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Transitional Provisions

This guide explains the transitional provisions and tax scenario for intra-state and inter-state trade of goods, highlighting the changes from State Tax, VAT, and Excise to GST, including the migration process for existing taxpayers.

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Transitional Provisions

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  1. Transitional Provisions

  2. Present Scenario (Intra-State Trade of Goods) State Tax = ₹ 13.31 (₹ 11 + ₹ 1.10 + ₹ 1.21) VAT = ₹ 12.10 ITC = (₹ 11) ₹ 1.10 VAT = ₹ 13.31 ITC = (₹ 12.10) ₹ 1.21 VAT = ₹ 11 Excise = ₹ 10 Excise = ₹ 11 ITC = (₹10) ₹ 1 Central Tax = ₹ 11 (₹ 10 + ₹ 1) Tax Invoice (B) Cost = ₹ 100 Value = ₹ 110 Excise = ₹ 11 VAT = ₹ 12.10 ₹ 133.10 Tax Invoice (C) Cost = ₹ 121 Value = ₹ 133.10 VAT = ₹ 13.31 ₹ 146.41 Tax Invoice (A) Value = ₹ 100 Excise = ₹ 10 VAT = ₹ 11 ₹ 121

  3. GST Scenario (Intra-State Trade of Goods) State Tax = ₹ 12.10 (₹ 10 + ₹ 1 + ₹ 1.10) SGST = ₹ 11 ITC = (₹ 10) ₹ 1 SGST = ₹ 12.10 ITC = (₹ 11) ₹ 1.10 SGST = ₹ 10 CGST = ₹ 10 CGST = ₹ 12.10 ITC = (₹11) ₹ 1.10 CGST = ₹ 11 ITC = (₹10) ₹ 1 Central Tax = ₹ 12.10 (₹ 10 + ₹ 1 + ₹ 1.10) Tax Invoice (B) Cost = ₹ 100 Value = ₹ 110 CGST = ₹ 11 SGST ₹ 11 ₹ 132 Tax Invoice (C) Cost = ₹ 110 Value = ₹ 121 CGST = ₹ 12.10 SGST = ₹ 12.10 ₹ 145.20 Tax Invoice (A) Value = ₹ 100 CGST = ₹ 10 SGST = ₹ 10 ₹ 120

  4. Present Scenario (Inter-State Trade of Goods) State Tax (X) = 2.42 +(8.58-Refund Claim) State Tax (Y) = ₹ 16.91 (₹ 13.91 + ₹ 3) Entry Tax = ₹ 3 VAT = ₹ 11 CST = ₹ 2.42 ITC = (₹ 2.42) ₹ 0 VAT = ₹ 13.91 Excise = ₹ 10 Excise = ₹ 11 ITC = (₹10) ₹ 1 Central Tax = ₹ 11 (₹ 10 + ₹ 1) Tax Invoice (B) Cost = ₹ 100 Value = ₹ 110 Excise = ₹ 11 CST = ₹ 2.42 ₹ 123.42 Tax Invoice (C) Cost = ₹ 126.42 Value = ₹ 139.06 VAT = ₹ 13.91 ₹ 152.97 Tax Invoice (A) Value = ₹ 100 Excise = ₹ 10 VAT = ₹ 11 ₹ 121

  5. GST Scenario (Inter-State Trade of Goods) State Tax (X) = ₹ 1.10 (₹ 10 - ₹ 10* + ₹ 1.10) State Tax (Y) = ₹ 12.22 (₹ 2.44 + ₹ 9.78**) Add. Tax = ₹ 1.10 SGST = ₹ 12.22 IGST = (₹ 9.78) ₹ 2.44 SGST = ₹ 10 ** Centre will transfer IGST used for payment of SGST to State Y IGST = ₹ 22 CGST = (₹10) SGST = (₹10) ₹ 2 CGST = ₹ 10 CGST = ₹ 12.22 IGST = (₹12.22) ₹ 0 Central Tax = ₹ 12.22 (₹ 10 + ₹ 2 + ₹10* - ₹ 9.78**) Tax Invoice (B) Cost = ₹ 100 Value = ₹ 110 IGST(20%) = ₹ 22 Add. Tax = ₹ 1.10 ₹ 133.10 Tax Invoice (C) Cost = ₹ 111.10 Value = ₹ 122.21 CGST = ₹ 12.22 SGST = ₹ 12.22 ₹ 146.55 Tax Invoice (A) Value = ₹ 100 CGST = ₹ 10 SGST = ₹ 10 ₹ 120 * State X will transfer SGST used for payment of IGST to Centre

