GST

Transition Provisions under

GST
GST is a significant reform in the field of indirect taxes in our The balance instalment of un-availed credit on capital goods
country. Multiple taxes lev-ied and collected by the Centre and credit can also be taken by filing the requisite declaration in the
States would be replaced by one tax called Goods and Services GST TRAN 1.
Tax (GST). GST is a multi-stage value added tax on consumption
of goods or ser-vices or both. (c) Credit on duty paid stock:
A registered taxable person, other than the manufacturer or
As GST seeks to consolidate multiple taxes into one, it is very service provider, may have duty paid goods in his stock on the
essential to have transitional provisions to ensure that the appointed day. GST would be payable on all supplies of goods or
transition to the GST regime is very smooth and hassle-free and services made after the appointed day. It is not the intention of
no ITC (Input Tax Credit)/benefits earned in the existing regime the Govern-ment to collect tax twice on the same goods. Hence,
are lost. The transi-tion provisions can be categorised under in such cases, it has been provided that the credit of the duty/
three heads: tax paid earlier would be admissible as credit. Such credit can be
taken as under:
A. Relating to Input Tax Credit
(i) Credit shall be taken on the basis of invoice evidencing
B. Continuance of existing procedures such as job work for payment of duty of excise or VAT
a reasonable period without any adverse consequence
under GST law (ii) Such invoices should be less than one-year old

C. All claims (pending as well as future) pertaining to existing (iii) Declare the stock of duty paid goods within the
laws filed before, on or after the appointed day prescribed time on the common portal

A. Transitional arrangements for ITC (d) Credit on duty paid stock when Registered Person does not
possess the docu-m-ent evidencing payment of excise duty/VAT
Elaborate provisions have been made to carry forward the ITC
earned under the existing law. Such credit should be permissible For traders who do not have excise or VAT invoice, there is a
under the GST law. However, the taxable person opting for scheme to allow credit to them on the duty paid stock. The
composition scheme would not be eligible for carry forward of features of this scheme are as under:
the existing ITC. ITC of various taxes under the existing laws
(CENVAT credit, VAT etc.) would be carried forward as under: (i) The scheme is operative only for six months from the
appointed day. It is not available to manufacturer or supplier
(a) Closing balance of the credit in the last returns: of service. It is available to traders only.
The closing balance of the CENVAT credit /VAT in the last
returns filed under the existing law can be taken as credit in (ii) Credit @ 60% on such goods which attract central tax @ 9%
electronic credit ledger. Such credit would be available only or more and @ 40% for other goods of GST paid on the stock
when returns for the previous last six months have been filed cleared after the appointed day would be allowed. However,
under the existing law. In order to claim this credit, declaration such goods should not be unconditionally exempted goods or
in form GST TRAN 1 is required to be furnished on the common taxed at nil rate under the existing law. It has also been provided
portal within ninety days from the appointed day i.e. 1st July, that where integrated tax is paid on such goods, the amount
2017 or within such extended time of credit shall be allowed at @ 30% and 20% respectively of the
said tax.
(b) Un-availed credit on capital goods:

Directorate General of Taxpayer Services

CENTRAL BOARD OF EXCISE & CUSTOMS
www.cbec.gov.in
 GST
Transition Provisions under
GST

(iii) Credit would be allowed after the GST is paid on such goods (h) ITC in case of Centralised Registration under service tax
subject to the condition that the benefit of such credit is
passed on to the customer by way of reduced prices. Such Registered Person can take credit of the amount of CENVAT
carry forward-ed in return furnished under the existing law, if
(iv) The statement of supply of such goods in each of the six tax the original/revised return under the ex-isting law has been filed
periods has to be submit-ted. within three months. Such credit may be transferred to any of the
Registered Persons having the same PAN for which the centralised
(v) Stocks stored should be easily identifiable. registration was obtained.

