GOODS AND SERVICES TAX

TRANSITION PROVISIONS(BASED ON NOVEMBER 2016 DRAFT)

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COVERAGE• Migration of Existing tax Payers

• Carry forward of ITC / CENVAT

• Carry forward of ITC in case of stock in trade and in transit

• Carry forward of ITC for a person switching from composition scheme

• Return of Goods after enactment

• Revision where price is revised after enactment

• Claim of CENVAT on account of any appeal / revision

• Treatment of Long term contracts

• Miscellaneous provisions

MIGRATION OF EXISTING TAX PAYERSSec 166

• Provisional registration for all existing tax payers having a VALID PAN to be valid for 6 months;

• Thereafter person to submit records etc to get it converted into final.

• Further information may be sought for finalization.

• Taxable person who would be not liable under GST need to submit an application

CARRY FORWARD OF CENVAT / ITCSec 167

• All persons other than those in composition scheme to carry forward.

• Amount to be carried forward = as available on last date of VAT / ST

• Closing balance to be taken as opening of Electronic ledger

• CENVAT of Excise and ST as on enactment date as CGST opening balance and VAT input as SGST opening balance

• Only that input tax can be carried forward which is admissible both under GST as well as old law

• Refund of CST as per old law (if any), no carried forward in GST

CARRY FORWARD OF CENVAT / ITC ON STOCK AND FIXED ASSETS

Sec 168, 169, 171

• Pending 50% of CENVAT on fixed assets available in the GST regime.

• Substantial difference in meaning of capital goods

• Any credit of capital goods not availed in the last return before GST can be claimed after the introduction of GST

• Those assesse becoming taxable under GST would be allowed to carry forward their input to GST

• In case of goods in transit on date of enactment such input should be recorded in books within 30 days of implementation

CARRY FORWARD OF CENVAT / ITC ON WORKS CONTRACT

Sec 172

• Any Registered person who is paying tax in the capacity of Composite Tax Payer at a fixed rate or amount under the present tax law of Centre / State shall be eligible to take input Tax credit in Electronic Credit Ledger in respect of Inputs, WIP held in stock, input contained in Finished Goods as on the date immediately preceding to the date from which GST Act comes into force.

RETURNING OF DUTIABLE GOODS

• Sec 173 (Exempted goods) & 174

• No tax is payable by the person returning the goods after enactment of GST provided the return is within 6 months of enactment of GST.

Sec 174 (Dutiable Goods)

• Refund of tax paid under previous law would be available to the supplier provided application is moved within 6 months of enactment.

ISSUE OF SUPPLEMENTARY INVOICE

• Sec 178

• In case of any price revision for goods the supplier has to issue supplementary invoice or debit note for the same under GST. Such notes are to be issued within 30 days.

• The above to have effect only if the recipient of the supply has also done corresponding entries in their books

MISCELLANEOUS

• Long Term contracts (Sec 186)

• Tax as applicable on the date of provision of the service shall be paid for ongoing projects

• Supplies after enactment (Sec 187)

• No tax is applicable on supplies which are effected after enactment of GST provided payment has been received and tax has been deposited before enactment

MISCELLANEOUS

CENVAT for centralized registration (Sec 191)

• CENVAT accumulated in centralized registration can be transferred to any location within same PAN.

• Treatment of Branch transfers (Sec 194)

• Appropriate provisions under SGST act only.

• Input Tax credit shall not be admissible in respect of any amount reversed prior to the introduction of GST Act.

MISCELLANEOUS

Goods sent on approval (Sec 195)

• Goods sent on approval have a window of 6 months to be received back without attracting GST.

• Deduction of Tax at source (Sec 196)

• No TDS for supplies and invoices made before enactment of GST where payment is made after GST.

• CENVAT credit in certain cases (Sec 196)

• Where CENVAT reversed due to non payment for 3 months it can be reclaimed under GST upon payment.

ISSUES

1. For e.g. an assesse had CENVAT credit of 1,50,000 from three input services out of which Rs. 75,000 was carried forward to GST. Under the law CENVAT of one input service is not allowed. How much CENVAT would be available to be carried forward ?

2. Is a works contractor eligible to carry forward CENVAT / INPUT VAT on the stock lying with him upon enactment of GST ?

ISSUES

1. For e.g. an assesse had CENVAT credit of 1,50,000 from three input services out of which Rs. 75,000 was carried forward to GST. Under the law CENVAT of one input service is not allowed. How much CENVAT would be available to be carried forward ?

2. Is a works contractor eligible to carry forward CENVAT / INPUT VAT on the stock lying with him upon enactment of GST ? (Sec 169)

ISSUES

3. A trader of exempted goods under UP VAT become taxable under GST. He had Input VAT amounting to Rs. 30,000 on the stock lying with him which would become his opening balance in GST. However consultant has informed him that only Rs. 27,500 is admissible and the Cess cannot be carried forward by him. Is the consultant correct ? (Sec 169)