How to carry forward credit of Input tax which were there in previous laws such as Excise, VAT, Service tax etc.

How to carry forward credit of Input tax which were there in previous laws such as Excise, VAT, Service tax etc.

Elaborate provisions have been made to carry forward the ITC earned under the previous law to the GST.

a) Taking credit of closing balance of credit in the last returns

In order to claim this credit, declaration in form “GST TRAN 1” is required to be furnished within 90 days.

b) Taking credit of un-availed credit on capital goods

This can also be taken by filing the declaration in form “GST TRAN 1”.

Conditions

Such credit would be available only if one had filed returns for the last 6 months under the respective old laws.

c) Taking Credit on duty paid stock

In order to take credit on duty paid stock, one need to declare the stock of duty paid goods within prescribed time

Conditions

(i) Credit shall be taken on the basis of invoice evidencing payment of duty of excise or VAT

(ii) Such invoices should be less than one-year old

d) Taking Credit on duty paid stock when one does not possess the document evidencing payment of excise duty/VAT

GST has a scheme for traders who do not have excise or VAT invoice. Following are its features:

  1. This scheme can be availed only by traders
  2. It would be operative only for 6 months which means stock lying as on 30 june should be sold max upto 31 Dec 2017
  3. Partial credit would be allowed as follows:
  • At 60 % on goods which attracts central tax (CGST) at 9% or more
  • At 40 % on other goods which attracts CGST below 9 %.

Conditions

  1. Goods should not be unconditionally exempt goods or taxed at nil rates under existing law
  2. Stocks stored should be easily identifiable
  3. Credit would be available only once said goods are sold and GST is paid.
  4. Benefit of credit should be passed on to the customer by way of reduced prices.
  5. The statement of supply of such goods in each of the six tax periods has to be submitted.

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