GST is a significant reform in the field of indirect taxes in our country. Multiple taxes lev-ied and collected by the Centre and States would be replaced by one tax called Goods and Services Tax (GST). GST is a multi-stage value added tax on consumption of goods or ser-vices or both. Now check more details for "Transition Provisions under GST" from below...As GST seeks to consolidate multiple taxes into one, it is very essential to have transitional provisions to ensure that the transition to the GST regime is very smooth and hassle-free and no ITC (Input Tax Credit)/benefits earned in the existing regime are lost. The transi-tion provisions can be categorised under three heads:
- Relating to Input Tax Credit
- Continuance of existing procedures such as job work for a reasonable period without any adverse consequence under GST law
- All claims (pending as well as future) pertaining to existing laws filed before, on or after the appointed day
Transition Provisions under GST
Transitional arrangements for ITC
- Credit shall be taken on the basis of invoice evidencing payment of duty of excise or VAT
- Such invoices should be less than one-year old
- Declare the stock of duty paid goods within the prescribed time on the common portal
- The scheme is operative only for six months from the appointed day. It is not available to manufacturer or supplier of service. It is available to traders only.
- Credit @ 60% on such goods which attract central tax @ 9% or more and @ 40% for other goods of GST paid on the stock cleared after the appointed day would be allowed. However, such goods should not be unconditionally exempted goods or taxed at nil rate under the existing 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.
- The statement of supply of such goods in each of the six tax periods has to be submit-ted.
- Stocks stored should be easily identifiable.
- Such input stock used for taxable supply under this Act
- Registered Person is not covered under section 10 (composition scheme) of this Act
- Registered Person is eligible for ITC under this Act
- Registered Person is in possession of the invoice or other duty payment documents
- Such invoices are not more than twelve months old on the appointed day
- The agent is a registered taxable person
- Both the principal and the agent declare the details of stock
- The invoices are not older than twelve months
- The principal has either reversed or not been availed on the input tax credit
Transition provisions relating to job work, goods returned/sent on approval etc.
- Inputs, semi-finished goods or finished goods were sent to the job worker or any other premises without payment of duty/VAT under the existing law. No GST is payable by the job worker when such goods are returned by him within six months after the appointed day. The period can be extended by the Commissioner, GST by another two months.
- If not returned within the prescribed period, then ITC shall be liable to be recovered from the principal as per second provision to section 141(1) of the Act. In addition, the job worker will have to pay the GST on such supplies. In case of semi-finished goods, the manufacturer may transfer the goods to premises of a Registered Person without pay-ment of tax within the prescribed period. In case of finished goods, the manufacturer may transfer the goods on payment of tax or clear for export within the prescribed period.
- If such goods are returned by an unregistered person, then refund of the duty/VAT paid under the existing law can be claimed.
- If returned by a Registered Person, then the return of goods shall be treated as supply of goods (ITC can be claimed).
- In case of upward price revision, a registered person will issue a supplementary invoice or debit notes within 30 days from the date of revision and such revision shall be treated as supply under GST, and tax is payable under this Act.
- In case of downward revision, Registered Person may issue credit note within 30 days from such revision and credit note shall be deemed to have been issued in respect of outward supply made under this Act. A Registered Person will reduce his tax liability for such credit note, subject to reversal of credit by the recipient.
Proceedings under the existing laws:
- GST law would become operational w.e.f. the appointed day and existing laws would be repealed. Elaborate provisions have been made to save the pending as well future claims relating to existing law made before, on or after the appointed day. Such proceedings may pertain to refund claims of CENVAT credit/VAT or export related rebate or service tax, and the proceedings may either result in recovery of tax or refund.
- All such cases would be disposed of under the existing law. If any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse. Refund of CENVAT credit shall be paid in cash. There will be no refund of CENVAT if already carry forwarded. If any amount becomes recoverable, the same shall be recovered as arrear of tax under GST Act.
- Statutory provisions relating to transition are contained in
chapter XX (section 139 to 142) of the GST law and the transition rules available at department website www.cbec.gov.in may be referred.