Details of section 140(5)
This query is : Resolved
13 June 2017
pls clarify that in case of service received before 1st July but invoice received after 1st July but bill is dated 30th June, can we pass the entry u/s140(5) in the books in July month and also take credit under gst.
one more query I have what will be the situation of the same case as above but service tax liability is under RCM
13 June 2017
hi dear expert's , can anyone give his valuable comments on my query
21 July 2024
Section 140(5) of the Central Goods and Services Tax (CGST) Act, 2017 deals with transitional provisions related to input tax credit (ITC) on goods and services under the Goods and Services Tax (GST) regime. Let's address your queries based on this section:
### Scenario 1: Service received before 1st July but invoice received after 1st July (bill dated 30th June)
In this scenario, if you received the service before 1st July, but the invoice is dated 30th June and received after 1st July, you can still claim input tax credit (ITC) under GST. Here's how it works:
1. **Eligibility for ITC:** According to Section 140(5), if you have invoices or documents evidencing payment of tax under the earlier law (Service Tax in this case), you are eligible to claim credit under GST, provided the goods or services are received within 12 months from the GST implementation date (i.e., by 30th June 2018).
2. **Passing Entry in Books:** You can pass the entry in your books of accounts in July when you receive the invoice, even though the service was received before 1st July. The date of invoice (30th June) is crucial because it relates to the point in time when the service was completed or the liability to pay service tax under the earlier regime arose.
3. **Taking Credit under GST:** Yes, you can take credit under GST for the taxes paid under the earlier regime (Service Tax) as per the invoice received in July. The amount of credit you can claim will be subject to the conditions and limitations specified under GST law, such as being eligible goods or services under GST and satisfying other GST compliance requirements.
### Scenario 2: Service tax liability under Reverse Charge Mechanism (RCM)
If the service tax liability is under RCM (Reverse Charge Mechanism), the situation is generally treated the same, but with the added consideration of who is liable to pay the tax:
- **Service Received before 1st July:** Even if the service was received before 1st July but the liability to pay service tax (under RCM) arose after 1st July due to the invoice being dated 30th June, you can still avail of input tax credit under GST. This is because the liability under RCM is typically triggered at the time of payment or invoice date, whichever is earlier.
- **Entry in Books and Taking Credit:** Similar to the first scenario, you can pass the entry in your books in July when you receive the invoice and take credit under GST. The invoice date (30th June) would be considered for determining eligibility for ITC.
### Conclusion:
In both scenarios, as per Section 140(5) of the CGST Act, 2017, you are allowed to claim input tax credit under GST for services received before 1st July but invoiced after 1st July (dated 30th June), provided you meet the conditions outlined in the law. The timing of the invoice date is crucial as it determines the eligibility for transition credits under GST.
It's advisable to consult with a tax advisor or GST expert to ensure compliance with GST laws and to correctly interpret transitional provisions like Section 140(5) for your specific situation.
### Scenario 1: Service received before 1st July but invoice received after 1st July (bill dated 30th June)
In this scenario, if you received the service before 1st July, but the invoice is dated 30th June and received after 1st July, you can still claim input tax credit (ITC) under GST. Here's how it works:
1. **Eligibility for ITC:** According to Section 140(5), if you have invoices or documents evidencing payment of tax under the earlier law (Service Tax in this case), you are eligible to claim credit under GST, provided the goods or services are received within 12 months from the GST implementation date (i.e., by 30th June 2018).
2. **Passing Entry in Books:** You can pass the entry in your books of accounts in July when you receive the invoice, even though the service was received before 1st July. The date of invoice (30th June) is crucial because it relates to the point in time when the service was completed or the liability to pay service tax under the earlier regime arose.
3. **Taking Credit under GST:** Yes, you can take credit under GST for the taxes paid under the earlier regime (Service Tax) as per the invoice received in July. The amount of credit you can claim will be subject to the conditions and limitations specified under GST law, such as being eligible goods or services under GST and satisfying other GST compliance requirements.
### Scenario 2: Service tax liability under Reverse Charge Mechanism (RCM)
If the service tax liability is under RCM (Reverse Charge Mechanism), the situation is generally treated the same, but with the added consideration of who is liable to pay the tax:
- **Service Received before 1st July:** Even if the service was received before 1st July but the liability to pay service tax (under RCM) arose after 1st July due to the invoice being dated 30th June, you can still avail of input tax credit under GST. This is because the liability under RCM is typically triggered at the time of payment or invoice date, whichever is earlier.
- **Entry in Books and Taking Credit:** Similar to the first scenario, you can pass the entry in your books in July when you receive the invoice and take credit under GST. The invoice date (30th June) would be considered for determining eligibility for ITC.
### Conclusion:
In both scenarios, as per Section 140(5) of the CGST Act, 2017, you are allowed to claim input tax credit under GST for services received before 1st July but invoiced after 1st July (dated 30th June), provided you meet the conditions outlined in the law. The timing of the invoice date is crucial as it determines the eligibility for transition credits under GST.
It's advisable to consult with a tax advisor or GST expert to ensure compliance with GST laws and to correctly interpret transitional provisions like Section 140(5) for your specific situation.
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