Transition to GST

As now the GST is implemented, the businesses are getting more concerned about transition to GST in India. Registration under goods and services tax is also required by the entities/ businesses/ individuals registered under VAT or Service Tax. All such entities and concern need to get register themselves on provisional basis under GST, and loanbaba gives you complete details about the same.

A certificate will be issued for such registration which will be valid for a period of 6 months. It is mandatory to get registered under GST by the entities having a business turnover of more than Rs. 20 lakh. Small businesses can choose among two options viz. voluntary registration under GST and composition scheme.

Under GST Model Law, invoices need to be uploaded online. Whole the process including transactions will be online i.e. payment, deduction and refund of indirect taxes/ GST. To have ease in the process of GST, business offices are advised to be fully computerized.

At, you will learn more about migration to GST and its essentials.

Transition of Input Tax Credit

For the period prior to July 1, 2017, there is a provision of transfer to the electronic ledger account for input tax credit claimed under existing laws in the return for that period. CENVAT credit for input held in the form of finished goods, semi finished goods and stock can be claimed by the existing dealers and manufacturers if they satisfy following terms and conditions:

  • The use/ intention of use of such goods/ inputs is made for taxable supplies under GST
  • The said taxable person reduced the prices and hence passes on the benefit to the recipient in a way
  • The said taxable persons needs to be perfectly eligible for the input tax credit on the aforesaid inputs/ goods under new taxation system i.e. GST, India
  • The said taxable person has with himself the invoices and/ or prescribed documents which make an evidence of payment of the needed duty under the previous law with respect to said inputs
  • The aforesaid documents should not be older than 12 months from the appointment date i.e. July 1, 2017
  • The abatement under GST is not for the renderer of services.

The dealer/ manufacturer can claim Input Tax Credit for only those hoods which are received by the business after July 1, 2017 and tax for which has been paid already under the existing/ previous law. The business needs to record the invoice in the books of accounts within 30 days of appointed day, if above credits need to be availed. An extension can be given by the competent authority if there is a valid reason for the delay.

Refunds Claimed

If there are claims which are pending for the refund procedure on due amount of CENVAT credit, tax/ interest paid before July 1, 2017 will be disposed off under the lights of previous/ existing law.

If inputs or semi furnished goods which have been removed from the factory before the appointment date and then are sent further for job work viz. testing, repair, or processing, are received after the appointment date, there shall not be any liability of payment of tax if:

  • Such goods are transferred back to factory within a period of 6 months from the appointment date which can be extended up to a maximum of 2 months.
  • The goods have been declared to be held by the job worker in specified form/ manner.
  • Such supply of semi finished goods has taken place after the payment of tax in India or the goods have been exported out within a period of 6 months from appointment date.

In case the goods are removed without the payment of any duty for the processes like tests (which do not amount to manufacture), tax is not payable if:

  • The said goods have been returned back to the factory within the period of 6 months from appointment date which can be extended for 2 more months.
  • The declaration of such goods is done under specified manner and specific form.
  • Such supply of finished goods has taken place after the payment of tax in India or the goods have been exported out within a period of 6 months from appointment date which can be extended by 2 more months.

Credit Distribution by ISD

If the services are rendered before the date of appointment and invoices are received after the appointment date, provisions of transition may apply and ISD can distribute Input Tax Credit under GST.

Subject to certain conditions, taxpayers who have been registered under the composition scheme in existing/ previous tax regime will be allowed to avail credit of input in stock, semi finished or finished goods, on the day previous to the day from which the taxpayer opts to be treated/ taxed as a regular payer.