TRAN 1 and TRAN 2 are forms that the CBEC released to allow taxpayers to carry forward their input tax credit. Any businesses which had a closing stock before GST implementation can claim input credit for the taxes paid under the previous regimes.
TRAN 1 is the transition form for taxpayers registered under GST and may be registered or unregistered under old regime. TRAN 2 is the transition form for taxpayers registered under GST but unregistered under previous regime.
Conditions to claim credit
In case of stock of finished goods, the taxpayer should meet the following conditions to claim input credit:
- Stock used 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 invoice or prescribed documents.
- He issued such invoices between 1st July 2016 and 1st July 2017.
Who can file the claim?
The following people can file TRAN 2:
- GST Registered taxpayers who were previously unregistered but had closing stock as on 30th June 2017.
- Registered persons who do not have any proof or document about payment of taxes.
Who cannot file TRAN 2?
Rules to claim credit under TRAN 2
- 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 of Central Tax and State tax- Applicable in case of States offering Tax on MRP Scheme.
- Central tax and/or state tax is paid.
- Goods are not Nil rated or fully exempt from Excise Duty or under the State VAT Act.
- Registered person has the document for purchase of such goods.
- Amount is credited to Electronic Credit Ledger (ECL).
- The registered person stores the stock of goods in a way that he can easily identify it.
When to file TRAN 2?
A dealer or trader should file TRAN-2 at the end of every month when he sells the stock. The trader/dealer should report the relevant details to claim input tax credit.
Earlier the due date for filing TRAN-2 was 31st March 2018.
The new due date is 30th June 2018.
Taxpayers could not take 100% ITC for capital goods in the first year of purchase.They could avail only 50% in the first year & remaining 50% in subsequent year. The registered person who was able to claim partial amount in the old regime, can claim the remaining under GST.
Stock sent or received for job work
A principal manufacturer may send his goods for job work. If such goods are lying with the job worker as on 1st July, it is also a stock held by principal manufacturer. Manufacturer can claim input tax credit on this.
These are the details that principal manufacturer and job worker should mention in the form:
- Challan number and date
- Type of goods (raw material, semi-finished/ finished goods)
- Description of goods – HSN, unit, quantity, value
- GSTIN of manufacturer or job worker