How to take Input Tax Cedit on Closing Stock under GST
Following are the general conditions for taking input tax credit on closing stock under GST :-
- Carry forward of CENVAT/VAT in the last return can be claimed as a credit under GST.
- GST TRAN 1 shall be filed within 90 days
Carry forward of Cenvat Credit to GST
A manufacturer who is having Cenvat Credit balance in his return on 30-6-2017 can carry forward his Cenvat credit as CGST Credit. He can also take unavailed Cenvat credit of excise duty paid on capital goods – Section 140 (1) and 140 (2) of CGST Act . He has to submit application in form GST TRAN 1 within 90 days.
However the Commissioner may, on the recommendations of the Council, extend the period of 90 days by a further period not exceeding ninety days.
Eligible Cenvat credit on inputs and input services can be carried forward – Section 140 (1) of CGST Act.
Unavailed Cenvat Credit on eligible capital goods not carried forward in a return can taken – Section 140 (2) of CGST Act.
“unavailed CENVAT credit” means the amount that remains after subtracting the amount of CENVAT credit already availed in respect of capital goods by the taxable person under the existing law from the aggregate amount of CENVAT credit to which the said person was entitled in respect of the said capital goods under the existing law.
Carry forward of VAT Credit to GST
A dealer or manufacturer who has input tax credit under State Vat or Entry Tax in his return on 30-6-2017 can carry forward his input tax credit as SGST Credit. He can also take unavailed credit of State Vat paid on capital goods – section 140(1) and 140(2) of SGST Act. He has to submit application in form GST TRAN 1 within 90 days.
However the Commissioner may, on the recommendations of the Council, extend the period of ninety days by a further period not exceeding ninety days.
Eligible State Vat credit and entry tax credit can be carried forward – section 140(1) of SGST Act.
Unavailed State Vat Credit on eligible capital goods not carried forward in a return can taken – section 140(2) of SGST Act.
In case CST forms (C, F, H, I, E-I/E-II ) etc [ for CST Transactions if any) not submitted then credit shall be reduced to the extent of balance tax.However if these forms are submitted later refund can be claimed later.
Central Sales Tax Forms to be Submitted
If goods were supplied under CST Act, details of claims and CST forms (C, F, H, I, E-I/E-II shall be submitted within 90 days – proviso to rule 1(1) of Transitional Provision Rules. Please note that input tax credit of Central Sales Tax (CST) is not admissible under GST.
Value of CST transactions i.e., CST sales, branch transfers, deemed exports shall be given with form number
In case forms not received credit shall be reduced to the extent of balance tax.
If forms are submitted later refund can be claimed later.
ITC on Excise duty on Closing Stock if Not registered under Central Excise Law or if invoice of supplier showing tax paid is not available
As per Section 140 (3) of CGST Act. A taxable person who was not eligible to take Cenvat Credit but is now under GST can take input tax credit of excise duty which was paid on the stock with him, if
- He has Invoice or other documents evidencing payment of excise duty
- Invoice is not more than 12 months old.
- He has to submited stock statement in form GST TRAN 1
- Stock of goods on which credit is availed can be identified by the registered person.
A taxable person who was not earlier under Central Excise but is now under GST and does not have excise duty paying documents evidencing payment of excise duty, can take input tax credit at the rate of 60% on such goods which attract central tax at the rate of 9% or more and 40% for other goods of the central tax applicable on supply of such goods after the appointed date and shall be credited after the central tax payable on such supply has been paid:
Provided that where integrated tax is paid on such goods, the amount of credit shall be allowed at the rate of 30% and 20% respectively of the said tax. Rule 4(a) of Transitional Provision Rules.
Key Points: If Excise Duty documents not available for taking ITC credit under GST
-Cenvat / vat paid on stocks can be taken as credit in GST if not in possession of invoice with tax details :
-Credit shall be given after GST is paid at following rates and utilized within 6 tax periods.
- If CGST / SGST > or = 9% then credit is 60% of GST paid.
- IfCGST / SGST < 9% then credit is 40% of GST paid.
- If IGST > or = 18% then credit is 30% of IGST paid.
- If IGST < 18% then credit is 20% of IGST paid
He takes credit when he sales this stock after 1-7-2017 by charging CGST. He can sale old stock upto six months. He has to submit stock statement in form GST TRAN 1 and 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. – – proviso to section 140(3) of CGST Act..
ITC of VAT on Closing Stock if not registered under State VAT Law or if invoice of supplier showing tax paid is not available
A taxable person who was not earlier under State Vat but is now under GST can take input tax credit of State Vat which was paid on the stock with him, if he has tax invoices or other documents evidencing payment of State Vat. He has to submit stock statement – section 140(3) of SGST Act.
