1. GST: Input tax credit limit on existing stock raised to support transition period sales

GST: Input tax credit limit on existing stock raised to support transition period sales

GST Council has raised the limit on input tax credit against excise duty payment to 60% from 40% of GST liability on items with tax rate above 18%, bringing some respite on sale of inventories stocked up before the implementation of the new tax regime on July 1.

By: | Updated: June 5, 2017 11:41 AM
Businessmen had cut inventory of goods as earlier rules provided for claiming tax credit for only up to 40% of their total GST liability against the excise duty paid on purchases before July 1 without the original excise payment receipt. (Image: Reuters)

In a major relief to traders and businessmen across the country, the GST Council has increased the limit on input tax credit to 60% against excise payments from 40% earlier on items with tax rates at 18% and above without excise payment receipts, bringing some respite on sale of inventories stocked up before the implementation of the new tax regime on July 1.

The input tax credit refund against excise on items with tax rates below 18% would remain at 40% of the total GST liability. Further, the council also ruled that entire 100% input tax credit against excise can be availed on high-value items above Rs 25,000 with a chassis number. It must be noted that the input tax credit refund against is already at the full value in cases where the excise payment receipt is available.

Distributors and dealers had begun cutting down on the stock of goods lying with them ahead of the implementation of GST, as the earlier proposed rules provided for them to claim tax credit for only up to 40% of their total GST liability against the excise duty already paid on the goods purchased before July 1 without furnishing the original excise payment receipt.

However, with the increase in the limit of the input tax credit that they can claim, the companies could sigh a breath of relief as it would cushion the impact on sales in the month leading up to the levy of the new tax.

The GST Council, which met on Saturday to decide the tax rate on remaining six items, has finalised all the pending rules, including those on transition and returns forms, for the implementation of the most sweeping tax reform in the country since independence in less than a month from now. The council also decided the tax rate to be levied on the six items, including gold, bidis, biscuits, textiles, apparels and footwear. All the states have agreed to the roll out from July 1, bringing certainty to the implementation of the new regime as scheduled.

Earlier last month, the GST Council, tasked with tasked with framing rules for implementation of most sweeping tax reform India has ever seen since independence, finalised the rate of tax on over 1,200 items and most of the services, while deferring decision on six items including gold to today’s meeting.

The council has proposed four tax slabs at 5%, 12%, 18% and 28% under GST, while exempting essential or daily consumption items and services from tax levy, such as fresh meat, fish, chicken, eggs, milk, curd, natural honey, fresh fruits, vegetables, flour and bread, and healthcare and education services. Other than this, it levied cess over and above the 28% tax on certain luxury goods and sin goods. The GST Council kept 81% of the items in the first three tax brackets, ie, up to 18%. The 12% and 18% tax bracket together account for two-thirds of all items.

GST seeks to unify the entire country into a single market with only one value-added tax levy on all the goods and services across states at the point of consumption, subsuming up to 16 different taxes and levies that are imposed at present. This is expected to make the movement goods across the state borders smoother, faster and easier, though some experts have raised concerns over the complications that could arise out of a multiple tax-slab structure.

(Originally published on www.financialexpress.com on Saturday, June 3; updated on Monday, June 5)

