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Transitional provisions related to credit under GST

Goods and Services Tax - GST - By: - Abhishek Gupta - Dated:- 29-12-2016 - Transitional Provisions for CENVAT Credit under GST Need for Transitional Provisions To facilitate the implementation of any new law or amendment in old law, role of transitional provisions comes into play. As India in gearing up for one of the biggest tax reform of its country, it is very important to read, analyze and assess the impact of GST Law and in amid these discussions of GST, transitional provision plays a very .....

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ep will be to look into the drafting of IGST Act. But, yes we can say that GST is an unquestionable new indirect tax of India. It may be deferred but yes it will come. Chapter XXVII of Model GST Law prescribes the transitional Provisions under GST. Transitional provisions are very important for exiting indirect tax payers as it will enable them to migrate into different aspects like migration, CENVAT Credit, sales return, job work, refund, pending contracts, stock transfers etc. Closing balance .....

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ning balance of input tax credit in electronic credit ledger. This balance of CENVAT credit will be known as CGST (central goods & service tax). What is electronic credit leger in GST? All the input taxes under various major heads i.e. CGST, SGST and IGST shall be credited to an electronic ledger. Any availment of input tax credit will be credited in the ledger and any utilization, refund, reversals will be debited in the ledger. Section 2(43) of Model GST Law, electronic credit ledger means .....

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Following conditions needs to be considered before carrying forward the said credit: The CENVAT Credit must qualify as admissible input credit under both, the existing law and the GST Law. The CENVAT Credit must have been reflected as input credit carried forward in the return filed for the last period under existing law. It is important to note that the admissible CENVAT Credit as per last return filled under current indirect tax laws would be considered and recognized. The closing credit balan .....

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e amount that remains after subtracting the amount of CENVAT credit already availed in respect of capital goods by the taxable person under the earlier law from the aggregate amount of CENVAT credit to which the said person was entitled in respect of the said capital goods under the earlier law. A registered taxable person is not allowed to avail credit under this section unless CENVAT Credit was admissible to him under the earlier law and GST as well. It is very important to recap here that tim .....

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be allowed A registered taxable person will be allowed to avail CENVAT Credit of duties paid on inputs held in stock, contained in semi-finished goods or finished goods held in stock, on the appointed day, subject to certain conditions. Such registered taxable person should have been- Person not liable to be registered under earlier law Engaged in manufacture of exempted goods or provision of exempted service Was providing work contact service and paying tax on abated value First stage dealer or .....

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T or entry tax, a person who has not liable to be registered under the respective VAT laws or who was engaged in the sale of exempted goods under the earlier law but liable to pay tax under this act can also take input tax credit in electronic credit ledger. Credit of eligible duties and taxes in respect of inputs held in stock to be allowed in certain situations A registered taxable person who was engaged in manufacture of non-exempted as well as exempted goods or provision of non-exempted as w .....

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In such a situation, a registered taxable person receiving such goods and or services after the appointed day, on which appropriate duty or tax has been paid under the earlier law shall be entitled to take in his electronic credit ledger the amount of tax paid earlier. The condition to be fulfilled to avail such credit shall be that the bill or invoice should be recorded in the books of accounts within a period of thirty days from the appointed day. Also, assessee shall furnish a statement in r .....

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taxable outward supply under the GST Assessee should not be working under composition scheme Taxable person is eligible for availing input tax credit on such inputs Taxable person is in possession of supporting documents Such documents were not issued earlier than 12 months immediately preceding the appointed day Illustration: X ltd. registered in Delhi is manufacturing medical equipment s on which 10% excise duty is applicable and is providing health care services which is exempted by notifica .....

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000 Input services- ₹ 20,000 From above closing balance, credit of input service of value ₹ 1,000 is eligible as per CCR, 2004 but not eligible under GST. Closing balance of credit of VAT shown in last return: ₹ 10,000 Closing balance of credit of entry tax shown in last return: ₹ 12,000 Credit attributable to section 3, 5(3), section 6 or section 6A of the CST Act, 1956 claimed within the time of rule 12 of CST(Registration and turnover) Rules, 1957- ₹ 6,000 CENVAT .....

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00 Rate of CGST, SGT and IGST are 9%, 9% and 18% respectively.- Suggest tax compliances as GST will roll-out on 1st April, 2017 considering an assumption that supplies of goods or services made by X ltd. will be taxable under GST. Solution: As per section 167 of Model GST Law: Closing balance carried forward in return will become input tax credit under GST Input tax credit as per section 167 will be: Particulars Amount Remarks Capital Goods 1,00,000 It can be claimed as ITC in electronic credit .....

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