Debugging Trans 1 and Trans 2

Tax or duty credit carried forward under any existing law or on goods held in stock on the appointed day

(1) Every registered person entitled to take credit of input tax under section 140 shall, within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, duly signed, on the Common Portal specifying therein, separately, the amount of input tax credit to which he is entitled under the provisions of the said section:

Provided that the Commissioner may, on the recommendations of the Council, extend the period of ninety days by a further period not exceeding ninety days.

Provided further that where the inputs have been received from an Export Oriented Unit or a unit located in Electronic Hardware Technology Park, the credit shall be allowed to the extent as provided in sub-rule (7) of rule 3 of the CENVAT Credit Rules, 2004:

Shall specify separately-

(i) the value of claims under section 3, sub-section (3) of section 5, sections 6 and 6A and sub-section (8) of section 8 of the Central Sales Tax Act, 1956 made by the applicant and

(ii) the serial number and value of declarations in Forms C and/or F and Certificates in Forms E and/or H or Form I specified in rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 submitted by the applicant in support of the claims referred to in sub-clause (i) above;

(this proviso only in SGST rules)

(2) Every declaration under sub-rule (1) shall: -

(a) in the case of a claim under sub-section (2) of section140, specify separately the following particulars in respect of every item of capital goods as on the appointed day-

(i) the amount of tax or duty availed or utilized by way of input tax credit under each of the existing laws till the appointed day, and

(ii) the amount of tax or duty yet to be availed or utilized by way of input tax credit under each of the existing laws till the appointed day;

(b) in the case of a claim under sub-section (3) or the proviso thereto or clause (b) of sub- section (4) or sub-section (6) or sub-section (8) of section 140, specify separately the details of stock held on the appointed day;

(c) in the case of a claim under sub-section (5) of section 140, furnish the following details -

(i) the name of the supplier, serial number and date of issue of the invoice by the supplier or any document on the basis of which credit of input tax was admissible under the existing law,

(ii) the description and value of the goods or services,

(iii) the quantity in case of goods and the unit or unit quantity code thereof,

(iv) the amount of eligible taxes and duties or, as the case may be, the value added tax

[or entry tax] charged by the supplier in respect of the goods or services, and

(v) the date on which the receipt of goods or services is entered in the books of account of the recipient.

The amount of credit specified in the application in FORM GST TRAN-1 shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.

(4) (a) (i) A registered person who was not registered under the existing law shall, in accordance with the proviso to sub-section (3) of section 140, be allowed to avail of input tax credit on goods (on which the duty of central excise or, as the case may be, additional duties of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975, is leviable) held in stock on the appointed day in respect of which he is not in possession of any document evidencing payment of central excise duty.

(ii) Such credit shall be allowed at the rate of sixty per cent. on such goods which attract central tax at the rate of nine per cent. or more and forty per cent. for other goods of the central tax applicable on supply of such goods after the appointed date and shall be credited after the central tax payable on such supply has been paid:

Provided that where integrated tax is paid on such goods, the amount of credit shall be allowed at the rate of thirty per cent. and twenty per cent. respectively of the said tax

(iii) The scheme shall be available for six tax periods from the appointed date.

(b) Such credit of central tax shall be availed subject to satisfying the following conditions, namely, -

(i) such goods were not unconditionally exempt from the whole of the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated in the said Schedule.

(ii) the document for procurement of such goods is available with the registered person.

iii) the registered person availing of this scheme and having furnished the details of stock held by him in accordance with the provisions of clause (b) of sub-rule (2) of rule 1, submits a statement in FORM GST TRAN 2 at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period.

(iv) the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.

(v) the stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.

(4) (a) (i) A registered person, holding stock of goods which have suffered tax at the first point of their sale in the State and the subsequent sales of which are not subject to tax in the State availing credit in accordance with the proviso to sub-section (3) of section 140 shall be allowed to avail input tax credit on goods held in stock on the appointed day in respect of which he is not in possession of any document evidencing payment of value added tax.

