SKP Group
SKP GST Update
The much awaited Transitional Rules are out
 
Final Transitional Rules
  • Transitional rules have been approved and released in the public domain by the GST Council
  • The percentage of ad-hoc credit prescribed by the council in cases where the taxpayer does not possess a duty paying document have been tabulated as under:
    Sr. no. Type of supply GST rate on output supply Percentage of ad-hoc credit available
    1 Intra-state supply CGST/SGST rate is 9% or more 60% of CGST paid
    2 Intra-state supply CGST/SGST rate is less than 9% 40% of CGST paid
    3 Inter-state supply IGST rate is 18% or more 30% of IGST paid
    4 Inter-state supply IGST rate is less than 18% 20% of IGST paid
  • The ad-hoc credit would be credited to the electronic credit ledger once the goods are sold under the GST regime, and the central tax and/or state tax is actually paid to the government. 
  • The taxpayer would be required to submit a declaration in GST TRAN-1 specifying separately the details of stock held on the appointed day.
  • Additionally, a statement in GST TRAN 2 to be submitted at the end of each month, indicating details of supplies effected during the month.
  • Full Input Tax Credit (ITC) of excise duty paid can be availed on high-value items above INR 25,000 having clear identification by means of chassis number, product serial no., etc. through credit transfer document. 
Credit Transfer Document (CTD)
  • Draft rules for issue of CTD have been issued which are proposed to be inserted in the CENVAT Credit Rules, 2004.
  • It aims at facilitating the transfer of Central Value Added Tax (CENVAT) credit on specified goods available with the trader as on 1 July 2017.
  • Following are brief conditions  to be satisfied for issue of CTD:
    • The person issuing the CTD should be a manufacturer registered under the Central Excise Act, 1944.
    • The dealer to whom the CTD is issued should possess the goods pertaining to which the CTD is issued.
    • The goods in respect of which the CTD is issued must bear the brand name of the manufacturer or the principal manufacturer and should be distinctly identifiable as a number such as a chassis or an engine no. of a car.
    • CTD should be issued within 30 days from the appointed date, i.e. before 31 July 2017 with a copy of a corresponding commercial invoice.
    • The copy of commercial invoices issued by the manufacturer to the intermediary dealer should be maintained by the dealer availing credit using CTDs.
    • CTD shall not be issued to a dealer to whom a tax invoice was issued earlier.
SKP's comments
  • Increase in the ad hoc credit available from 40% to 60% in case of goods taxable at 18% or more under CGST/SGST has provided a major relief.
  • Provision to issue CTD is also a welcome step for dealers not possessing a duty paying document.
  • However, the right to issue CTD is restricted to manufacturers who are registered under the Central Excise Act, 1944. It appears that assesses who possess an importer/dealer registration would not be able to issue a CTD to pass on the credit of Countervailing Duty/Special Additional Duty/Excise Duty.
SKP
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DISCLAIMER
This update contains general information which is provided on an “as is” basis without warranties of any kind, express or implied and is not intended to address any particular situation. The information contained herein may not be comprehensive and should not be construed as specific advice or opinion. This update should not be substituted for any professional advice or service, and it should not be acted or relied upon or used as a basis for any decision or action that may affect you or your business. It is also expressly clarified that this update is not intended to be a form of solicitation or invitation or advertisement to create any adviser-client relationship.

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