PPT on GST transitional provisions
GST Transitional Provisions:
Section 165 to 197 of Model GST Law contains the GST transitional provisions.Here we have compile all the provisions one by one.
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General Provisions
All persons earlier appointed under various Central/State Acts & continuing in office on appointed day shall be appointed under GST.
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Migration
Every registered person under earlier law will be issued provisional certificate, which will remain valid for 6 months (or extended period). Final Registration Certificate will be issued on furnishing of prescribed information.
Provisional Certificate will get cancelled if it is issued to person not liable for registration under GST (provided application is filed regarding this).
If person opts for composition scheme, he may proceed with that.
Provisional Certificate may get cancelled if person does not provide necessary information within specified time.
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GST transitional provisions for amount of Cenvat Credit carried forward in a return to be allowed as input tax credit
The amount of credit which is carried forward in return for immediately preceding period before appointed day, same can be entered in GST electronic credit ledger, i.e. can be used for paying output tax under GST. (Not for composition scheme)
The condition is that credit must be eligible under GST law as well.
If excess credit carried forward, it will be recovered under GST
VAT return should be filed within 90 days of enactment of GST.
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GST transitional provisions for Unavailed Cenvat Credit on capital goods, not carried forward in a return, to be allowed in certain situations
Basically this deals with the case when credit in respect of capital goods is allowed upto 50% in first year, and balance in subsequent years.
Only a registered taxable person can avail the credit on capital goods (i.e. entered in electronic credit ledger), which was not carried forward in the return for immediately preceding period before appointed day.
The condition is that credit must be eligible under earlier law as well as GST law.
Meaning of unavailed cenvat credit on capital goods: Total eligible credit on capital goods as reduced by the credit utilized in earlier law.Excess claim should be recovered as an arrear under GST law.
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Credit of eligible duties & taxes in respect of input held in stock to be allowed in certain situations (SGST law)
Credit of eligible duties & taxes will be allowed in respect of inputs held in stock as semi-finished goods or finished goods on the appointed day.
Persons eligible for credit:
- Who was not liable to registration under earlier law but now is required under GST
- Manufacturer of exempted goods or provider of exempted services which now became taxable
- Works contract service provider
- First stage or second stage dealer
Conditions for credit:
- Inputs are used for making taxable supplies
- Taxable person passes the benefit of credit to recipient
- Taxable person is eligible for input tax credit
- Invoice should be issued & should not be more than 12 months earlier
- No abatement is taken
Excess credit taken shall be recovered.
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GST transitional provisions for credit of eligible duties & taxes in respect of input held in stock to be allowed in certain situations (CGST law)
Registered taxable person (manufacturer of exempted & non-exempted goods and provider of exempted & non-exempted services) can take Cenvat Credit of tax paid in respect of inputs held in stock in the electronic credit ledger.
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Credit of eligible duties of taxes in respect of inputs or input services during transit
A registered taxable person can take credit in his electronic credit ledger, credit of duties & taxes paid before appointed day but inputs or services are received after appointed day, provided that invoice is recorded in books within 30 days from the appointed day (can be extended to further 30 days)
- Credit of eligible goods & taxes of inputs held in stock to be allowed to a taxable person switching from composition scheme
A registered person, who has opted for composition scheme under earlier law, can take credit of inputs held in stock semi-finished goods or finished goods, if he doesn’t opt for composition scheme in GST law and other conditions are satisfied.
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Exempted goods returned to the place of business on or after the appointed day
Where any exempted goods under earlier law which were removed within 6 months prior to appointed day and are returned to any place of business on or after appointed day, no tax shall be payable if returned within 6 months from appointed day. No tax shall be payable if goods are returned by an unregistered person.
Taxable only if:
- Goods are returned after 6 months from appointed day and
- Goods are liable to tax under GST
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Duty/tax paid goods returned to the place of business on or after the appointed day
Where any goods which have been removed under earlier law within 6 months prior to appointed day and duty has been paid thereon, are returned to place of business within 6 months from appointed day, the registered taxable person will be eligible for refund of duty paid under earlier law.
If the said goods are returned by registered taxable person, it is deemed to be supply.
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Inputs removed for job work and returned on or after appointed day
If any inputs have been removed for job work and is returned within 6 months (can be extended further by 2 months) from appointed day, no tax shall be payable on such inputs.
If not returned within given time, tax credits will be recovered as per GST law.
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