(ii) Such credit shall be allowed at the rate of sixty per cent. on such goods which attract State tax at the rate of nine per cent. or more and forty per cent. for other goods of the State tax applicable on supply of such goods after the appointed date and shall be credited after the State tax payable on such supply has been paid:

Provided that where integrated tax is paid on such goods, the amount of credit shall be allowed at the rate of thirty per cent. and twenty per cent. respectively of the said tax.

(b) Such credit of State tax shall be availed subject to satisfying the following conditions, namely, -

(i) such goods were not wholly exempt from tax under the Value Added Tax Act.

(ii) the document for procurement of such goods is available with the registered person.

(iii) the registered person availing of this scheme and having furnished the details of stock held by him in accordance with the provisions of clause (b) of sub-rule (2) of rule 1, submits a statement in FORM GST TRAN 2 at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period.

(iv) the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal. (v) the stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.

(In SGST Rules of States offering tax on MRP scheme)

2. Declaration to be made under clause (c) of sub-section (11) of section 142

Every person to whom the provision of clause (c) of sub-section (11) of section 142 applies, shall within a period of ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1 furnishing the proportion of supply on which VAT or service tax has been paid before the appointed day but the supply is made after the appointed day, and the ITC admissible thereon.

3. Declaration of stock held by a principal and agent

Every person to whom the provisions of section 141 or sub-section (14) of section 142 apply shall, within ninety days of the appointed day, submit a declaration electronically in FORM GST TRAN-1, specifying therein, the stock of the inputs, semi-finished goods or finished goods, as applicable, held by him on the appointed day.

4. Details of goods sent on approval basis

Every person having sent goods on approval under the existing law and to whom sub-section (12) of section 142 applies shall, within ninety days of the appointed day, submit details of such goods sent on approval in FORM GST TRAN-1.

5. Recovery of credit wrongly availed

The amount credited under sub-rule (3) of rule 1 may be verified and proceedings under section 73 or, as the case may be, section 74 shall be initiated in respect of any credit wrongly availed, whether wholly or partly.

Categories of closing stock held and to be shown in the form to claim ITC in Tran 1:

1. Credit of tax paid under CST on purchases
2. Closing Stock w.r.t exempted earlier but now taxable under GST
3. Unavailed credit on Capital Goods
4. Registered person having centralised registration under pre-GST regime
5. Goods send for job work
6. Goods held in stock as agent or send as principal
7. Goods sent on approval basis

The following are the broad categories of closing stock held on which ITC can be claimed and shown in the transition forms:

1. Credit of tax paid under CST to be carried forward for closing stock along with details of Form-C, Form-H/I, Form- F
2. Details of the inputs held in stock which were exempted under pre-GST regime but made taxable under GST
3. Amount of tax to be carried forward w.r.t tax unavailed on capital goods, example- as in Central Excise 50 % credit of tax paid on purchase of capital goods is allowed to Non-SSI assesse. Hence to claim the rest of 50% (if, not claimed earlier) details of purchases of capital goods are to be mentioned
4. Details of transfer of cenvat credit for registered person having centralised registration under pre-GST regime
5. Details of goods send for job work by principal manufacturer and held by the job worker for job work
6. Details of goods held in stock as agent on behalf of the principal and goods held by agent as a principal
7. Details of goods sent on approval basis six months prior to the 1st July

What are the Rules and conditions for Tran 1?

The form is to be filed by every person registered under GST irrespective of being registered or not under pre- GST regime. 

The form requires exhaustive details of the following:

• Registration number under pre- GST regime (Central Excise, VAT Act, Service tax)
• Tax period to which the last return filed under pre- GST regime pertains
• Date of filing of the above
• Details of description, unit quantity, value and type of goods (raw material, semi-finished/ finished goods)
• GSTIN of the supplier of goods
• HSN code of underlying goods

ITC to be carried forward of Commercial Tax (VAT/ CST) / Entry tax

1. Details of last tax period of which returns have been filed and the amount of cenvat credit admissible 
2. Details of the following forms received from supplier for which credit is being claimed:

• C- Form- Buyer dealer of different state issues C Form for compliance of CST Rules of the state of selling dealer
• F- form- The F form is required for stock transfer to branches / consignment agents or vice-versa from one state to another without attracting charge of CST
• H/I- Form- It is issued when the inter-state buyer is an exporter and buys the goods for exports.

