Why a taxpayer is required to file FORM GST TRAN 2:

Proviso to Section 140(3) of CGST Act provided for the benefit of input tax on stock for dealers not registered in Excise.The similar provision in State GST Act provided for the benefit in case of states covered in single point taxation. CGST Rules 2017 also provide the procedure for availing the benefit. Rule 117 (4) (b) provide for the basic conditions to avail such credit: These conditions are reproduced here:

Rule 117(4)(b)

 The credit of central tax shall be availed subject to satisfying the following conditions,namely:-
(i) such goods were not unconditionally exempt from the whole of the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated in the said Schedule;

(ii) the document for procurement of such goods is available with the registered person;

(iii) the registered person availing of this scheme and having furnished the details of stock held by him in accordance with the provisions of clause (b) of sub-rule (2), submits a statement in FORM GST TRAN 2 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;

(iv) the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the common portal; and

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

Who is required/eligible to file FORM GST Tran 2:

Dealers want to avail the benefit of central taxes paid on the stock on appointed date need to fill it. Exact amount of tax on items in stock will not be available. A notional amount of 40% of CGST when tax rate in GST is less than 9% (of CGST). When the tax rate in GST is 9% or more 60% of CGST will be returned to Dealer. Conditions reproduced in last para should also be taken care. Also the filing of TRAN 1 and declaration of that stock there is also compulsory. Dealer can show the sales from that stock each month and can avail the benefit of notional tax paid on that stock.This stock is required to be sold within 6 months. In case it is not sold in 6 months from applicability of GST benefit will lapse on unsold stock.

How to file FORM GST Tran 2: 

GST FORM TRAN 2 can be filled with the help of utility provided by GSTN. You can download it from GST portal.

Impact if you miss the deadline of 31st March 2018 in filing FORM GST  Tran 2:

In case the deadline of 31st March is missed the dealer will lose his benefit. It is important to fill the form before March 31. Although date of Tran 2 may extend but we should not wait for such extension. Filing this form will directly result in credit of that notional amount in credit ledger and can be utilized for payment of tax.

Take care to pass on the credit:

The most important part of this provision is to pass on the credit you have availed. Many dealers are ignoring this part and may be liable for recovery of that amount in future.There can be two ways to do this reversal.

• Dealer can reduce the amount from the payable at the time of sale.  The amount of benefit will be 40% or 60% of amount of CGST charged on sale. Then payment for that part can be covered from the amount credited by Government.
• In case the reversal was not made at the time of sale it is advisable to do it now. Dealer can do that by issuing a credit note.

Hope this write up will help traders to get their pie of tax they paid. Be careful in availing this benefit. For any further query do write us at info@consultease.com or shaifaly@consultease.com