  6. Migration of Existing Taxpayers to GST – S. 166

  7. Migration of Existing Taxpayers to GST – S. 166 • Procedure to registered: • To begin with the State department will be communicating the Provisional ID and password taxpayers registered with the VAT department. • Access the GST Common Portal, create your unique username and new password after using provisional ID and password provided by the VAT department. • Login to the GST Common Portal with your new login details • Fill the enrollment application and provide business details. • Verify the auto populated details from the VAT system. • E-Sign and submit the application and attached necessary attachments. (E-sign ie. digitally or Aadhar OTP) • If details are satisfied an application number (ARN) will be issued. Provisional ID Status- Migrated till appointed date. On appointed date, Provisional ID status would be activated

  8. Carry forward of CENVAT Credit – S. 167 Return to be filed within 90 days of appointed day under SGST *Credit attributable to any claim related to specified sections of CST Act, 1956 not eligible to be carried forward. - COT means Composition Taxpayer

  9. Unavailed CENVAT Credit on Capital goods – S. 168

  10. Credit of eligible duties and taxes on input held in stock to an UR dealer in earlier law– S. 169 Person eligible for input tax credit Credit available on Conditions • Goods must be used for taxable supply • Such person should be in possession of invoice or other prescribed document • Invoice or other document should be within 12 months from the appointed day • Excess claims will be recovered as arrears of tax under GST law • Benefit of Reduced Prices to the recipient • Inputs held in stock and inputs contained in semi-finished goods or finished goods held in stock as on appointed day • Above benefit not available for input services • Such credit can be taken in the electronic credit ledger • Person engaged in 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, or a first stage dealer or a second stage dealer or a registered importer under the earlier law but liable to tax under GST law • NOTIONAL CREDIT TO THE VAT DEALERS : Prior to this amendment a manufacturer was eligible to claim input tax credit of excise duty paid on inputs under earlier law whereas traders were faced with additional tax burden as they were not be able to claim the credit as done by manufacturers.

  11. Credit of eligible duties/ taxes in respect of inputs held in stock for providing exempted and non-exempted goods or services – S. 170

  12. Provided invoice for the same was recorded in books of accounts within 30 days or extended period (30 days) of appointed day Credit of eligible duties/ taxes in respect of inputs/ input services during transit – S. 171 Appointed Day Input / Input Services received after appointed day Supplier Recipient Statement for credit taken to be furnished in prescribed format Duty / Tax Paid prior to appointed day

  13. Credit of eligible duties and taxes on inputs held in stock on switching over from composition scheme – S. 172 Person eligible for input tax credit Credit available on Conditions • Person not paying taxes under composition scheme under GST law • Goods must be used for taxable supply • Otherwise eligible to take the credit under earlier law and under GST law • Such person should be in possession of invoice or other prescribed document not older than 12 months period. • A registered taxable person paying taxes under the composition scheme under earlier law • Inputs held in stock and inputs contained in semi-finished goods or finished goods held in stock as on appointed day • Above benefit not available for input services • Such credit can be taken in the electronic credit ledger

  14. Exempted goods returned to the place of business on or after the appointed day – S. 173 Exempted goods were removed/ sold under the earlier law (not prior to 6 months from appointed day); Appointed Day Supplier Recipient Exempted goods are returned to the any place of business within 6 months from the appointed day without payment of tax Provided Goods are identifiable to satisfaction of proper officer