In case any of the above forms are not available, details of such forms and differential tax also needs to be mentioned

Unavailed ITC w.r.t. capital goods 

ITC for capital goods is not available to the taxpayers under pre-GST regime 100% during the purchase of such goods. In case a registered person has purchased the capital, goods and was not able to claim the total amount of tax paid on purchase, the remaining ITC can be claimed under GST.

Specify the following in respect of every capital goods, invoice-wise details of:

• Total Cenvat Credit involved in such capital goods
• The amount of ITC availed or utilised till July 1st
• The amount of ITC remaining unavailed or unutilized till July 1st  2017

Stock held being send or received for job work 

When a principal manufacturer has sent his goods for job work to the job worker and such goods are lying with the job worker as on 1st July, it is also a stock held by principal manufacturer on which credit of tax will be allowed. 

The details must be filed by both principal manufacturer and job worker for goods

• Held as a job worker on behalf of the principal
• Send to job worker for job work as principal

Following are the basic details to be mentioned in the form:

• Challan number and date
• Type of goods (raw material, semi-finished/ finished goods)
• Description of goods- HSN, unit, quantity, value
• GSTIN of manufacturer or job worker

Goods sent to agent or consignment dealer for sale

When a principal dealer or manufacturer has sent his goods to his agent or consignment dealer for sale and the stock still lies with the agent or consignment dealer as on 1st July, it is also a stock held by principal dealer or manufacturer on which credit of tax will be allowed. 

The details must be filed by both principal dealer or manufacturer and agent or consignment dealer for goods

• Held as an agent or consignment dealer on behalf of the principal
• Send to agent or consignment dealer by principal dealer or manufacturer

Following are the basic details to be mentioned in the form:

• GSTIN of principal dealer or manufacturer
• Description of goods- unit, quantity, value and ITC to be taken

% of ITC claim available

The registered person under GST will be allowed the credit of tax paid on purchase of goods and held in closing stock as on the appointed date. Since, it is not in in possession of an invoice or other documents evidencing payment of taxes under VAT Act, Central Excise, credit will be allowed based on rate of IGST, CGST and SGST of the closing stock under GST according to the HSN code.

When the taxpayer sells the goods held as closing stock as on 30th June, he will have to first pay the appropriate taxes on such outward supply and then he will be allowed the ITC based on the rate of tax paid for that outward supply.

Conditions to be fulfilled to claim credit of Central Tax and State tax- Applicable in case of States offering Tax on MRP Scheme.

• The central tax or state tax payable on such supply has been paid.
• such goods were not wholly exempt from Excise Duty or Nil rated or under the relevant State VAT Act.
• the document for procurement of such goods is available with the registered person.
• furnish the details of stock held at the end of each of the 6 tax periods indicating therein the details of supplies of such goods effected during the tax period in FORM TRAN-2
• amount of credit allowed shall be credited to the Electronic Credit Ledger.
• the stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.

Requirement to file FORM TRAN-2

• The person aiming to claim ITC is registered under GST
• The registered person under GST is not registered under any pre-GST regime (VAT Act or Central Excise, Service Tax)
• Not in possession of an invoice or other documents evidencing payment of taxes
• Not a manufacturer under Central Excise or a supplier of services under Service Tax
• Closing stock lying on 30th June

The registered person who satisfies all the above conditions must file FORM TRAN-2  

Categories of closing stock held and to be shown in the form to claim ITC in Tran 2:

• Details of inputs held on stock on 1st July w.r.t any invoice/document evidencing payment of tax is not available with assessee.
• Credit on State Tax on the stock mentioned in point no.1 above