CBEC released two transition forms TRAN 1 and TRAN 2 to help smooth transition into GST and carry forward their input tax credit. Any businesses which had a closing stock before GST implementation can claim input credit for the taxes paid.
Who can file the claim?
Taxpayers registered under GST can file TRAN 1 irrespective of whether they had registration under old regime.
The following registered persons can file TRAN 1:
- Manufacturer of exempted goods
- Provider of exempted services
- Works contractor availing abatement under 26/2012-ST
- First or second stage dealer
- GST Registered importer
- Depot of a manufacturer
- A person who is currently not liable for registration
Who cannot file TRAN 1?
Taxpayers registered under composition scheme cannot file TRAN 1.
Rules to claim credit
- Taxpayers have to file separate transition forms for each GSTIN.
- The credit which you are carrying forward must be eligible under GST as well.
- You can carry forward accumulated credit of old regime if you have filed VAT/Excise/Service Tax returns for past 6 months.
Conditions to claim credit
In case of finished goods, the taxpayer should meet the following conditions to claim input credit:
- He uses stock for making taxable supplies under this act.
- The person making the claim is eligible to claim ITC under this act.
- Supplier of the service is not eligible for abatement under this act.
- The person must have the proper invoice or prescribed documents.
- He issues such invoices between 1st July 2016 and 1st July 2017.
Percentage of claim
The registered person under GST will be allowed to claim the input credit paid on the purchase of goods and held in closing stock as on the appointed date. Since, it is not the possession of an invoice or other documents evidencing payment of taxes under VAT Act, Central Excise, credit will be allowed based on the rate of IGST, CGST and SGST of the closing stock under GST according to the HSN code.
The taxpayer may sell goods from the closing stock as on 30th June. Here, he will first pay
the appropriate taxes on such outward supply. Then he will claim ITC based on the rate of tax paid for that outward supply.