We all know, that the Goods and Services tax replaced all other indirect taxes in the nation. It is important for the businessmen and dealers to switch to GST in order to supply their goods and services and levy tax rates on the basis of the value of their supply made.
Therefore, the very first thing any dealer or businessman registered under any other forms of indirect taxes should immediately register under the provisions of the GST Regime in order to become eligible for all the benefits and advantages under GST. The below are the following steps for the GST registration transition
- The unregistered dealer will be issued a provisional certificate of registration in a prescribed form GST REG-25, as a part of their transitional process.
- The dealer should now submit all the necessary documents in form GST REG-24 within 90 days in order to finalize the registration.
- Once the documents are verified and proved to be satisfying the final certificate will be issued in form GST REG-06.
- During the transitional process, the dealer is not required to mandatorily register under GST who is previously registered under other indirect tax. However, he can cancel the form GST REG-25 within 30 days in form GST REG -28.
The different types of GST transitional provisions are:-
INPUT TAX CREDIT
Before, the introduction of the GST Regime the assesses enjoyed the benefits of Input tax credit under VAT, customs duty, and other indirect taxes. The assesses are accessible to carry forward those earned ITC to GST under the provisions of the GST regime. Whereas, a registered dealer opting for a composition scheme will not be eligible to carry forward his Input tax credits.
Below are the following instances where ITC transitional provisions will be made applicable.
- The closing balance of the input tax credit - The assesses can avail of the Input tax credit availed in the previous regime under the new GST regime if the closing balance of the Input Tax Credit was found in the last return filed by the assessee in the last 6 months. It means the returns should be filed from January 2017 – July 2017 in the previous regime.
To carry forward the input credits, the assessee should file form TRAN 1 by 27th December 2017.
Note - TRAN 1 can be rectified only once.
- Credit on Capital Goods - In the previous regime, only a part of ITC on capital goods were allowed to take as credit. In such a case, the unutilized credit available on capital goods can be carried forward to GST in form TRAN 1.
- Credit on stock – Any manufacturing or service unit that held their closing stocks or goods on which the duty was already paid is also eligible to take credit. However, the manufacturer has to declare the stock of such goods on the GST Portal. The dealer should assist the invoices of the goods less than a year old, in order to avail the credits. In case, the invoices showed as evidence is not available, then he will become ineligible to avail of ITC under the new regime.
Only, traders are allowed to claim credit when the invoice is not available, being subject to fulfilling the below conditions:
- The stock should be identified separately.
- The trader can avail of the credit only when the same has reached the final consumers.
When there is no invoice, then the credit will be as follows:
18% and Above
A registered dealer fulfilling the following conditions can also avail input tax credit –
- If he was not registered under the previous regime.
- He is engaged in the manufacture of exempted goods or provisions of exempted goods.
- He was providing works contract service and was availing abatement.
- He is a first-stage dealer or a second-stage dealer.
- He is a registered importer.
He should also fulfill further following conditions-
- The goods or inputs should be used for making taxable supplies.
- He should eligible to receive benefits under input tax credit on the inputs.
- There should be an invoice evidencing the payment of duty under the previous regime.
- The invoices should be less than a year.
- The credits on the inputs should be passed to his consumers in the form of reduced prices.
- The supplier of the services should not be eligible for any abatement under GST.
- Credit on Goods sent before 1st July- ITC can be claimed by the dealers for those goods received after the appointed day, the tax on which was paid under the previous regime. The credits will be allowed only if the invoices are submitted as evidence within 1st August 2017. He will be granted a 30 days extension by a competent authority provided that his delay was a reasonable cause.
REFUNDS AND ARREARS
If there are any claims or appeals pending for the refund on the due amount of CENVAT Credit, Tax or Interest paid before 1st July 2017 should be according to the previous regime. Any such amount found to be payable under the previous regime will be considered as arrears of GST and can be recovered according to GST Provisions.
IN OTHER CASES
- GST Transition for Job Work - In certain conditions, there shall be no tax chargeable on Inputs or semi-finished goods removed for job work for performing particular processes or returned after 1st July 2017. The conditions are as follows:
- Goods are returned to the manufacturing or production unit within 6 months from 1st July, which can be extended to a period of 2 years.
- Goods being held by the job worker are declared in the form TRANS 1.
- The supply of the semi-finished goods is done only on the tax paid across India or those goods that are exported out of India with 6 months from 1st July being extended to a maximum of 2years.
If the goods were already removed before 1st July and are returned within a period of 6 months from 1st of July, then the tax will not chargeable. Whereas, those goods that are not returned within 6 months, the ITC can be recovered.
- GST Transition by an Input Service Distributor- If the services were received before 1st July 2017, and the invoices being received on or after 1st July, then the GST transitional provisions under the new regime will become applicable.
- GST Transition for Composite Dealers- When a registered dealer who was paying tax on the basis of the composite scheme under the previous regime, and becomes a regular taxpayer under the new laws of the GST regime, then he is eligible to avail Input tax credit. However, he has to fulfill the following conditions :
- The input should be used for taxable supplies.
- The registered dealer should be eligible for Input Tax Credit.
- The invoices should be less than a year or equal.
- The invoice of the supplies or any tax-paying documents (duty) should be available.