GST: Transitional Provisions Edition 1
Contents Administration under GST [S.165] Migration of Existing taxpayers [S.166] Input Tax Credits [S.167 to 172] Goods sent for Job work [S.173 to S.177] 2
Section 165: General Provisions All persons appointed by the respective Govt. s under the subsuming laws-shall be deemed to have been appointed as GST authorities Method of transition Through necessary orders, rules or notifications Law Central Excise Service Tax Value Added Tax Central Sales Tax Entry Taxes/ Entertainment tax/ Luxury Tax Department Ministry of Finance CBEC Ministry of Finance CBEC State Government/ Commercial taxes Department Central Law, administered by respective State Governments/ Commercial Taxes Department State Governments/ Commercial tax Department Following have not been subsumed in GST: Professional Tax-administered by Commercial Taxes Department Customs Duty-administered by CBEC 3
Section 166 Migration of Existing Taxpayers Every registered person under earlier laws to be issued a Registration Certificate on provisional basis Provisional RC Valid for 6 months Final RC to be issued subject to S.23 (Registration) RC to stand cancelled if information not provided within 6 months On an application made by such person stating that he was not liable for registration- Provisional RC shall be deemed to have not been issued Person eligible for composition scheme may apply for same within prescribed time, otherwise he would be liable to pay tax as regular taxpayer 4
Section 167- CGST ITC Carried Forward In Return BEFORE APPOINTED DAY (PREVIOUS LAWS) Registered taxable person AFTER APPOINTED DAY (GST REGIME) Registered taxable person other than composition taxpayer Claimed Cenvat Credit in return Allowed to take such credit in Electronic Credit Ledger *Credit to be allowed only if such inputs are admissible under GST Law
Section 167- SGST ITC Carried Forward In Return BEFORE APPOINTED DAY (PREVIOUS LAWS) Registered taxable person AFTER APPOINTED DAY (GST REGIME) Registered taxable person other than composition taxpayer Claimed Credit of VAT/ Entry tax in return (Furnished within 90 days) Allowed to take such credit in Electronic Credit Ledger *If central sales made against Central Statutory forms, credit shall not be allowed until such forms are submitted. However, later on making compliance under Rule 12 of CST Rules, taxpayer can claim refund under earlier laws
Section 168 - CGST & SGST Unavailed Cenvat Credit on Capital Goods BEFORE APPOINTED DAY (PREVIOUS LAWS) Registered taxable person AFTER APPOINTED DAY (GST REGIME) Registered taxable person other than composition taxpayer Unavailed cenvat credit of capital goods not carried forward in Return Allowed to take such credit in Electronic Credit Ledger *Credit to be allowed only if such inputs are admissible under Earlier laws as well as GST Law
Section 169-CGST Credits of inputs held in stock Eligible to take credits of eligible duties and taxes on inputs contained in- Stock Semi-finished goods Finished goods held in stock on the appointed day Eligible Duties and Taxes (i) BED (ii) Other Additional Duties (iii) CVD (iv) SAD (v) Service Tax Conditions to be fulfilled 1. Inputs are used for making taxable supplies 2. Benefit of such credit would be passed by way of reduced prices to recipient 3. Eligibility of credit on such inputs under GST laws 4. Possession of invoice 5. Invoice were issued not earlier than 12 months immediately preceding the appointed day 6. The supplier of services is not eligible for any abatement under the GST law. Proviso to section 169(1) PROVIDED that where a registered taxable person, other than a manufacturer or a supplier of services, is not in possession of invoice or any other documents evidencing payment of duty in respect of inputs, then such registered taxable person shall, subject to such conditions, limitations and safeguards as may be prescribed, be allowed to take credit at the rate and in the manner prescribed. 8
Section 169-SGST Credits of inputs held in stock A Registered taxable person - a) who was not liable to be registered under the earlier laws, or b) who was engaged in the sale of exempted goods under the earlier law but which are liable to tax under this Act Eligible to take credits of VAT and Entry Tax on inputs contained in- Stock Semi-finished goods Finished goods held in stock on the appointed day Conditions to be fulfilled 1. Inputs are used for making taxable supplies 2. Benefit of such credit would be passed by way of reduced prices to recipient 3. Eligibility of credit on such inputs under earlier laws and GST laws 4. Possession of invoice 5. Invoice were issued not earlier than 12 months immediately preceding the appointed day 9
Section 170 Credit of inputs held in stock in certain situations Under CGST Law (Only) A registered taxable person who was engaged in manufacture of non-exempted/ exempted goods or providing non-exempted/ exempted services, shall be entitled to take credit: (a) Cenvat credit c/f in his return [as per S.167]; and (b) Cenvat credit of eligible duty in respect of inputs-relating to exempted goods or services [as per S.169] Section 171 Credit of taxes in respect of input/ input services during transit Under CGST Law A registered taxable person: (a) shall be entitled to take credit of eligible duties and taxes (b) in respect of inputs/ input services received on or after the appointed day (c) the duty or tax is paid before the appointed day (d) provided the invoice is recorded within 30 days from the appointed day, and (e) a statement is also required be furnished in respect of such credit *Similar enabling provisions under SGST 10
