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GST Trans – 1 & 2 – Format, Eligibility & Rule

Introductions

A major concern for businesses registered under GST is to make sure they don’t lose out on the tax benefits and input credits of the old regime. These taxes may have been paid while purchasing, inputs, raw materials, semi-finished goods, finished goods, or on materials sent to job worker. For most businesses these taxes are available as input credit on 30th July. And moving these to GST regime is important to take benefit of them.

The CBEC has released transition rules and formats and with the help of these, businesses can move credit of old regime to GST.

What is Transition from?

Any business having a closing stock -whether registered or not before GST, will be entitled to claim credit of tax paid under pre-GST regime. This claim of ITC also depends on few conditions which we will discuss further.

To help businesses transition smoothly and carry forward their input tax credit, the CBEC has released 2 transition forms called TRAN 1 and TRAN 2.

Trans – 1

  • Who are eligible – Registered persons under GST, may be registered or unregistered under old regime
  • Who are not – Those registering under GST as composition dealer
  • Due Date – 27th December

Trans – 2

  • Who are eligible – Registered persons under GST but unregistered or under old regime. A dealer or trader who does not have documents of duty paid.
  • Who are not – A manufacturer registered under excise. A service provider registered under service tax.
  • Due Date – Monthly from July 2017 to December 2017

What are the broad aspects of Transition to GST?

Transition aspects mainly relate to:

  • Input Tax Credit of the old regime that you want to claim in the new regime (report in TRAN-1)
  • Avoid any disruption to material sent to job workers ( report in TRAN-1)
  • Report agent principal dealing and dispatch of goods, works contracts (report in TRAN -1)
  • Tax refunds and claims under the old regime (not reportable in TRAN -1 or TRAN -2)

Things to remember for Transition to GST

  • Transition forms must be filed for each GSTIN separately.
  • Any credit that you want to carry forward from the old regime must be eligible credit under GST as well.
  • Accumulated credits of old regime can be taken to GST. This is allowed only when you have filed past six months returns under the old regime. So you must file old returns of VAT/ Excise/ Service Tax properly.
  • Any central taxes and duties such as Excise and Service tax will be carried forward as CGST
  • Any state taxes such as VAT will be carried forward as SGST

What are the Information required in TRAN Form?

Here is an item wise break up of information required in TRAN 1

  1. GSTIN – Mention your GSTIN number
  2. Legal Name of Registered Person – Mention your legal name in full
  3. Trade Name – If you are using any Trade Name, mention that
  4. Return Confirmation – Confirm that you have submitted ALL the returns required under existing law for past 6 months– Answer is in the form of Yes/No. The closing balance of CENVAT/VAT credit of past returns can be taken as a credit in your GST electronic ledger only when you have filed returns for the previous six months under the old regime.
  5. Tax credit carried forward in the return filed under existing laws – Under this you have to provide details of all the cenvat credit you want to move to GST

Amount of Cenvat credit carried forward to the electronic credit ledger

  • The tax amount applicable for a registered person other than a person paying tax under composition scheme, who was registered under the old regime and has furnished the returns under the old regime.
  • Input credit related to taxable supply where the registered person was providing/manufacturing both taxable as well as exempted service/goods under the old regime.
  • Such a person can claim excise and service tax input credit balance reflected in the return.