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TRANSITIONAL PROVISION UNDER GST – SEC 140(5)

September 24, 2017

Credit of eligible duties and taxes in respect of inputs or input services during transit

THE LAW:

140(5) - Credit of eligible duties and taxes in respect of inputs or input services during transit

A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of accounts of such person within a period of thirty days from the appointed day.

PROVIDED that the period of thirty 30 days may, on sufficient cause being shown, be extended by the commissioner for a further period not exceeding thirty days.

PROVIDED FURTHER that said registered person shall furnish a statement, in such manner as may be prescribed, in respect of credit that has been taken under this subsection.

THE LAW SIMPLIFIED

The aforesaid provision has been simplified as under:

  1. Credit shall be availed by the registered person.
  2. Point of taxation has arisen before the receipt of inputs or input services since invoices were raised before 1st July 2017.
  3. The inputs or input services have been received on or after 1st July 2017.
  4. Duty and tax in respect of the above inputs or input services has been paid before 1st July 2017.

 

Eligible duties and taxes:

The expression, ‘eligible duties and taxes’ in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day means:

Sl No

Nature of duty

Act

1

Central Excise duty

First Schedule to the Central Excise Tariff Act, 1985(5 of 1986)

2

Central Excise duty

Second Schedule to the Central Excise Tariff Act, 1985(5 of 1986)

3

Additional excise duty

Section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978)

4

Additional excise duty

Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957(58 of 1957)

5

National Calamity Contingent Duty

Section 136 of the Finance Act,2001(14 of 2001)

6

Additional duty

Customs Tariff Act Section 3(1) and 3(5)

7

Service Tax

Section 66B of the Finance Act, 1994

 

Conditions to be satisfied for availing transitional credit:

The following conditions needs to be satisfied for availing credit of eligible duties and taxes under the provisions of the aforesaid section:

  1. Invoices/duty paid documents must be recorded in the books within 30 days of the appointed date which may be extended by the commissioner for another 30 days on showing sufficient cause.
  2. Such credit is available subject to the condition that said registered person shall furnish a statement, in such manner as may be prescribed, in respect of credit that has been taken under this sub-section.

Procedure for claiming the aforesaid credit

  1. The registered person shall be allowed to take the credit under the above section only if he submits the FORM GST TRAN-1 electronically on the GSTN portal within 60 days of the appointed date.

 

  1. In terms of Rule 117(2)(c) the said taxable person shall furnish the following details:

 

           (i)  A statement indicating the name and address of the supplier together with invoice details.

           (ii) Description, quantity and value of goods or services.

          (iii) The amount of taxes, duties, VAT, Entry tax charged by the supplier.

          (iv) The date at which receipt of goods or services are entered in the books of the recipient.

 

Time limit for filing Tran-1 Form

Note – The following decisions have been taken in the 21st GST Council Meeting held on  9th September 2017

  1. The due date for submission of FORM GST TRAN-1 has been extended by one month i.e. 31st October, 2017.
  2. FORM GST TRAN-1 can be revised once.

Illustration explaining Sec 140(5)

Mr. A is engaged in providing renting of immovable property services. He appointed M/s XYZ for the purpose of maintenance of such premises wef 01/07/2017 and paid an advance of Rs.7,00,000 ( including service tax Rs.85,000).M/s XYZ has deposited this service tax amount of Rs.84,000 with the department on 06/06/2017. In view of the above section, Mr A shall be entitled to avail credit of such service tax amounting to Rs.84,000 charged by M/s XYZ provided invoice for such services is recorded in its books of accounts within 30 days from the appointed day i.e 30/07/2017.

Disclaimer - The information provided in this document is for general information only. It is based on the information available publicly. The user of this document should be aware that the interpretation or implications of relevant GST rules may change/vary depending upon circumstances.

Go Back

Nice article. This would be the biggest tax reform since independence and a boon to the economy as it will eradicate the shortcomings of the current tax structure and provide a single tax on supply of all goods and services.

1. Eliminating cascading effect of taxes.
2. Tax rates will be comparatively lower as the tax base will widen.
3. Seamless flow of Input tax credit.
4. Prices of the goods and services will fall.
5. Efficient supply change management.
6. Promote shit from unorganized sector to organized sector

However the transition from current tax structure to GST would bring several complex challenges that may prove disruptive initially. The compliance will be more tedious and time consuming.

But we believe with the promised advantages will be very beneficial to the country businessmen and consumers at a whole in the long run.

For filing GST Return, one needs a GST Return Software. You can apply for it with Taxraahi.
Thanks

Dear Sir,

Thank you very much for your kind words. We will keep posting other blogs on a continuous basis. Please do visit our website for more such blogs on GST, Income tax and other related topics..Thank you!!



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