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.
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