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Allowable credit on stock held on appointed day for Unregistered person

CA Varun Chadha 
on 12 June 2017

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Allowable credit of central duties or First stage VAT on stock held on appointed day for Traders/ Unregistered person in 10 simple points. 

1. Following persons are entitled to take CGST credit in Electronic credit ledger:

A. Not liable to register under earlier law

B. Was engaged in manufacturing exempted goods or providing exempted services

C. Availed the benefit of 26/2012 on works contact service

D. FSD/SSD/Registered Importer/depot of Manufacturer.

2. Conditions for taking credit:

A. Input i.e. Stock to be used taxable supply in CGST
B. Taxpayer is eligible for ITC in CGST
C. Possession of invoice evidencing payment of duties.
D. Invoice should not issue earlier than 12 months immediately preceding appointed day.
E. Supplier of services is not eligible for any abatement under CGST.

3. Input tax Credit on inputs held in stock and inputs contained in semi-finished or finished goods held in stock on appointed day is eligible for central excise duty or duty levied under section 3(1) of custom tariff act.

4. INPUT OF GOODS, IF INVOICE is NOT AVAILABLE - Provided that where a registered person (TRADER ONLY), is not in possession of an invoice or any other documents evidencing payment of duty in respect of inputs, 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.

5. The scheme shall be available for six tax periods from the appointed date.

6. 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 or were not nil rated

(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 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 CGST Rules)

7. 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 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.

8. 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.

9. The scheme shall be available for six tax periods from the appointed date.

10. 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 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)


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