GST TRAN – 2 Form

Last Update Date : August 13, 2018

form tran 2

Businesses that are registered under GST are worried about the taxes paid in the pre-GST regime. These taxes were paid while purchasing inputs, raw material, semi-finished goods, etc. Therefore, to enable the transfer of Input Tax Credit (ITC) under GST for the existing physical stocks that have suffered an incidence of taxes under various existing laws, transitional provisions have been incorporated in GST Act, 2017. So, businesses that have not availed ITC on services or a closing stock can claim a credit of tax paid under the pre-GST regime whether or not they were registered under the Pre-GST regime.

If you want to claim the credit of taxes paid for the closing stock held on June 30, 2017, you should file TRAN 1 and TRAN 2 within 90 days from the appointed date.

What are TRAN – 1 & TRAN – 2 Forms?

The CBEC has notified two types of forms for claiming ITC on closing stock – Form TRAN – 1 & Form TRAN – 2. These forms are named TRAN forms as they are meant for the transition of ITC.

How to Claim ITC on Old Stock?

Any business with a closing stock, irrespective of whether registered or not before GST, will be allowed to claim a credit for tax paid under the pre-GST regime.
Following is the procedure to claim ITC for the old stock:

  • You should file transition forms TRAN – 1 and TRAN 2,
  • You will have to sell your old stock (bought after June 30, 2016) within 6 months from the GST launch date (July 1, 2017)
Type of form Who can file Who cannot file Due date to file
TRAN – 1 That person can file this form, who are registered under GST, may be registered or unregistered under the old regime Persons, who register under GST as composition dealer October 31, 2017
TRAN – 2 Those persons can file this form, who are registered persons under GST but unregistered under the previous regime
A dealer or trader without the documents of duty paid
Manufacturers registered under Excise
Service Providers registered under Service tax
Every month from July 2017 to December 2017

Who can File GST TRAN-2 Form?

The person who satisfies all of the following conditions must file Form Tran 2:

  • The person aiming to claim the ITC should be registered under GST but should not be registered under any pre-GST regime.
  • The person should not possess any invoice or other documents that act as an evidence of payment of taxes.
  • The person should neither be a manufacturer nor a supplier of services under Central Excise or Service Tax respectively.
  • The closing stock should be lying on 30th June 2017.

Due Date to File GST TRAN-2

As per the GST transition rules, the GST TRAN 2 due date for all traders is the end of every month, by which he/she needs to report any sales of the stock, qualifying to claim input tax credit on the same.  As per the first notification regarding the transitional forms, it was specified that TRAN 2 is to be filled monthly for the months July to December 2017.

Note: As per the Latest Notification dated 28th March 2018 Order No. 1/2018 – Central Tax TRAN-2 must be filled by 30th June 2018.

Requirement for Filing TRAN – 2

You must file Form TRAN – 2 if you satisfy the below-mentioned conditions:

  • You are a registered person under GST aiming to claim ITC.
  • You should not be registered under the pre-GST regime (VAT Act or Central Excise, Service Tax).
  • You should not be in possession of an invoice or other documents proving payment of taxes.
  • You should have a document showing procurement of Goods
  • You have closing stock as on June 30.
  • You are not a Manufacturer or Service provider.

The basic condition to be fulfilled for availing credit is that “such goods should not be exempt from whole of duty/tax or were not nil rated or exempt goods in the previous laws”.

TRAN-2 has to be filed by a dealer or trader at the end of every month when the stock is sold reporting the details to claim input tax credit

How to File TRAN-2?

In order to file Form GST TRAN 2 follow the below mentioned simple steps:

NOTE: Kindly ensure that you have filed the TRAN-1 Form and the GSTR-3B return of the relevant month before you follow these steps.

STEP 1: Firstly LOGIN to GST PORTAL: www.gst.gov.in as shown in the image below

Once you are logged in, you will see a pop-up message as shown below;

STEP 2: Once the home page appears, Click the Services > Returns > Transition Forms link as shown below;

STEP 3: Now Click the TRAN 2 tab

STEP 4: Select month and year from the drop-down and click on search

STEP 5: Once you are done filling the year and month you will be directed to the image shown below, now click on no. 4

STEP 6: Once you click on 4. You will see a pop up message.
Under the “Important Note” section, 2nd point has link to download the Excel template and “click here” to download all processed records.

STEP 7: Once the details is previewed, click on submit and file with DSC or with EVC as per your convenience.

Details to be Filled in TRAN – 2

  • You have to mention your GSTIN
  • Provide the name of the taxable person
  • You have to state the tax period, i.e. month and year for which this form is being filed
  • You will have to give the details of inputs held on stock on July 1 for which you do not have any invoice/document proving payment of tax carried forward to electronic credit ledger

In case a document showing payment of Excise Duty is not available to you, then you are required to fill the following details in Point 4 of Tran-2.

