Post the roll-out of GST in July 2017, the existing businesses which were registered in the previous tax regime had concerns about the old tax benefits and Input credits which were accumulated in the past. Thus, moving such credits into GST regime becomes of utmost importance.
These taxes are paid while purchasing inputs, raw materials, semi-finished goods, finished goods.
Input tax credit of stock and input with regards to semi-finished goods and finished goods, of eligible duties and taxes, will be available to eligible taxpayers under GST only if the following conditions are fulfilled:
Under the law of Central Excise, first stage dealer means a person who purchases goods directly from the manufacturer as per the provisions of excise. Second stage dealer means one who purchases from first stage dealer.
Every first stage dealer or second stage dealer should get themselves registered as a dealer and are not eligible to take credit of excise duty paid. The excise duty involved is allowed as a credit to the registered manufacturer of dutiable goods. Thus, such dealers only pass on or transfer the credit and not utilise it.
On the same terms, an importer of goods is required to be registered so that he can pay off the import duties.
Under the Excise Law, every manufacturer does not have to get himself registered or discharge the liability to pay the taxes under the Act if his aggregate turnover does not exceed Rs 1.5 crores. In case the turnover exceeds the limit specified in a financial year which is different in different states, a person is required to be registered under the VAT Act.
As per GST Law, a taxpayer is liable to register in case aggregate turnover in one financial year exceeds Rs 20 lakhs (Rs 10 lakhs in case of the Special Category States). Hence, here persons who were not required to be registered under the previous tax laws but have to get themselves register under GST Act, will have to discharge the duties and taxes under GST on transition.
If a person was engaged in providing exempted services or was dealing with goods on which tax was not levied, and was thus not liable to pay duties earlier. Such person will be liable to discharge the same on transition if the goods are not covered under exempted goods in GST Act.
Any business, irrespective of being registered or not before GST and having a closing stock, will be entitled.
For a smooth transition of the business and carry forward of the ITC, 2 transition forms, i.e. TRAN 1 and TRAN 2 have been released by CBEC.
TRAN 1 form is filed by the registered person under GST who may or may not be registered under the old regime (VAT Act, Service Tax, Central Excise). The composite dealer registered under GST is not liable to file TRAN 1.
TRAN 2 form is filed by the registered person under GST but unregistered under the old regime. A dealer or trader who does not have documents evidencing payment of taxes can also file TRAN 2.
A service provider registered under Service Tax or a manufacturer registered under Excise cannot file TRAN 2.
These are the transitional provisions about the stock credit. As we are aware that TRAN 1 due date has already lapsed, but Filing of TRAN 2 has been extended from 31st March to 30th of June. If you face any problem, feel free to reach us at earlyGST by H&R Block and we will solve all your queries as well as file your taxes for you.