A new GST input tax credit scheme has been announced in the Transitional Provisions rules (http://www.cbec.gov.in/resources//htdocscbec/gst/transitionrulesPost04062017.pdf) to provide GST Input Tax Credit for unregistered persons who have unaccounted goods or stock on hand during the GST rollout. In this article, we look at the GST Input Tax Credit Scheme for unregistered taxpayers and existing stock in detail.
GST Input Tax Credit – For Central Excise
The GST input tax credit scheme for Central Excise mentioned in the Transitional Provisions rules targets unregistered persons who do not have any existing registration like central excise registration or evidence for payment of central excise duty while having stock on the GST implementation date. Such persons would be allowed to claim GST input tax credit on goods held in stock on which central excise or additional duties of customs would be applicable on the date of GST implementation after payment of central tax.
GST input tax credit would be allowed at the rate of 60% on goods which attract central tax at the rate of 9% or more. For all other goods on which central excise tax is applicable at the rate of 9% or less, GST input tax credit would be allowed at 40%. If integrated tax is paid on such goods, the amount of input tax credit allowed would be at the rate of 30% and 20%, respectively. The GST input tax credit would be credited to the electronic credit ledger of the taxpayer after central tax payable on such supply has been paid.
Further, to be eligible for input tax credit under this scheme, the following conditions must be satisfied:
Such goods were not unconditionally exempt from the whole of the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated in the said Schedule.
The document for procurement of such goods is available with the registered person.
The registered person availing of this scheme and having furnished the details of stock held by him, submits a statement in FORM GST TRAN 2 at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period.
The amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT2 on the Common Portal.
The stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.
The scheme for claiming GST input tax credit against central excise would be available for 6 months from the date of GST implementation.
GST Input Tax Credit – For VAT
Any taxpayer having VAT registration and holding stock of goods on the GST implementation date for which VAT payment has been at the first point of sale in the State and the subsequent sales of which are not subject to tax in the State availing credit – would be allowed to avail GST input tax credit even if there is no document evidencing payment of value added tax.
GST input tax credit would be allowed for such goods at the rate of 60% for goods which attract state tax at the rate of 9% or more. For goods having state tax at the rate of 9% or less, input tax credit at the rate of 40% would be provided. If integrated tax is paid on such goods, the amount of credit shall be allowed at the rate of 30% and 20%. respectively. GST input tax credit would be credited to the electronic credit ledger of the taxpayer after the State tax payable on such supply has been paid.
To be eligible for claiming GST input tax credit under this scheme, the following conditions must also be satisfied:
The goods were not wholly exempt from tax under the Value Added Tax Act of the concerned state.
The document for procurement of such goods is available with the registered person.
The registered person availing of this scheme and having furnished the details of stock held by him, submits a statement in FORM GST TRAN 2 at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period.
The amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT2 on the Common Portal.
The stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.
The scheme for claiming GST input tax credit against VAT would be available for 6 months from the date of GST implementation.
The scheme for availing GST input tax credit has been provided for in the GST Transitional Rules.