GST Update On 40%-60% ITC - Procedural Problems While Filing TRAN-1

Transitional provisions pertaining to the admissibility of credit to the supplier who was not registered under earlier law are given in rule 117(4) of the CGST Rules, 2017. The relevant part of this rule reads as follows:-

"(4) (a) (i) A registered person who was not registered under the existing law shall, in accordance with the proviso to sub-section (3) of section 140, be allowed to avail of input tax credit on goods (on which the duty of central excise or, as the case may be, additional duties of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975, is leviable) held in stock on the appointed day in respect of which he is not in possession of any document evidencing payment of central excise duty.

(ii) The input tax credit referred to in sub-clause (i) shall be allowed at the rate of sixty per cent. on such goods which attract central tax at the rate of nine per cent. or more and forty per cent. for other goods of the central tax applicable on supply of such goods after the appointed date and shall be credited after the central tax payable on such supply has been paid:
Provided that where integrated tax is paid on such goods, the amount of credit shall be allowed at the rate of thirty per cent. and twenty per cent. respectively of the said tax;

(iii) The scheme shall be available for six tax periods from the appointed date."

An analysis of this rule makes it clear that if a person was not registered under old law and is registered under GST, he shall be allowed to avail the credit on goods lying in stock on 1.7.2017 even in case he is not in possession of any document evidencing payment of excise duty.

Further, the rate at which the credit shall be allowed will be calculated as follows:-
- If CGST rate on goods is 9% or more - credit shall be allowed of 60% (If IGST is paid, credit shall be allowed at 30% of said tax).
- If CGST rate on goods is less than 9% - credit shall be allowed of 40% (If IGST is paid, credit shall be allowed at 20% of said tax).

The ITC calculated above will be credited to electronic credit ledger after the central tax has been paid on such supply.

The online utility of TRAN-1, has columns namely Number, Description, Unit, Qty., Value and Tax paid. On the other hand, since the people opting for this does not have duty paying document available with him, the amount of tax paid is not available. Further, the ITC shall be allowed based on the percentage of 40%/60% of the CGST or 30%/20% of IGST so paid. Thus, to calculate the eligible ITC we need to have the sale value which is not available at the time of filing TRAN-1. Thus, what amount of tax should be filled in the column "tax paid" of column 7d of TRAN-1, is not clear.

We have tried filling the amount "0" in the column "tax paid" and it was allowed. Perhaps, the reason behind this is that the details of this amount are not available with the return filer. Also, this amount has nothing to do with the admissible tax credit under CGST Act and rules; therefore, the column "tax paid" is irrelevant here. So, in absence of any clarification in this regard, is writing "0" in the column of tax paid will suffice? Clarification required!

Visit us at www.capradeepjain.com

and also at
https://www.facebook.com/GSTTODAYBYPRADEEPJAIN/

Comments

GST Update On 40%-60% ITC - Procedural Problems While Filing TRAN-1

Post a Comment

Query