GST will subsume several central and state levies
The government has announced a midnight rollout for GST or goods and services tax on June 30. Touted as the biggest tax reform since Independence in 1947, GST will subsume several central and state levies. Various government departments are working towards a seamless transition for taxpayers, traders, manufacturers and suppliers to the new indirect tax regime. As the country moves closer to July 1, the Central Board of Excise and Customs (CBEC) has addressed many queries relating to GST.
The balance VAT or value-added tax credit in the return for June 2017, for example, will be transferred as SGST Credit, according to the CBEC.
Here are some of the queries addressed by the CBEC:
A trader buys from a manufacturer not registered in excise as his turnover is below Rs 1.5 crore. In such a case, can the trader take input tax credit (ITC) on stock up to 40 per cent?Yes, deemed credit will be available subject to satisfaction of other conditions as prescribed.
Can a trader with an excise paid purchase invoice claim credit of full excise duty on the closing stock of July 1, 2017?Or
If a trader purchases directly from a manufacturer and has documents showing excise, will he or she get full excise credit or 40 per cent of CGST?Or
Is the full excise credit available to traders who purchase directly from manufacturers and excise is separately shown in invoice?A full transition credit of such duty will be available on stock in hand in respect of which you have the duty paying excise document subject to conditions under Section 140(3) of the CGST Act.
Section140(3) of the CGST Act mentions five conditions: "...(i) such inputs or goods are used or intended to be used for making taxable supplies under this Act; (ii) the said registered person is eligible for input tax credit on such inputs under this Act; (iii) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs; (iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and (v) the supplier of services is not eligible for any abatement under this Act."
A trader buys from a manufacturer not registered in excise as his turnover is below Rs 1.5 crore. Can such a trader take ITC on stock up to 40 per cent?Deemed credit will be available on stock in hand provided the conditions of Section 140(3) read with Section 1(4) of Transition Rules are satisfied.
According to Rule 1(4): "A registered person who was not registered under the existing law shall, in accordance with the proviso to sub-section (3) of section 140, be allowed to avail of input tax credit on goods (on which the duty of central excise or, as the case may be, additional duties of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975, is leviable) held in stock on the appointed day in respect of which he is not in possession of any document evidencing payment of central excise duty...Such credit shall be allowed at the rate of sixty per cent. on such goods which attract central tax at the rate of nine per cent. or more and forty per cent. 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 thirty per cent, and twenty per cent, respectively, of the said tax..."
If a service was provided on June 28, 2017 but the invoice is raised on July 5, 2017, will service tax be charged or GST?If point of tax arises after the appointed date, GST will be chargeable.
How will VAT (value-added tax) balance pending on the transition date be treated?The balance VAT credit in the return for June 2017 will be transferred as SGST Credit.
In a VAT return of June 2017, if no amount has been carried forward and a stock of Rs 50 lakh held, can credit be taken on such stock?The supplier would be eligible to carry forward the closing balance of ITC from the VAT return for June 2017.
Can input tax credit of Swachh Bharat Cess or Krishi Kalyan Cess be carried forward under GST?No.
Till what time is transition credit available? Where can one declare his or her input stock?The window to declare transition credit forms is three months from the appointed day. Please refer to transition rules for more details.