Tags: GST
  1. V
    vijayakumar
    Sep 25, 2017 at 7:25 pm
    Dear sir I have some balance purchase tax as per purchase 12 act, where is entry in TRANS I of GST please reply sir
    Reply
    1. k
      kachawala & associate
      Sep 1, 2017 at 4:29 pm
      respected all the business person and service provider this is to inform to u that kachawala associate (chartered account) providing to u all types of business related service on the mail and call and with the meeting in all over India with minimize service charge so all interested person may call and mail to join our best quality of services without and problem at your business place mailid-kcca999 / kcca999 rediffmail
      Reply
      1. G
        gagandeep singh
        Aug 23, 2017 at 1:02 pm
        closing stock of 30 june to be sold within how many months after taking input tax credit
        Reply
        1. C
          chartered chouhan
          Aug 19, 2017 at 1:24 pm
          all the person if you are having any types of quarry and advice related to financial and corporate tax matter than u may call and mail chouhanbhanu1993 7506305128
          Reply
          1. Dilip Zaveri
            Aug 6, 2017 at 9:06 pm
            By what date the return for the input tax credit on stock as on 30/06/17 is to be filed?
            Reply
            1. C
              chartered chouhan
              Sep 1, 2017 at 4:14 pm
              u have declared the stock detail to gst department than amount of carry fwd will be allowed in the first return in the gst filling
              Reply
            2. G
              Gopkumar
              Aug 4, 2017 at 4:37 pm
              Just a query, if I am Gold traders / retailer will I get the input credit for the compliments or gift items I am giving to the customer after purchase.
              Reply
              1. C
                chartered chouhan
                Aug 19, 2017 at 12:51 pm
                yes, u will avail the credit if u get purchase bill paid tax
                Reply
              2. R
                rekha
                Aug 2, 2017 at 5:43 pm
                shall we avail full carry forwarded input tax credit of vat excise after gst implementation.
                Reply
                1. C
                  chartered chouhan
                  Sep 1, 2017 at 4:15 pm
                  yes u can claim all types of credit
                  Reply
                2. N
                  nirmal kr kedia
                  Aug 1, 2017 at 3:52 pm
                  We have to upload our closing closing stock to get the VAT input in GST. Is there any form or rules to upload the closing stock as on 30.6.2017.
                  Reply
                  1. C
                    chartered chouhan
                    Aug 19, 2017 at 12:49 pm
                    there is no any separate form under gst, all detail will ask u under filling return under gstr-3b
                    Reply
                  2. S
                    sanjay
                    Jul 30, 2017 at 2:53 pm
                    please give examples for issuing bill gst 28 for old material purchased upto 30.6.17which is1)excice 12.5 shown bills 2) non excise bills,also tell if we have to show discount in current bill to avail deemed cgst credit, Also deemed cgst credit will be 60 of cgst on price or 60 of excise
                    Reply
                    1. B
                      Bharath B S
                      Jul 25, 2017 at 8:25 pm
                      Dear sir,We deal in Mobile and dth recharges earlier service tax paid by Co's like BSNL on MRP as and exempted from service tax But received Service tax bill but not accounted separately nor filled in Service tax reruns as it was exsumpted. Now We are receiving GST Bills. I had Stocks of Recharges services earlier ST Paid on MRP. Can i take GST Input on Closing Stocks
                      Reply
                      1. C
                        chartered chouhan
                        Aug 19, 2017 at 1:18 pm
                        yes u can take credit if u r bill with separate charge of tax in the bill
                        Reply
                        1. V
                          vishwadeep
                          Sep 6, 2017 at 6:52 pm
                          Dear sir kindly tell service tax paid adjusted from cgst or sgst. Service tax rate is 15 and gst rate is 18 out of which 9 cgst and 9 sgst what is tax treatment of itc caary forwrd and their adjustment
                      2. T
                        T K MOMIN
                        Jul 22, 2017 at 2:46 pm
                        Local s against Interstate purchase what rules will be applilcable in GST rule ?
                        Reply
                        1. T
                          T K MOMIN
                          Jul 22, 2017 at 2:48 pm
                          local s against interstate purchase what rules will applicable in GST rule
                          Reply
                          1. C
                            chartered chouhan
                            Aug 19, 2017 at 1:06 pm
                            yes u r purchase out side state than u will liable tax sgst and cgst tax in the s invoice
                        2. A
                          ArvindTK
                          Jul 22, 2017 at 7:53 am
