8 Sep 2017, 23:08 — 5 min read
GST has kicked in and is in full swing. The Government went the extra mile to help raise awareness about the new processes that would come with the advent of GST. However, with a change such as this, clarity is still being sought on the registration and input tax credit. This article aims to provide that clarity.
The Transition of Registration:
All taxpayers registered under existing tax laws such as State VAT, Central Excise, Service Tax etc. need to migrate into the GST regime. Each such taxpayer shall get a certificate of registration on a provisional basis in FORM GST REG-25. This certificate will be valid for a period of 3 months within which a registered taxpayer shall either submit prescribed documents for final registration in FORM GST REG–26 or if such person is not liable to be registered under GST then can cancel his provisional registration within 30 days electronically in FORM GST REG-29 at the GSTN portal.
The Transition of credit of input taxes paid on goods in stock:
1. A manufacturer/dealer having an existing registration can carry forward his Cenvat credit/ VAT credit as CGST/SGST credit in respect of input held in stock, semi-finished or finished goods held in stock if the following conditions are satisfied-:
2. A dealer who was not registered earlier or engaged in the manufacture of exempted goods/provision of exempted services, or provided works contract service or a composition taxpayer, a first/second stage dealer or a registered importer can also enjoy ITC of inputs in stock held on 1st July if the following conditions are satisfied:
3. If any person does not register under GST (even though he is liable to), then he will not be eligible to claim the input tax credit of excise & VAT paid on stock and will also be liable to a penalty.
4. The Credit of both Central and State taxes paid on goods in transit on the day of transition i.e 01-07-2017 is available on the basis of duty paying documents.
5. Transition provisions under GST illuminate that any balance of input tax credit on capital goods purchased in the previous tax regime, against which partial input credit has been availed, will be allowed to be availed in the new regime as well.
Transition under GST requires an extensive due diligence at taxpayers’ end.
What is your stance regarding the transition provisions under the GST regime?
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