Section 172 Composition to Regular taxpayer Credit of eligible duties and taxes on inputs held in stock to be allowed to a taxable person switching over from composition scheme Registered taxable person who was earlier under composition scheme shall be eligible to take credits on: Stock Semi-finished goods Finished goods held in stock on the appointed day Conditions to be fulfilled 1. Inputs used for making taxable supplies 2. Person is not paying tax under composition scheme of GST 3. Eligible for ITC under GST laws 4. Possession of invoices 5. Invoices were issued not earlier than 12 months immediately preceding the appointed day *Similar enabling provisions under SGST 11
Section 173 Exempted goods returned on or after appointed day Treatment of Exempted Goods returned after the appointed day *Let us assume that the appointed day is 1.4.2017 Condition 1 If exempted goods are sold within 6 months prior to the appointed day i.e. between 1.10.16 to 31.3.17 Condition 2 These goods are returned within 6 months from the appointed day i.e. between 1.4.17 to 30.9.17 Condition 3 These goods are returned to the place of business of the supplier Condition 4 Such goods are taxable under the new regime i.e. under GST TREATMENT Then such goods shall be exempt in the hands of the person who is returning such goods in the GST regime This provision can be said to be a saving provision enacted under the new statute or, we can say welcome provision However, If such goods are returned after 30.9.17 i.e. after 6 months, such goods will be taxable in the hands of the person returning such goods No tax shall be payable if goods are returned by person who is not registered under GST * Similar enabling provisions under SGST 12
Section 174 Duty paid goods returned on or after appointed day Treatment of duty paid goods returned after the appointed day Condition 1 If duty paid goods are sold within 6 months prior to the appointed day i.e. between 1.10.16 to 31.3.17 Condition 2 These goods are returned within 6 months from the appointed day i.e. between 1.4.17 to 30.9.17 Condition 3 These goods are returned to the place of business of the supplier Condition 4 Such goods are taxable under the new regime i.e. under GST TREATMENT The registered taxable person shall be eligible for refund of the duty paid under the earlier law where such goods are returned by an unregistered person If the said goods are returned by a registered taxable person, the return of such goods shall be deemed to be a supply *Similar enabling provisions under SGST 13
Section 175 Inputs removed for job work and returned on or after appointed day Treatment of inputs removed for job work and returned after appointed day Condition 1 If inputs are removed to a job worker for further processing under the provisions of earlier law before the appointed day Condition 2 These inputs are returned within 6 months from the appointed day Condition 3 These inputs are returned to the same factory from where inputs were sent for job work Condition 4 Such inputs are taxable under the new regime i.e. under GST Condition 5 Manufacturer and job worker declare the details of inputs held in stock, i.e. stock held by the job worker on behalf of manufacturer on the appointed day TREATMENT Then such inputs shall be exempt in the hands of the job worker in the GST regime However, if inputs are not returned within 6 months, the ITC shall be liable to be recovered in terms of section 184 14
Section 176 Semi-finished removed for job work and returned on or after appointed day Treatment of semi-finished goods removed for job work and returned after appointed day Condition 1 If semi-finished goods are removed to any other premises for carrying out manufacturing processes under the provisions of earlier law Condition 2 These goods are returned within 6 months from the appointed day Condition 3 These goods are returned to the factory from where semi finished goods are sent for further processing Condition 4 Such inputs are taxable under the new regime i.e. under GST Condition 5 Manufacturer and job worker declare the details of inputs held in stock, i.e. stock held by the job worker on behalf of manufacturer on the appointed day TREATMENT Then such inputs shall be exempt in the hands of the job worker in the GST regime However, if inputs are not returned within 6 months, the ITC shall be liable to be recovered in terms of section 184 *OPTION AVAILABLE TO MANUFACTURE Manufacturer may transfer goods to the premises of any registered taxable person for supplying there from on payment of tax in India or without payment of tax for exports [within 6 months] 15
Section 177 Finished goods removed for carrying out processes and returned after the appointed day Treatment of Finished goods removed for carrying out processes and returned after the appointed day Condition 1 If finished goods removed without payment of tax for carrying out test etc. not amounting to manufacture to other premises prior to appointed day Condition 2 These goods after test are returned within 6 months from the appointed day Condition 3 These goods are returned to the factory from where goods are removed Condition 4 Such goods are taxable under the new regime i.e. under GST TREATMENT Then such goods shall be exempt in the hands of the person returning goods in the GST regime However, if goods are not returned within 6 months, then, ITC shall be liable to be recovered in terms of Section 184 *OPTION AVAILABLE TO MANUFACTURER Manufacturer may transfer goods from the other premises on payment of tax in India or without payment of tax for exports [within 6 months] 16
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