How to Transfer Existing input tax credit in GST?

At the stroke of midnight on 1st July, 2017 the most awaited tax that clubbed all indirect taxes into one single tax came into effect. The Goods and Service Tax (GST) is the one tax that is applicable on the whole of India including the state of Jammu and Kashmir. GST was the change everyone had been eagerly waiting for. We read here about how to transfer existing input tax credit in GST?

With the roll-out of GST the biggest challenge businesses are facing is smooth migration from earlier tax regime to the mammoth tax. In the whole migration process the most worrying aspect is transferability of input tax credit which they have already received or will receive after filing the return of the 1st Quarter of 2017-18 financial year in July, 2017. But entrepreneurs do not need to worry about that because GST provides you the simplest way of transferring your input tax credit to your GST account so you can set it off against your GST liability.

Input tax credit Transfer Procedure

Under Goods and Service Tax every taxpayer having registration under VAT, service tax or any other indirect tax must mandatorily get their registration number. To provide transparency and help them migrate properly GST Act has laid down Transitional Provisions. According to the Rules, every taxpayer having GST registration and eligible for input tax credit under VAT, CST, Excise, Customs etc. must file e-form GST TRAN-1 on GST Common Portal within 90 days of the date of implementation of GST, that is, from 1st July, 2017 onwards.

The Rules also give power to the Commissioner to further extend the deadline by another 90 days under special circumstances thereby giving a taxpayer a total of 180 days to set off his input tax credit, received in the 1st Quarter of the financial year. Once the tax credit is transferred to your GST account using e-form GST TRAN-1, the amount will be verified and credited to your electronic tax credit ledger maintained on GST Common Portal through Form GST PMT-2. 

 

How to file e-Form GST TRAN-1?

With GST the best part is that everything is to be done online whether its return filing, payment of tax or filing a complaint. To ease the burden on taxpayers, the Government has designed a GST Common Portal and as a result no one needs to go to GST offices. 

As per Transitional Provisions of GST, every taxpayer is required to file GST TRAN-1 to claim input tax credit he has received under prior indirect taxes. The first step is to file a declaration ascertaining that he is eligible to claim input tax credit on the supplies made before implementation of GST Act and the tax credit received by him was post GST implementation, that is, after 1st July, 2017.

Additionally, the taxpayers also need to furnish some other details. In case of input tax credit on capital goods they need to provide information on the amount of credit they have availed under the previous indirect taxes till the appointed day. They are also required to submit the amount, yet to be claimed by them under each tax till that day.

In case of stock held by the taxpayer post implementation of GST, he needs to provide detailed information of the stock along with name of supplier, invoice date, quantity, serial number, value of goods, description, unit code and several other details required to claim input tax credit of previous taxes. 

Input tax credit or CENVAT credit can be carried forward to GST by filing GST TRAN-1 e-form on its Common Portal.

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