is recorded in the accounts of such person within 30 days of the appointed day. An extension of thirty-day may be granted by the competent authority on grounds of sufficient cause for delay.

REFUND CLAIMED :-

Any pending claims/appeals for refund on the due amount of CENVAT credit, tax or interest paid before the appointed day shall be disposed of according to the previous laws.
Inputs, semi-finished goods removed for job work for carrying certain processes and returned on or after the appointed date.
In case any inputs or semi-finished goods had been removed before the appointed date from the factory of the manufacturer and sent to a job worker for carrying further processing, testing, repair or for a similar purpose, and the same is received on :-

  1.  Underlying goods are returned to the factory within 6 months from the appointed date (extended maximum upto a period of 2 months).
  2. Declaration of the goods held by job worker is done in specified form and manner.
  3. Supply of semi-finished goods is done only on payment of tax in India or the goods are exported out of India within 6 months from the appointed date (extended maximum upto a period of 2 months).

 

Finished goods removed before appointed date for carrying certain processes and returned on or after the appointed date.

In case any excisable goods had been removed without payment of duty for carrying out tests or other processes not amounting to manufacture, no tax shall be payable if the following conditions are satisfied:-

  1. Underlying goods are returned to the factory within 6 months from the appointed date (extended maximum upto a period of 2 months)
  2. Declaration of the goods held by job worker is done in specified form and manner.
  3. Supply of finished goods is made only on payment of tax in India or the goods are exported out of India within 6 months from the appointed date (extendable by not more than 2 months).

If the underlying inputs, semi-finished goods or finished goods are not returned within 6 months or extended period, input tax credit shall be recovered respectively.

 

Credit distribution of service tax by ISD :-

In the case of services received prior to appointed date & invoices received on or after appointed date, transition provisions will apply. ISD will be eligible to distribute input tax credit under GST.

Credit of eligible duties and taxes on inputs held in stocks switching over from composition scheme to a taxable person.

Taxpayers registered under composition scheme opts to be taxed as a regular taxpayer will be allowed to take credit of input held in stock, or in semi-finished goods or in finished goods on the day immediately preceding the date when they opts to be taxed as a regular taxpayer.