Any business that has not availed Input Tax Credit (ITC) on services or a closing stock can claim credit of tax paid under the pre-GST regime, irrespective of whether they are registered or unregistered under this regime. Depending on the possession of the evidence of payment of taxes and being registered under the pre-GST regime, Form Tran 1 and Tran 2 are to be filed.
In order to claim ITC (Input Tax Credit), you will have to submit your input tax credits according to the previous tax regime and then claim it under GST. For that, you will have to file your Tran 1 and/or Tran 2 form within 90 days from the appointed date and sell your old stock which you are planning to carry forward to the subsequent i.e. GST tax regime within six months from the appointed date (i.e. 1st July 2017).
Check your eligibility for the Transition Forms you need to file
|Form TRAN 1
||Form TRAN 2
- It needs to be filed by every person who has closing stock under the GST regime, even if they were not registered under the pre-GST regime.
- Not a registered person under any pre-GST regime.
- Holds Closing stock on the appointed date (i.e. 1st July 2017)
- The person doesn’t possess any document that acts as an evidence of payment of taxes.
- The person is not a manufacturer in Central Excise.
- The person is not a service provider under the Service Tax.
Form GST Tran 1
- Every person who is registered under the GST regime and wishes to claim the tax credit of ITC available under the pre-GST regime must file the Form Tran 1 within ninety days of the appointed date.
- This form should be filed by every person who is registered under GST regime, even if he is not registered under the pre-GST regime if he wants to take credit of ITC available under the pre-GST regime.
- If a registered person has purchased capital goods and was unable to claim the full amount of tax paid during the purchase, the remaining amount can be claimed under GST.
Conditions to claim ITC
- A registered person can be a manufacturer or a provider of the exempted goods and/or services, works contractors availing abatement under 26/2012-ST, first or second stage dealer, a registered importer, depot of a manufacturer, or a person who is currently not liable for registration.
- The registered person shall be entitled to take in the inputs in finished goods held in the stock on the appointed day, inputs on the semi-finished goods, ECL, eligible credits on inputs.
- The entitlement in case of finished goods will be subject to the following conditions:
- The stock is to be used for making supplies that are taxable under this Act
- The person is eligible to take ITC on inputs under this Act
- The person should have the invoice or the prescribed documents
- These documents or invoices should not have been issued earlier than 12 months from 1st July
- The supplier of the service is not eligible for abatement under this Act
Form GST Tran 2
The person who satisfies all 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.
If the person wants to claim credit of State and Central Tax, following conditions should be fulfilled
- The state and central tax have been paid on supplies.
- The goods are not Nil rated or fully exempt from Excise Duty or under the State VAT Act.
- The registered person should have the document for procurement of these goods.
- The registered person should easily identify the stock of goods on which credit is allowed, which is why it should be stored in that way.
- The amount allowed should be credited to the ECL (Electronic Credit Ledger).
The above conditions in case of State Tax will be applicable if the States offer Tax on the MRP Scheme.
- The deadline for first GST Return, GSTR- 3B, has been extended to August 28 for taxpayers who opt to use the opening balance of pre-GST credit in the current month. Those who do not wish to claim opening credit in the current month or those who have no credit; the deadline continues to be August 20.
- The extended deadline also allows the taxpayers to file form TRAN 1 by October 31.
- TRAN 1 filing system is not up and running yet on GST portal.
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