To facilitate the smooth transfer of ITCs under the GST scheme, transitional provisions were also included in the 2017 GST Act for existing physical stocks which have already suffered from an incidence of taxes below the existing legal guidelines in force and which, as at the designated date, are still mendacity with registered vendors. Sections 140 to 142 of the GST Act 2017 and the rules laid down therein include, in particular, the provisions for input tax credits to be carried out under the updated GST scheme. In this article, we will discuss TRAN-1 and TRAN-2, Format and Due Date – Transition of Old Input Tax Credits (ITCs) To GST Regime.
You may want to file forms TRAN-1 and TRAN-2, which may be prescribed under the GST regime within 90 days of the appointed date if you wish to demand a credit score for taxes paid on the final stock. Registration under the GST system, whether previously registered or not, is mandatory for the use of the ITC.
What will happen to taxes paid under the pre-GST scheme What method will be used to take advantage of the credit Full credit will or will not be allowed for taxes paid under the pre-GST scheme How to assert the credit under the form GSTR 3B What are the due dates of TRAN 1 forms and TRAN 2 forms?
In order to facilitate the smooth transfer of ITC under GST for existing physical stocks that have already suffered tax incidence under various existing laws and are still lying with registered dealers as of the date specified, transitional provisions have been incorporated into the GST Act, 2017. The regulations are specifically dealt with in Sections 140 to 142 of the GST Act, 2017, and the rules set out therein.
TRAN-1 and TRAN-2 Forms Under GST
CBEC has released TRAN-1 and TRAN-2 paperwork to enable agencies to transfer easily and carry forward their input tax credit. Documentation relating to GST TRAN-1 and TRAN-2 can be filed in the form of a registered undertaking which, in accordance with the old tax laws, is the owner of a GST undertaking already registered. One is related, among many issues for business entities after GST implementation, to the availability of Input Tax Credit ( ITC) on old stock. Under the previous tax system, most of those companies currently keeping an old inventory of goods have already levied taxes on the purchase of raw substances and various goods/commodities, such as Value Added Tax ( VAT) and/or Service Tax (Service Tax) under the previous tax system.
TRAN – 1
- Any licensed individual under the GST regime (but not a composite distributor) should electronically file a FORM GST TRAN-1 declaration in compliance with section 140 if they are entitled to demand ITC stock as of 30.06.2017.
- It is immaterial for a person who is registered under GST & wants to claim ITC on inventory, whether or not he was registered under the old regime (VAT Act, Central Excise Act, Service Tax Act), to file Form TRAN 1.
- The sum of the ITC to which they are entitled should be properly signed and filed on the common portal of the GSTN indicating that sum, in accordance with the regulations.
- This declaration is to be made within ninety days of the specified date, i.e. by 30 September 2017.
- The amount of credit stated in the declaration in FORM GST TRAN-1 shall be credited to the applicant’s electronic credit ledger kept on the Common Portal in FORM GST PMT-2.
- FORM TRAN 1 shall not be filed exclusively for the use of the ITC stock credit, but the residual sum can be claimed in compliance with GST even if the registered individual has received the capital goods and has not been able to assert the full amount of tax paid during the transaction.
- Shape TRAN 1 is likely to be accessible as of August 21, 2017, on the GSTN portal.
TRAN 2 Form
Any registered individual under the GST regime who meets all of the conditions referred to below should file Form GST TRAN 2.
Under the old / pre-GST scheme, these people should not be registered.
As of June 30th, 2017, the closing stock should be eligible.
A supplier should neither be a manufacturer under the Central Excise Act nor a service provider under the Service Tax Act.
As evidence of the payment of taxes, any invoice or any other record should not be in possession.
From July 2017 until December 2017, Type Tran 2 will be submitted on a monthly basis.
Due Date for Submitting Forms TRAN-1 and TRAN-2
- In order to claim the input tax credits paid on the old stock, the final date for the filing of forms Tran-1 and Tran-2 is given as follows:
- Businesses wishing to exercise their tax liability by means of a transitional (old stock) loan for the month of July are expected to apply on or before 28 August.
- Companies applying for the transitional ITC TRAN-1 have to apply on or before 31 December.
- Those qualified for Transitional ITC TRAN-2 can continue on or before 30 June on a month-to-month basis.
Eligibility Criteria for Claiming ITC on Old Stock
- Businesses that are still listed under the previous tax scheme with the old stock are eligible.
- A business that is authorized under VAT and has paid excise duty on the last inventory as of 30 June 2017.
- Undertakings which have not been previously registered are, however, registered under GST and have old tax-payable shares.
- Those GST manufacturers/promoters have exempted goods which were taxable under the previous tax system and which have already paid their old stock tax.
- As of 30 June 2017, those who were composition vendors in the earlier regime but no longer under GST will declare input credit on their capital inventory.
- Under older laws prior to GST, a company is expected to have filed the last six-monthly returns.
- The old stock products currently in the development or task painting process are also eligible.
- As of 30 June 2017, input credit will be declared on their capital inventory by those who were composition vendors in the earlier regime but no longer under GST.
- A business is expected to have filed the last six-monthly returns pursuant to older laws prior to GST.
- Also, qualifying is the old stock items currently in the production or task painting phase.