(e) Credit relating to exempted goods under the existing law (i) Reclaim the reversed Input Service credit
which are now taxable
CENVAT credit reversed on account of non-payment of consideration
Input Tax Credit of CENVAT/VAT in respect of input, semi-finished within three months can be reclaimed if payment is made to the
and finished goods in stock attributable to exempted goods or supplier of service within 3 months from 1st July, 2017
services which are now taxable can also be taken in the same
manner. (j) Where any goods or capital goods belonging to the principal are
lying at the premises of the agent on the appointed day
(f) Input/input services in transit
This provision is specific to SGST law. In such cases, agent shall be
There might be a scenario where input or input services are entitled to take credit, subject to the following conditions:
received on or after the ap-pointed day but the duty or tax on the
same was paid by the supplier under the existing law. Registered (i) The agent is a registered taxable person
person (RP) may take credit of eligible duties and taxes, provided
the in-voice has been recorded in the books within 30 days (ii) Both the principal and the agent declare the details of stock
from the appointed day. The period can be extended by the
Commissioner GST by another 30 days. A statement of such in- (iii) The invoices are not older than twelve months
voices have to be furnished. ISD can also distribute such credit.
(iv) The principal has either reversed or not been availed on the
input tax credit
(g) Tax paid under the existing law under composition scheme
B. Transition provisions relating to job work, goods
Those taxpayers who paid tax at fixed rate or fixed amount in lieu returned/sent on approval etc.
of the tax payable un-der the existing law but are working under
normal scheme under GST can claim credit on their input stock, (a) Job work
semi-finished and finished stock on the appointed date, subject
to the following conditions: Inputs, semi-finished goods or finished goods were sent to the job
worker or any other premises without payment of duty/VAT under
(i) Such input stock used for taxable supply under this Act the existing law. No GST is payable by the job worker when such
goods are returned by him within six months after the appointed
(ii) Registered Person is not covered under section 10 day. The period can be extended by the Commissioner, GST by
(composition scheme) of this Act another two months.

(iii) Registered Person is eligible for ITC under this Act If not returned within the prescribed period, then ITC shall be
liable to be recovered from the principal as per second provision
(iv) Registered Person is in possession of the invoice or other to section 141(1) of the Act. In addition, the job worker will have to
duty payment documents pay the GST on such supplies. In case of semi-finished goods, the
manufacturer may transfer the goods to premises of a Registered
(v) Such invoices are not more than twelve months old on the Person without pay-ment of tax within the prescribed period. In
appointed day case of finished goods, the manufacturer may transfer the goods

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 GST
Transition Provisions under
GST
If not returned within the prescribed period, then ITC shall be deemed to have been issued in respect of outward supply made
liable to be recovered from the principal as per second provision under this Act. A Registered Person will reduce his tax liability for
to section 141(1) of the Act. In addition, the job worker will have such credit note, subject to reversal of credit by the recipient.
to pay the GST on such supplies. In case of semi-finished goods, C. Proceedings under the existing laws
the manufacturer may transfer the goods to premises of a
Registered Person without pay-ment of tax within the prescribed GST law has become operational w.e.f. 1st July, 2017 and existing
period. In case of finished goods, the manufacturer may transfer laws have been repealed. Elaborate provisions have been made
the goods on payment of tax or clear for export within the to save the pending as well future claims relating to existing law
prescribed period. made before, on or after the appointed day i.e. 1st July, 2017. Such
proceedings may pertain to refund claims of CENVAT credit/VAT or
(b) Goods removed before 6 months of the appointed day i.e. export related rebate or service tax, such proceedings may either
1st July, 2017 but returned within 6 months from 1st July, 2017: result in recovery of tax or refund.
All such cases would be disposed of under the existing law. If any
If such goods are returned by an unregistered person, then refund claim for refund of CENVAT credit is fully or partially rejected, the
of the duty/VAT paid under the existing law can be claimed. amount so rejected shall lapse. Refund of CENVAT credit shall be
paid in cash. There will be no refund of CENVAT if already carry
If returned by a Registered Person, then the return of goods shall forwarded. If any amount becomes recoverable, the same shall be
be treated as supply of goods (ITC can be claimed). recovered as arrear of tax under GST Act.
Statutory provisions relating to transition are contained in chapter
(c) Goods sent on approval basis before 6 months of the XX (section 139 to 142) of the CGST Act, 2017, SGST Act(s), 2017 and
appointed day i.e. 1st July, 2017 but returned within 6 months Rule 117 to 121 of the CGST Rules, 2017.
from 1st July, 2017:

No tax is payable by the person returning the goods.

Commissioner may extend the peri-od by 2 months. If returned
after that, tax is payable if the supply is taxable under GST (by the
recipient). If not returned, tax is payable by the person who sent
the goods on ap-proval basis.

(d) TDS deducted in VAT

Where a supplier has made any sale of goods, and tax was
required to be deducted under VAT Act, and invoice was issued
before the appointed day. however, the payment was made on
or after the appointed day. In such cases, no TDS under GST is to
be deducted.

(e) Price revision in respect of existing contracts

In case of upward price revision, a registered person will issue

a supplementary invoice or debit notes within 30 days from
the date of revision and such revision shall be treated as supply
under GST, and tax is payable under this Act.

In case of downward revision, Registered Person may issue credit

note within 30 days from such revision and credit note shall be

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