TRANSITIONAL PROVISIONS FOR AVAILMENT OF INPUT TAX CREDIT - Handbook of GST Law & Procedures (CBIC) [October 2024] - GST

3. TRANSITIONAL PROVISIONS FOR AVAILMENT OF INPUT TAX CREDIT 3.1. Closing balance of the credit in the last returns: The closing balance of the CENVAT credit /VAT in the last returns filed for the period ending 30.06.2017 under the existing law can be taken as credit in Electronic Credit Ledger. Such credit would be available only when the returns for the previous last six months have been filed under the existing law. In order to claim this credit, declaration in FORM GST TRAN-1 is required to be furnished on the common portal within ninety days from the appointed day i.e. 1st July, 2017 or within such extended time. 3.2. Unavailed credit on capital goods: The balance installment of unavailed Cenvat credit on capital goods can also be taken by filing the requisite declaration in the GST TRAN-1. 3.3. Credit on duty paid stock: A registered taxable person, other than manufacturer or service provider, may have duty paid goods in his stock on 1st July, 2017. GST would be payable on all supplies of goods or services made after the appointed day. The Government cannot collect tax twice on the same goods. Hence, in such cases, it has been provided that the credit of the duty/tax paid earlier would be admissible as credit. Such credit can be taken as under: i. Credit shall be taken on the basis of invoice evidencing payment of duty of Central Excise or VAT. ii. Such invoices should be less than one-year old. iii. Declare the stock of duty paid goods within prescribed time on the common portal. 3.4. Credit on duty paid stock when registered person does not possess the document evidencing payment of Central Excise duty/VAT: For such traders who do not have Central Excise or VAT Invoice, there was a scheme to allow credit to them on the duty paid stock. The features of this scheme are as under: i. The scheme was operative only for six months from 1st July, 2017. It was not available to manufacturer or supplier of service. It was available to traders only. ii. Credit @ 60% on such goods which attract Central Tax @ 9% or more and @ 40% for other goods of GST paid on such stock cleared after 1st July, 2017 was allowed. However, such goods should not be unconditionally exempted goods or taxed at Nil rate under the GST law. It has also been provided that where Integrated Tax is paid on such goods, the amount of credit shall be allowed at @ 30% and 20%, respectively of the said tax. iii. Credit would be allowed after the GST is paid on such goods subject to the condition that the benefit of such credit is passed on to the customer by way of reduced prices. iv. A statement of supply of such goods in each of such tax period has to be submitted. v. Stocks stored should be easily identifiable. 3.5. Credit relating to exempted goods under the existing law but now taxable: Input Tax Credit of CENVAT / VAT in respect of input, semi-finished and finished goods in stock attributable to such exempted goods or services, which are now taxable can also be taken in the same manner. 3.6. Input/input services in transit: There might be a scenario where input or input services are received on or after the appointed day but the duty or tax on the same was paid by the supplier under the existing law. Registered person may take credit of eligible duties and taxes, provided the invoice has been recorded in the books within 30 days from 01.07.2017. The period can be extended by the Commissioner of GST by another 30 days. A statement of such invoices have to be furnished. Input Service Distributor can also distribute such credit. 3.7. Tax paid under existing law under composition scheme : The taxpayers paying tax under the normal scheme of the earlier law has opted to pay tax under the Composition Scheme of the CGST Act, 2017 then the amount of CENVAT credit carried forward in a return will not be allowed to be carried forward if the person is paying tax under Composition Scheme. Even the unavailed amount of CENVAT credit on capital goods shall not be allowed to be carried forward under the CGST Act, 2017. In case, the taxpayer is switching over from the Composition Scheme to the normal scheme under the CGST Act, 2017 then he can take credit of eligible duties and taxes in respect of inputs held in stock, inputs held in semi-finished or finished goods, subject to the following conditions:- i. Such Input stock is used for taxable supply under this Act. ii. Registered person is not covered under Section 10 (Composition Scheme) of the CGST Act, 2017. iii. Registered person is eligible for ITC under the CGST Act, 2017. iv. Registered person is in possession of such Invoice or other duty payment documents. v. Such Invoices are not more than twelve months old on appointed day. 3.8. ITC in case of Centralized Registration under Service Tax : Person holding centralized registration can take credit of the amount of CENVAT credit carry forwarded in return furnished under the existing law, if the original / revised return under the existing law has been filed within three months. Such credit may be transferred to any of the registered persons having the same PAN for which the centralized registration was obtained. 3.9. Reclaim the reversed Input Service credit: CENVAT credit reversed on account of non-payment of consideration within a period of three months can be reclaimed if payment is made to the supplier of service within three months from 01.07.2017. 3.10. Capital goods belonging to the principal lying at the premises of the agent: This provision is specific to SGST law. In such cases, agent shall be entitled to take credit subject to the following conditions: i. the agent is a registered taxable person ii. both the principal and the agent declare the details of stock iii. the invoices are not earlier than twelve months iv. the principal has either reversed or not availed of the input tax credit.