You will have to give the details of the stock in the following manner:

In column 1 – You have to provide HSN code (at 6-digit level) of the opening stock for the month
In column 2 – Specify the unit of measurement of the opening stock for the month
In column 3 – Quantity of opening stock for the month
In column 4 – Quantity of goods sold in the month
In column 5 – Details of taxable value of goods sold for the month
In column 6 – In case goods are sold intra-state then specify the CGST
In column 7 – In case goods are sold inter-state then the amount of IGST paid must be stated
In column 8 – credit of central tax (input credit of CGST/IGST) claimed shall be:

  • In case the CGST paid in column 6 is 9% or greater, then the ITC to be claimed is 60% of column 6. If it is not so then, it is 40% of column 6.
  • In case the IGST paid in column 7 is 18% or greater, then the ITC to be claimed is 30% of column 7. If it is not so then, it is 20% of column 7.

In column 9 – Quantity of Closing stock for the applicable tax period is calculated by deducting value in column 4 from the value in column 3.
In case a document showing payment of VAT is not available to you, then you are required to fill the following details in Point 5 of Tran-2.
You will have to give the details of the stock in the following manner:

In column 1 – You have to provide HSN code (at 6-digit level) of the opening stock for the month
In column 2 – Specify the unit of measurement of the opening stock for the month
In column 3 – Quantity of opening stock for the month
In column 4 – Quantity of goods sold in the month
In column 5 – Details of taxable value of goods sold for the month
In column 6 – Specify the SGST payable on sale.
In column 7 – Credit of State tax (input credit of SGST) claimed shall be:

  • In case the SGST paid in column 6 is 9% or greater, then the ITC to be claimed is 60% of column 6. If it is not so then, it is 40% of column 6.

In column 8– Quantity of Closing stock for the applicable tax period calculated by deducting value in column 4 from the value in column 3.

Percentage of ITC Claim Available

A person, who is registered under GST can avail ITC on the purchase of goods and held in closing stock as on the appointed date. As the person does not possess an invoice or other documents that can act as proof of payment of taxes under VAT Act, Central Excise, hence credit will be allowed basis the rate of IGST, CGST and SGST of the closing stock under GST as per the HSN code.

When the taxpayer sells the goods held as closing stock on June 30, then, first of all, he is required to pay the appropriate taxes on such outward supply. Only then he will be allowed the ITC based on the rate of tax paid for that outward supply.

Let us understand this with the help of an example

Mr Harsh holds the below-mentioned goods as closing stock on June 30:
1500 units of Bags
Now, on July 25 he sells 200 bags for Rs 110 each of which ITC is applicable at 12%
Then the taxable amount will be Rs 22000, and the tax amount thereon will be Rs 2640
As the rate of IGST is less than 18%, ITC will be allowed at 20%
Therefore, ITC allowed will be 20% of Rs 2640 = Rs 528

Conditions for Claiming a Credit of Central Tax and State Tax

This tax is only applicable in case of States offering Tax on MRP Scheme

  • The Central Tax or State Tax payable on such supply has been paid
  • These goods were not wholly exempt from Excise Duty nor NIL rated. And such goods were not under the relevant State VAT Act.
  • The registered person is in possession of the document for procurement of such goods.
  • Provide the details of stock held at the end of each of the 6 tax periods specifying therein the details of supplies of such goods effected during the tax period in Form TRAN – 2.
  • The amount of credit allowed shall be credited to the Electronic Credit Ledger.
  • The stock of goods on which the credit is availed is stored in such a manner that the registered person can identify it easily.

earlyGST by H&R Block can help you in the easy filing of your TRAN – 2 form so that you can avail the right amount of credit and ensure that you don’t lose on any eligible credit.

Frequently Asked Questions

1. Can I download and open the TRAN-2 Offline Tool in my system from the GST Portal?

Ans: Yes, you can download and Tran 2 offline. Follow the steps given below:

  • Login to the GST Portal www.gst.gov.in.
  • Go to Downloads > Offline tools > TRAN-2 Offline Tools button and click on it.
  • Click the Download link for template to be downloaded.

2. Can I make any amendment to the transition form GST TRAN – 2?

Ans: There is no revision or amendment of transition ‘Form GST TRAN – 2. Form GST TRAN- 2 can only be filed only once for one tax period.

3. Do I need to attach any document along with transition form GST TRAN – 2?

Ans: There is no requirement for uploading any documents as an attachment along with transition form GST TRAN – 2.

4. I am not able to file transition form GST TRAN – 2, why?

Ans: If you have filed transition form GST TRAN – 1 as you cannot file GST TRAN – 2 without filing GST TRAN – 1. If you have not filed valid GSTR-3 return for that period, as you cannot file GST TRAN – 2 for that period for which you have not filed valid GSTR-3 return.

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