A taxable person who was not earlier under State Vat or was under composition scheme but is now under GST and does not have documents evidencing payment of State Vat, can take input tax credit at the rate of 60% on such goods which attract State Tax at the rate of 9% or more and 40% for other goods of the State Tax applicable on supply of such goods after the appointed date and shall be credited after the State Tax payable on such supply has been paid:
Provided that where integrated tax is paid on such goods, the amount of credit shall be allowed at the rate of 30% and 20% respectively of the said tax. rule 4(a) of Transitional Provision Rules.
He can sale old stock upto six months. He has to submit stock statement in form GST TRAN 1 and 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- proviso to section 140(3) of SGST Act.
Credit of duty paid inputs or service tax paid on input services received after 1-7-2017 but duty was paid earlier
If goods were cleared by supplier prior to 1-7-2017 by paying excise duty and State Vat but goods (inputs ) or Input Services were received after 1-7-2017 by recipient, input tax credit of such excise duty or State Vat is available if such invoice was recorded in books of account within 30 days i.e. before 30-7-2017. He has to submits a statement in form GST TRAN 1 within a period of 90 days.
However the period of thirty days may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding thirty days. section 140(5) of CGST Act and SGST Act
Similar provision in respect of Vat paid on goods which were received after 1-7-2017 – section 140(5) of SGST Act.
Inputs, semi finished goods and finished goods sent for job work before 1-7-2017 but received after 1-7-2017
If material was sent for job work and was lying with job worker, input tax credit can be taken on submission of details in FORM GST TRAN-1, if such inputs, after completion of the job work or otherwise, are returned to the said place within six months from the appointed day:
To take Input Tax credit principal needs to submit within 90 days of the appointed day, a declaration electronically in FORM GST TRAN-1, specifying therein, the stock of the inputs, semi-finished goods or finished goods, as applicable, held by him on the appointed day.
However the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months: – Section 141 of CGST Act and SGST Act.
If such inputs are not returned within the six monnths ( or extended period ), the input tax credit shall be liable to be recovered in accordance with the provisions of clause (a) of sub-section (8) of Section 142.
Inputs sent on approval basis as on 1-7-2017
Where any goods sent on approval basis, not earlier than six months before the appointed day, are rejected or not approved by the buyer and returned to the seller on or after the appointed day, no tax shall be payable thereon if such goods are returned within six months from the appointed day:
However the said period of 6 months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding 2 months:
Every person having sent goods on approval under the existing law shall, within 90 days of the appointed day, submit details of such goods sent on approval in FORM GST TRAN-1.
Tax shall be payable by the person returning the goods if such goods are liable to tax under CGST Act, and are returned after a period of 6 months ( or Extended period)
Provided also that tax shall be payable by the person who has sent the goods on approval basis if such goods are liable to tax under this Act, and are not returned within a period of 6 months ( or Extended period). [ Section 141 of CGST Act 2017 ]
The following 3 conditions will be applicable only if Person despatching the goods & the job worker both Provide details of such inputs, on appointed day in FORM GST TRAN-1.
Credit if taxable person was manufacturing exempted as well as taxable goods and providing exempted or taxable services
A taxable person who was manufacturing exempted as well as taxable goods and providing exempted or taxable services can take input tax credit of Cenvat credit as per return filed under excise law, if he is liable to pay CGST and SGST. He can also take input tax credit of duty and Vat paid on inputs held in stock and inputs contained in semi-finished goods or finished goods held in stock on 1-7-2017 relating to such exempted goods or tax free goods- – section 140(4) of CGST Act and section 140(4) of SGST Act.
Registered person who was paying tax/duty at fixed rate or paying fixed amount
Registered person who was paying tax/duty at fixed rate or paying fixed amount under earlier law can take input tax credit of excise duty paid VAT in on inputs held in stock or contained in semi-finished goods and finished goods – section 140(6) of CGST Act and section 140(6) of SGST Act.
He has to submits a statement in form GST TRAN 1 within a period of 90 days.
Distribution of credit by Input service distributor of service invoices received after GST
Input service distributor can distribute credit in respect of services received prior to GST, even if invoices of such services were received after introduction of GST – section 140(7) of CGST Act.
Taxable persons having centralized registration under service tax
Taxable persons having centralized registration under service tax can take input tax credit within three months if included in his return. The credit can be distributed to its branches or divisions having same income tax PAN – section 140(8) of CGST Act.
Carry Forward of CENVAT credit on Capital Goods
Read Carry Forward of unutlized ITC on Capital Goods under GST
Goods sold prior to GST Act and Returned afterwards
Goods Sold Prior to GST but Returned after GST Act comes into force – Treatment
Tax Paid on Goods before GST Act but Received Afterwards
Tax paid on Goods before GST but received after GST Act comes into