                          Dear Sir, I am a Dealer from Assam I purchased goods from Maharashtra and CST was Charged against C-Form in the month of June and Goods came in the month of July. Will I get ITC on that goods or not and also have goods which are exempted in Gujarat Vat (Kerosene Stove but Paid Excise 2 ) and has Assam VAT 2 and I have paid s Tax for month of JUNE and balance stock I am having will I get ITC on That. Please Help Arvind
                          Reply
                          1. C
                            chartered chouhan
                            Aug 19, 2017 at 1:14 pm
                            arvind if u r filled return of cst month of june and u claimed that itc than u r availed tax credit under gst
                            Reply
                          2. K
                            KAMLESH DODIYA
                            Jul 19, 2017 at 11:43 am
                            I M RETAIL TRADERS , I M REGISTER UNDER GUJARAT VAT ON 03/04/2017 AND I PAID ADVANCE TAX FOR REGISTRATION UNDER VAT , I M LUMSUM DEALER IN GUJRAT VAT AND I M ALSO COMPOSITION UNDER GST SO I M CLAIM MY ADVANCE TAX IN GST?
                            Reply
                            1. C
                              chartered chouhan
                              Aug 19, 2017 at 12:56 pm
                              sorry u cannot avail tax credit because u are registered under composition scheme under gst no availed tax credit
                              Reply
                            2. R
                              Ritesh
                              Jul 12, 2017 at 4:40 pm
                              I AM STEEL TRADERS. I AM REGISTERED IN EXCISE AND VAT. U HAVE A STOCK OF 2014 , 2015 2016 IS IT POSSIBLE TO GET INPUT CREDIT EXCISE OF SAID STOCK ?
                              Reply
                              1. C
                                chartered chouhan
                                Aug 19, 2017 at 12:58 pm
                                ritesh, if u r filled tax return under excise and vat of latest previous year end than u can take tax credit under excise and vat balance under gst
                                Reply
                              2. S
                                shatnha
                                Jul 5, 2017 at 1:02 pm
                                we are dealer of iron and steel, we are registered under excise. we are having closing stock as on 30.06.2017, how we can claim under gst.where we have to upload the purcase bills. kindly send us the vidio to our mail id
                                Reply
                                1. A
                                  arvind
                                  Jul 4, 2017 at 2:27 pm
                                  sir we are manufacturer of jari it is exempted from tax... now the tax on jari is 12 GST we purchase raw material metallised polyerster film on which we have paid exicse duty vat both on polyester yarn we pay only excise duty.. what will be the impact on ur closing stock we have with us, will we have to pay 12GST on closing stock or we will get any input tax credit on these old stocks or not...
                                  Reply
                                  1. M
                                    Mohan
                                    Jul 3, 2017 at 1:53 pm
                                    We are traders. We import instruments and sell to customers. We have some stock, so can we claim input tax on our stock. Regards Mohan
                                    Reply
                                    1. S
                                      siva
                                      Jul 2, 2017 at 4:31 pm
                                      how is make gst invoice
                                      Reply
                                      1. G
                                        G C LAHA
                                        Jul 2, 2017 at 1:36 pm
                                        We were clearing goods under Central excise notifications which were exempted from payment CED in the VAT regime and opted rule 6 (3A) common record. CENVAT CREDITs were reversed on s basis as per prescribed formulae. As such CENVAT Credit on Inventory Stock have subsumed in the reversal amount . Now how such credit can be availed on Inventory Stock in to GST regime.
                                        Reply
                                        1. R
                                          R
                                          Jul 1, 2017 at 6:10 pm
                                          For manufacturers, how will the stock as on 30th June'17 be treated? How do the manufacturer get ITC on the existing stock?
                                          Reply
                                          1. R
                                            ravi
                                            Jul 1, 2017 at 4:38 pm
                                            i have a manufacturing factory of furnitures and sofas, i purchased raw materials like foam , jute wood, cotton fibre , textile items , fabrics. i have lot of stocks in my godowns of raw materials and finish goods also. now i don't know how much tax will be added or deducted in my raw material and finish goods
                                            Reply
                                            1. Load More Comments

                                            Go to Top