TRANSITIONAL PROVISIONS AND MIGRATION ISSUES in GST

1. TRANSITIONAL PROVISIONS AND MIGRATION ISSUES in GST By- CA Umesh Sharma

2. TRANSITION IS ………………..

5. Taxes Subsumed and their credit in GST

6. Input credit • Logically the credit of Taxes subsumed is to be given…. • But it would be interesting to note that tax paid on inter state sale in current regime (CST) is not allowed as credit under GST.

7. Goods not covered in GST • Alcoholic liquor for human consumption. • Petroleum crude • High speed diesel • Motor spirit • Natural gas • Aviation turbine fuel

8. TRANSITIONAL ARRANGEMENTS FOR INPUT TAX CREDIT.

9. Section 140 (1) -TransitionalarrangementsforITC Amount of CENVAT Credit carried forward in a return to be allowed as ITC

10. Section 140 (2) -TransitionalarrangementsforITC Unavailed CENVAT Credit on Capital goods not carried forward in a return, to be allowed in certain situations No Credit unless-Where the credit admissible under the existing law and also under this Act

11. Credit of eligible duties and taxes on input held in stock 140 (3) Person eligible for input tax credit Credit available on Conditions • Goods must be used or intended to be used for taxable supply • Eligible to take the credit under GST law • 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 • 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 not liable to be registered under the earlier law • Person engaged in manufacture/ sale of exempted goods, provision of exempted services • Person providing works contract service and availing abatement under notification no. 26/2012 • First/ Second stage dealer, importer

12. where a registered person, other than a manufacturer or a supplier of services, not in possession of - an invoice or - any other documents evidencing payment of duty

13. ITC on inputs for which documents are not available

14. 9% or more CGST– Credit allowed @ 60% • Less than 9% CGST – Credit allowed @ 40% • Such credit shall be credited after the central tax payable on such supply has been paid. • Provided, where IGST is paid Credit shall be 30% and 20% respectively.

15. Credit Transfer Document Who Can Issue :- Manufacturer who was registered under Central Excise Act Issue to whom :- Person not registered under Central Excise but is registered under GST For which goods? :- Goods cleared before appointed date and he is satisfied that goods are in possession with person to whom CTD is been issued. Conditions :- Value of such goods is Minimum Rs. 25,000/- perpiece Goods bears the brand name of issuer and identifiable distinct no. Records of clearance and duty payment are maintained with Issuer Goods are in same form in which it was cleared by manufacturer. Copies of all invoices is maintained by dealer who is availing credit by CTD.

16. What details are required in credit transfer document? • Serially numbered • Central excise registration no. • Address of concerned excise division • Name, address and GSTIN of person to whom it is issued • Description • Classification • Invoice no with date of Removal • Mode of transport • Vehicle Registration No • Rate of Duty • Quantity • Value • Duty Amt

17. Time limit for issuing CTD

18. Take a note :- CTD shall not be issued to the person to whom invoice was issued for same goods before appointed date.

19. Take a note :- Person availing credit on basis of CTD shall mention such CDT Number in invoice while making supply of such goods

20. Submitting details

21. NOTE • Credit on basis of CTD is available for Excise paid inputs • BUT what about CVD SVD components in the inputs held by a Dealer?

22. Credit of eligible duties and taxes in case of exempted goods as well as taxable goods-140(4)

23. Credit of eligible duties and taxes in input and input services- Sec 140(5) A registered person shall get •credit of eligible duties and taxes •paid by him under earlier Law •In his Electronic Credit Ledger •on inputs or input services •received on or after appointed day •This period can be further extended more 30 days on sufficient cause being shown •He has to furnish a statement prescribed manner in respect of credits taken under this sub-section extended to being statement in credits Provided he has to recorded invoice or other duty or tax paid documents in his books of account within 30 days from appointed day

24. Section 140 (6) - Transitional arrangements for ITC

26. Section 140 (7) Transitional arrangements for ITCDistribution of Credit under this Act 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 Input Service Distributor • Shall be eligible for distribution as credit under this Act even if the invoices are received on or after the appointed day.

27. Section 140 (8) - Transitional arrangements for ITC Carry forward of credit where person has centralized registration under existing law • For the period ending with the immediately preceding the appointed day • If the taxable person files an original/ revised return within 3 months of the appointed day • Credit will be allowed if credit amount is reduced from that claimed earlier • Note: • Only those credits which are admissible under GST laws will be allowed. • Credit may be transferred to any registered taxable person having the same PAN for which centralised registration was obtained under earlier law

28. Section 140 (9) - Transitional arrangements for ITC Eligibility of credit under this Act in case CENVAT was reversed under existing law due to non-payment

29. Section 141- Transitional provisions relating to Job Work

30. GOODS removed for Job work and returned on or after the appointed day

31. Section 142 Miscellaneous transition Provision

32. 142(1)-Goods returned after the appointed date Not earlier than 6 monrhs of the appointed date

33. Provided that if the said goods are returned by a registered person, the return of such goods shall be deemed to be a supply.

34. WHERE PRICE IS REVISED IN PURSUANCE OF A CONTRACT 142(2)

35. Section – 142 (3) Misc. Transitional Provisions Claim for refund filed before on or after the appointed day of any amount paid under the existing Law No refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.

36. Section – 142 (4) Misc. Transitional Provisions Claim for refund filed before on or after the appointed day of any amount paid under the existing Law No refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.

37. Section 142 (5) - Misc. Transitional Provisions • Claim for refund file after the appointed day for refund of tax paid under existing law in respect of services not provided • Every claim filed by a person after the appointed day • for refund of tax paid under the existing law • in respect of services not provided shall be • disposed of in accordance with the provisions of existing law and • any amount eventually accruing to him shall be paid in cash

38. Section 142 (9) - Misc. Transitional Provisions Return furnished under Old Law, revised after appointed day

39. Section 142 (10) –contract entered prior to the appointed date • Contract entered into prior to appointed day and Goods/Services supplied after the appointed day • Goods/Services or both supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under this Act

40. Section 142 (10) - Misc. Transitional Provisions • Tax not to be paid under this Act if paid under existing law • No Tax shall be payable on • Goods under this Act to the extent-the tax was leviable -on the said goods under Value Added Tax • The tax was leviable on the said Services under Finance Act, 1994 Section 142 (11) - Misc. Transitional Provisions To the extent of supplies made after the appointed day The taxable person shall be entitled to take credit of VAT and ST paid under existing Law Tax Shall be leviable under this Act AND

41. GOODS SENT ON APPROVAL BASIS RETURNED ON OR AFTER THE APPOINTED DAYSection 142 (12)

42. Now we move to cross the rules……

43. As per Transition Rules • (1) • A registered person who wants to take credit of Input tax u/s 140 needs to file GST TRANS-1 within a period of 90 days of the appointed date. • Commissioner may extend the period by further 90 days

44. As per Transition Rules • 2 (a) • Every claim u/s 140(2) in relation to credit of tax paid on capital goods. • Should specify separately • Amount of tax or duty Availed/Utilized till the appointed date under the existing law • Amount of tax or duty YET to be Availed/Utilized till the appointed date under the existing law

45. As per Transition Rules • 2(b)

46. As per Transition Rules • 2(c)

47. Stock in hand under GST – Treatment of CENVAT Credit and VAT Credit

49. (I) Manufacturer registered under Excise, VAT and Service Tax • (a) Return filed under Excise, VAT or Service Tax shows outstanding/ excess/ unutilisedbalance of input tax credit