  15. Duty/ Tax paid goods returned to the place of business on or after the appointed day – S.174 Appointed Day Supplier Recipient Goods are returned to the any place of business within 6 months from the appointed day with payment of GST- B2B Claim Refund in case of B2C Duty / Tax Paid prior to appointed day Provided Goods are identifiable to satisfaction of proper officer

  16. Inputs removed for Job work and returned on or after the appointed day – S. 175 • Inputs removed/ dispatched as such or after partial processing etc. for job work under the earlier law prior to appointed day; Appointed Day Manufacturer and Job worker need to declare details of inputs held in stock by the job worker on behalf of the manufacturer on the appointed day • Inputs are returned within 6 months or within the extended period (2 months) from the appointed day to the said factory/ said place of business. Job Worker Manufacturer • If returned after 6 months, ITC liable to be recovered as per S. 184

  17. Semi-finished goods removed for Job work and returned on or after the appointed day – S. 176 • Semi-Finished Goods removed for job work under the earlier law prior to appointed day; Appointed Day Manufacturer and Job worker need to declare details of inputs held in stock by the job worker on behalf of the manufacturer on the appointed day • Semi-finished Goods are returned within 6 months or within the extended period (2 months) from the appointed day to the said factory/ said place of business. Job Worker Manufacturer • Manufacturer may transfer such goods to premises of any registered taxable person for purpose of supplying therefrom with (in India) or without (exports) payment of tax, within 6 months from appointed day. • If returned after 6 months, ITC liable to be recovered as per S. 184

  18. Finished goods removed for carrying out certain processes and retuned on or after the appointed day – S. 177 • Excisable Goods removed w/o payment of duty for tests/ processes etc. under the earlier law prior to appointed day; Appointed Day • Finished Goods are returned within 6 months or within the extended period (2 months) from the appointed day to the said factory/ said place of business. Job Worker Manufacturer • Manufacturer may transfer such goods from the other premises with (in India) or without (exports) payment of tax, within 6 months from appointed day. • If returned after 6 months, ITC liable to be recovered as per S. 184

  19. Issue of supplementary invoice, etc. where price is revised in pursuance of a contract – S. 178

  20. Pending refund claims to be disposed off under earlier law – S. 179

  21. Claim of CENVAT Credit to be disposed off under the earlier law – S. 180 - 182

  22. Finalization of proceedings relating to output duty liability – S. 183

  23. Treatment of the amount recovered or refunded in pursuance of assessment or adjudication proceedings – S. 184

  24. Treatment of amount recovered or refunded pursuant to revision of return – S. 185

  25. Treatment of long term construction / works contracts – S. 186

  26. Progressive or periodic supply of goods or services – S. 187

  27. Taxability of Supply of Goods/ Services – S. 188

  28. Credit distribution of service tax by ISD (CGST) – S. 190

  29. Tax paid on goods/ capital goods lying with agent to be allowed as credit (SGST) – S. 192

  30. Goods sent on approval basis returned on or after the appointed day (SGST) – S. 195

  31. Deduction of tax at source – S. 196

  32. Other Provisions • Branch Transfers (SGST) – Amount of ITC reversed prior to appointed day not admissible as ITC under GST. S. 194 • Availing CENVAT Credit (CGST Act) – When CENVAT Credit has been reversed due to non-payment of consideration within a period of 3 months, such credit can be reclaimed provided taxable person has made the payment of consideration within 3 months from the appointed day. S. 197

  33. General Provisions & Powers

  34. Thanking You CA.Sharad Singhal Secretary Indirect Taxes CommitteeThe Institute of Chartered Accountants of IndiaICAI BhawanA-29, Sector - 62, NOIDA (U.P.)IndiaTelephone Direct - +91 120 3045 954 Mobile : 9811996384 Email at : sharad.Singhal@icai.org

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