Mr. A : Good Day Sir, how are you?
CA : Hi Mr. A, I am doing fine, how about you?
Mr. A: I am doing fine sir. We have now really discussed much about GST, but today can you guide how can I migrate to GST from current VAT regime?
CA: Hi Mr. A, This is question mostly all business persons is thinking about. Let me clear you the scenario today.
The first aspect to migrate to GST is to take provisional registration currently. This can be done directly by applying for provisional registration through your existing TIN number. There will be one Provisional ID issued for one PAN based registration for each state.
Then a provisional registration will be granted on the start day of GST and then the necessary documents need to be submitted within 3 months. Once the documents are verified successfully then a final registration certificate will be issued.
Mr. A: Ohkay, so this is how I need to progress on registration requirements. And what about the input credit which I am having in current VAT/Service tax/Excise laws?
CA: Mr. A, there are provisions for effective and smooth migration of your input tax credit under current laws to GST law. For your holistic view here is the chart showing various cases for carry forwarding of input tax credit to GST:
|
Input Credit available |
Available to whom |
Conditions |
| Carried forward in last return |
To all Existing taxpayers who are taxpayers in GST also | 1. Filed return of last 6 months immediately preceding the GST start 2. The credit should not be related to goods manufactured under any exemption provided by Government 3. The said goods should be taxable in GST also. |
| Unavailed CENVAT credit on Capital Goods | To all Existing taxpayers who are taxpayers in GST also | The said credit should be permissible as input tax credit in GST act. |
| Input Credit on stock or WIP at GST start | Registered in GST but exempted erstwhile or works contractor, First Stage Dealer/Second Stage Dealer, Registered Importer or Composition taxpayer | 1. Such Goods should be used for making taxable supply in India. 2. Invoices of such goods are available and the invoices should not be earlier then 12 months from GST start 3. The supplier of services should not be eligible for abatement in GST |
|
Input tax paid earlier but goods/service received after GST started |
Registered person in GST |
Invoice of such goods/service should be recorded in books within 30 days. |
|
Credit carried forward in Last return before GST |
Registered person having Centralized Registration in Service tax |
Credit can be transferred to any of registered premises coming under Centralized registration which is now separately registered in GST |
Application for availing credit on inputs/goods lying in stock can be submitted by registered person within 60 days from start of GST in form GST TRAN-1. Hence, the input credit will be available in CGST form for carrying forward the credit of Central taxes and in SGST for carrying forward the credit of state taxes.
Mr A: Ok, so if I am correctly filling returns and having appropriate bills then I can carry forward the input credit by filling GST TRAN-1. Let us suppose I have duty paid stock but I do not have the relevant billing document of them, then how can I take the credit of those?
CA: Mr A, I will really rate this an amazing question. Any registered person in GST who was exempted erstwhile or works contractor, First Stage Dealer/Second Stage Dealer, Registered Importer shall be allowed to take input tax credit on goods held in stock on the day of start of GST for which he is NOT in possession of any document evidencing payment of Central excise duty:
i) Credit allowed at the rate of 60% of the CGST paid under GST on such goods if the CGST rate on those goods is Greater or equal to 9%. IF the CGST rate is less than 9% then the credit will be allowed at the rate of 40%. Such credit will be allowed once the CGST has been paid.
ii) In case of IGST paid, the refund will be 30% / 20%.
iii) This scheme will only be available for 6 tax periods i.e. 6 months.
Similarly, any registered person (as mentioned above) shall be allowed to take input tax credit on goods held in stock on the day of start of GST for which he is NOT in possession of any document evidencing payment of Value added Tax:
i) Credit allowed at the rate of 60% of the SGST paid under GST on such goods if the SGST rate on those goods is Greater or equal to 9%. IF the SGST rate is less than 9% then the credit will be allowed at the rate of 40%. Such credit will be allowed once the SGST has been paid.
ii) This scheme will only be available for 6 tax periods i.e. 6 months.
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