GST Rollout From July 1. How To Claim Taxes Paid On Goods In Stock

The CBEC, under the revenue department, has mentioned various points as part of transition provisions to address three key issues: registration, credit of taxes on goods and transition without double taxation.

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GST Rollout From July 1. How To Claim Taxes Paid On Goods In Stock

GST will subsume a variety of central and state levies

Highlights

  1. Government announces midnight GST launch on June 30
  2. CBEC has clarified on transition provisions to address key GST issues
  3. Registered manufacturers can carry forward Cenvat credit as CGST credit
The government has announced a midnight launch of GST or Goods and Services Tax on June 30. Finance Minister Arun Jaitley on Tuesday said President Pranab Mukherjee , Prime Minister Narendra Modi and two of his predecessors, Dr Manmohan Singh and HD Deve Gowda, will be on stage in the central hall of Parliament for the launch. Touted as India's biggest tax reform since Independence, the new indirect tax regime will subsume a variety of central and state levies, such as excise, service tax and VAT or value-added tax. While the government is taking various measures to make the public aware of the new indirect tax regime, the Central Board of Excise and Customs has come out with clarification on transition provisions to address key issues relating to GST.

The CBEC, under the revenue department, has mentioned various points as part of transition provisions to address three key issues: registration, credit of taxes on goods and transition without double taxation.

While clarifying on transition of credit of central taxes paid on goods in stock, the CBEC said: "A manufacturer having an existing registration can carry forward his Cenvat credit as CGST credit. He is also entitled to take balance of Cenvat Credit on capital goods." Under the current scheme of indirect taxation, manufacturers are allowed to take credit of duty of excise on any input received in the factory. Under the CENVAT credit system, the benefit of excise duty on inputs is available instantaneously when the inputs reach the factory.

Here's what the CBEC said:

Transition of Registration:

Any dealer who is registered under 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

Transition of credit of Central taxes paid on goods in stock:

A manufacturer having an existing registration can carry forward his Cenvat credit as CGST credit. He is also entitled to take balance of Cenvat Credit on capital goods.

A dealer who was not registered earlier on a first stage or a second stage dealer can take Cenvat credit paid on inputs, if he has 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 value of more than Rs 25000/- per item, bearing the 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% of CGST paid where the CGST rate is 9% or more and 40% of CGST paid in other cases for a period of six months, on stocks which were not unconditionally exempted earlier buy no Cenvat paying document is available.

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 balance of VAT credit on capital goods.

A dealer who was registered earlier can claim 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 inter-state sale is subject to submission of information regarding value and serial number of forms E, H etc.

Credit on goods in transit:

Credit of both Central and State taxes paid on goods in transit on the day of the transition i.e. 01-07-2017 is available on the basis of duty paying documents.

Transition without double taxation:

No tax is payable on 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.


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