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SECTION-140

CLAIMING OF ITC

(1) Amount of Cenvat credit carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law allowed as input tax credit in his electronic credit ledger other than a person opting to pay tax under section 10 (composition scheme).

Conditions:

  • admissible as input tax credit under this Act.
  • furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date;
  • where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government.

Critical points


1.

Company must properly record the amount of Cenvat credit availed in its books of account.

2.

A company must file its last return for Excise, VAT, Service tax carefully in order to avoid loss of eligible Cenvat credit.

Within sixty days of the appointed day, submit an application electronically in FORM GST TRAN-1, duly signed, on the Common Portal


Procedure

Within sixty days of the appointed day, submit an application electronically in FORM GST TRAN-1, duly signed, on the Common Portal specifying separately:

[This proviso is applicable only in SGST]

(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 during the financial year relating to the relevant return, 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.

(2) Credit of unavailed CENVAT credit in respect of capital goods, not carried forward in a return, shall be allowed Provided such credits are admissible under both existing law and the GST laws.

Unavailed CENVAT credit means the amount that remains after subtracting the amount of

Cenvat credit already availed in respect of capital goods.

Critical points


1.

The company must maintain proper documentation of capital goods received prior to the appointed day in order to avail their credit under the GST Act.

2.

Credit of only those capital goods would be available as are defined under Rule 2(a) of the Cenvat Credit Rules, 2004 and also available under the GST law.

3.

The company must defer the purchase of any capital goods like furniture, etc., the credit of which is not available under the earlier law.

Within sixty days of the appointed day, submit an application electronically in FORM GST TRAN-1, duly signed, on the Common Portal


Particulars relating to every item of capital goods in respect of tax/duty awaited or utilized by way of credit under the existing law and unavailed portion shall be indicated.        

Pictorially this provision can be depicted as follows:

(3) Credit of eligible duties in respect of inputs containing semi and finished good held in stock allowed in certain situations as engaged in the manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of the benefit of notification No. 26/2012-Service Tax, dated 20.06.2012 or a first stage dealer or a second stage dealer or a registered importer, or a depot of a manufacturer held on appointed day

  • Such input / goods shall be used for making taxable supplies under this Act.
  • Said taxable person pass on the credit by way of reduced price to recipient.
  • Such taxable person are eligible for credit under this Act.
  • Said taxable person is holding valid invoice or document under the earlier law and having evidence that tax were paid on input.
  • Such invoice or documents must not be older that 12 months immediately proceeding the appointed day . Means if appointed day is 1.4.2017 then invoice from 1.4.2016 shall be treated as valid documents.
  • Supplier of services is not eligible for any abatement [only for CGST]

Critical Points


Credit of only those inputs would be allowed to be carried forward as is available under the existing law.

In case of goods imported by a trader under the earlier law, presently only credit of SAD @ 4% is available as against credit of IGST @ 18% (assumed) in case the goods are procured post-implementation of GST. In order to avoid such huge loss of credit, a trader must well plan its purchases of imported goods.

shall specify separately details of stock held on the appointed day. In respect of inputs for      which he is not in possession of any document evidencing payment of central excise duty,    value added tax

(ii) Such credit shall be allowed at the rate of [forty per cent.] of the central tax, value added tax applicable on supply of such goods after the appointed date and shall be credited after the central tax payable, value added tax payable on such supply has been paid.

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


Submits a statement in FORM GST TRAN - 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.

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

(4) Cenvat credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, relating to such exempted goods or services, in accordance with the provisions of sub-section (3).

Applicable to a person:

  • Engaged in the manufacture of taxable as well as exempted goods under the Central Excise Act, 1944
  • Provision of taxable as well as exempted services under Chapter V of Finance Act, 1994

But which are liable to tax under this Act shall be entitled to take, in his electronic credit ledger.

Conditions:

  • The person must be a registered person under the GST Laws.
  • application in Form GST TRANS-01 specifying separately the details of stock held on the appointed day upto 6 tax periods indicating the details of supplies effected during each tax period.

(5) Credit of eligible duties and taxes in respect of inputs or input services during transit

A registered person shall be entitled to take credit of

• Eligible duties and taxes in respect of inputs or input services

• Received on or after the appointed day

• The duty or tax in respect of which has been paid by the supplier under the existing law

• The invoice or any other duty or tax paying document was recorded in the books of account within a period of thirty days from the appointed day unless such period is on sufficient cause being shown, extended by the Commissioner for a further period not exceeding thirty days

• Registered person furnishes a statement in respect of credit taken:

In terms of Rule 2(c) of Transition provisions the said taxable person shall furnish the following details:

(i) A statement indicating the name & address of the supplier together with invoice details.
(ii) Description, quantity and value of goods or services.
(iii) The amount of taxes, duties, VAT, Entry tax charged by the supplier.
(iv) The date at which receipt of goods or services are entered in the books of the recipient.

• Eligible duties defined to mean all duties on which CENVAT credit is available under Rule 3 of CENVAT Credit Rules 2004 including service tax but excluding cesses

• Section does enables taking of credit not availed for goods and services already received

• Same provisions under SGST Acts

(6) Credit of eligible duties and taxes on inputs held in stock to be allowed to a taxable person switching over from composition scheme

• A registered person

A. Paying tax at a fixed rate or

B. Paying a fixed amount in lieu of the tax payable shall be entitled to take credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day

Credit entitlement is subject to following conditions

1. Such inputs or goods are used or intended to be used for making taxable supplies under CGST Act

2. Registered person is not paying tax under composition scheme

3. Registered person is eligible for input tax credit on such inputs under CGST Act

4. Registered person is in possession of invoice or other prescribed documents evidencing payment of duty

5. Such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day

6. In terms of Sub Rule 2(b) of the Transition Provision Rules the application in FORM TRAN-1 shall specify separately the details of stock held on the appointed day upto 6 tax periods indicating the details of supplies effected during each tax period

• Same provisions under SGST Acts

(7) Credit distribution of service tax by Input Service Distributor.

• Notwithstanding anything to the contrary contained in this Act, the input tax credit on account of any services received prior to the appointed day by an ISD shall be eligible for distribution as credit under this Act even if the invoices relating to such services are received on or after the appointed day

• ISD definition refers to receipt of the invoices towards the receipt of input services

• No such provisions under SGST Acts in absence of ISD concept

  • Before GST as CGST
  • After GST as CGST or IGST

(8) Provision for transfer of unutilized Cenvat Credit by taxable person having centralized registration under the earlier law Who has obtained a registration under CGST Act shall be allowed to take credit of the amount of CENVAT carried forward in the last return.   

Credit should be admissible as input tax credit under the CGST Act

• Return can be filed within three months of the appointed day and credit shall be allowed subject to the condition that the said return is either an original return or a revised return where the credit has been reduced from that claimed earlier

• Such credit may be transferred to any of the registered persons having the same PAN who were covered under the centralised registration

(9) CENVAT credit reversed due to non-payment of consideration, can be reclaimed provided that the registered person has made the payment within a period of three months from the appointed day

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