Industry gets 90 days to claim credit for GST transition stock

However, the draft transition rules for the GST regime is for 60 days

Traders and retailers can file declarations within 90 days claiming tax credit for transition stock after the GST rolls out from July 1.

The draft transition rules for the Goods and Services Tax (GST) regime had pegged the time at 60 days.

The transition rules approved by the GST Council provides that "every registered person entitled to take credit of input tax shall, within 90 days of the appointed day, submit a declaration electronically ... Specifying separately, the amount of input tax credit to which he is entitled...".

It also gives commissioners the power to extend this period by further 90 days on recommendation of the GST Council.

The GST Council, chaired by Finance Minister Arun Jaitley and comprising state counterparts, also decided to amend the transition rules allowing traders and retailers to make claim of 60% against the CGST or SGST dues where the tax rate exceeds 18%.

In cases where the GST rate is below 18%, only 40% deemed credit will be available against CGST and SGST dues.

To avail this a manufacturer can issue a Credit Transfer Document (CTD) as evidence for excise payment on goods cleared before the introduction of GST to the dealer.

The dealer availing credit using CTD would also have to maintain copies of all invoices relating to buying and selling from the manufacturer to the dealer, through intermediate dealers.

CTD shall be issued within 30 days of July 1, 2017, and details of the same shall be mentioned in specified forms by manufacturer and such dealer/distributor availing the credit.

"This provision comes as a sigh of relief for entire dealers/distributors network of the motor vehicle and other conveyances, as such dealers/distributors would get the entire credit of excise paid by the original manufacturer," Nangia & Co Directors (Indirect Tax) Rajat Mohan said.

The draft transition law had said that once GST is implemented, a company could claim the credit of up to 40% of their CGST or SGST dues for excise duty paid on stock held by businesses prior to the rollout.

Dealers had demanded a hike in the quantum of input tax credit for transition stock and hence the GST Council in its June 3 meeting amended the transition rules.

Besides, in cases where Integrated GST (IGST) is paid on the sale of such goods, deemed credit would be available at the rate of 30% of IGST paid, if the IGST rate is 18% or above and 20% of IGST paid in other cases.

The draft rules issued earlier did not mention this.

For claiming deemed credit, the goods should be leviable to excise duty or additional customs duty and the goods should not be unconditionally exempt from the whole of duty of excise.

For claiming credit of service tax or VAT paid in the current regime against GST liability for supplies made in GST regime, a dealer would be required to furnish details of proportion of such supply made.

"The transition rules specify that individual states may insert a new provision giving the details of methodology of calculation of the VAT paid which would be available as ITC of state tax under specified condition," Mohan said.

Further, the government will refund 100% excise duty for goods costing above Rs 25,000 and bearing a brand name of the manufacturer and are serially numbered like TV, fridge or car chasis.