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GST: Industry gets 90 days to claim tax credit for transition stock after rollout from 1 July

GST: Industry gets 90 days to claim tax credit for transition stock after rollout from 1 July

New Delhi: Traders and retailers can submit reports within 90 days to apply for a transitional tax credit following the July 1 GST exit. The draft transition rules for the tax system on goods and services (GST) set the period of 60 days.

The transition rules approved by the GST Council establish that “any person registered right to the credit of the input tax must, within 90 days from the established day, submit declarations by electronic means … specifying separately amount of the credit Tax on the inputs that it has the right … “. Also gives power commissioners extend this deadline by another 90 days on the recommendation of the GST.

The GST Council, chaired by Union Finance Minister Arun Jaitley, and made up of state counterparts, also decided to change the transition rules that allow traders and retailers to claim 60 percent against the CGST and SGST taxes when the rate Tax rate exceeds 18%. In cases where the GST rate is less than 18%, only 40% of the reputed credit will be available against the CGST and SGST contributions. To take advantage of this, a manufacturer may issue a credit transfer document (CTD) as proof of payment of the excise duty on goods dispatched before the introduction of the GST to the distributor. The distributor who uses the credit with CTD must also keep copies of all invoices relating to the purchase and sale of the manufacturer to the distributor, through intermediate distributors. CPC must be issued within 30 days of July 1, 2017, and the details of these must be mentioned in the forms specified by the manufacturer and the distributor who uses the credit.

The Union’s Minister of Finance, Arun Jaitley. Reuters
The Union’s Minister of Finance, Arun Jaitley. Reuters
“This provision is a sigh of relief for the entire network of dealers / distributors of motor vehicles and other means of transportation, because these agents / dealers would get the full credit of special paid by the original manufacturer,” Nangia and Directors Co (Indirect tax) said Rajat Mohan.

The transitional bill had said that once the GST was implemented, a company could claim a credit of up to 40 percent of its CGST and SGST contributions from special paid-up shares held by companies before the rollout.

Distributors had requested an increase in the amount of input deduction for transitional actions and therefore the GST Council at its meeting on 3 June modified the transitional rules. In addition, in cases where the Integrated GST (IGST) was paid for the sale of these products, the credit would be deemed to be available at a rate of 30 percent IGST paid if the IGST rate is 18 percent or higher and 20 percent of IGST paid in other cases. The draft regulations previously issued do not mention.

To apply for a reputable credit, products must be subject to a special duty or additional customs duty and products must not be unconditionally exempt from any special tax. To claim the service tax credit or VAT paid in the current liability regime for GST of deliveries made in the GST system, a dealer would be required to provide information on the proportion of the offer made.

“The transition rules specify that individual states may insert a new provision that details the method of calculation of the VAT paid which would be available as a state-rate CCI under specific conditions,” Mohan said.

In addition, the government will pay 100% of excise taxes for products that cost over Rs 25,000 and bear the manufacturer’s mark and number series such as TV, refrigerator or car chassis.

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