Proposed Scheme for Transitioning Unutilized Credit from Pre-GST to Post-GST: Key Guidelines and Proof Requirements The article discusses the proposed scheme for transitioning unutilized credit from the pre-GST to the post-GST regime. It addresses how registered and unregistered assessees under the pre-GST regime can manage their input credit, including input goods, semi-finished and finished goods, capital goods, and input services. The proposals suggest allowing the carry forward of taxes paid on eligible goods and services, subject to verification and appropriate mechanisms for identification. The burden of proof lies with the claimant, requiring certified purchase invoices and stock records. The article emphasizes the complexity of transitioning credit and the need for clear guidelines. (AI Summary)
This article is prepared to know about the proposed scheme of availing unutilized credit available with the assessee in pre-GST regime. The article also deals with the fate of credit for pre-GST unregistered assessees who will register in post-GST regime.
Current provisions relating to input credit are different in case of central excise, service tax and other tax laws. Further, many of the state laws are different in relation to input credit provision. Possible methods which the Govt may adopt w.r.t to credit transition stocks could be as under:
- Fully allow deduction/refunds/carry forwards
- Fully deny deduction/refunds/carry forwards (of certain restricted goods)
- Fully deny deduction/refunds/carry forwards
- Permit refunds on completion of assessment of tax paid in a pre-GST regime at the time of procurement of goods which are lying in the closing stock on the date of entry into GST.
Proposals:
Particulars | Assessee registered in pre-GST regime | Assessee not registered in pre-GST regime |
Credit of “Input Goods” | - Must be allowed to carry forward the tax paid in pre-GST regime on eligible inputs
- Provided the amount is rightly availed and carried forward in returns, whether or not lying in stock.
| - These should also be allowed to take credit of inputs that has suffered appropriate tax in pre GST regime and which would be used for taxable supply in GST regime.
- Appropriate mechanism needs to be provided for identification of such inputs and transfer of credits.
- Burden of proof would be on claimant.
- Purchase invoice along with appropriate stock records duly certified by CA may be asked.
|
Credit of Semi Finished and Finished goods lying in stock | - Credit on input goods used in semi finished/finished goods would have already been taken in tax records. Thus, no separate exercise.
| - Require an appropriate mechanism to identify and allow taxes paid, based on records maintained.
|
Credit of Capital Goods | - Must be allowed to carry forward the taxes paid in respect of eligible capital goods lying in stock.
- Subject to certain conditions as may be prescribed.
| - These should also be allowed to take credit of capital goods that has suffered appropriate tax in pre GST regime and which would be used for taxable supply in GST regime.
|
Credit of Input Services | - Assessee must be allowed to carry forward the credit.
| - Must be allowed to identify the unutilized credit of such input services and carry forward the same to GST regime.
- Prescribing a manner of ascertaining the unutilized part of services would be a challenge to law makers.
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This is just for your reference. It does not constitute our professional advice or recommendation. Your views are welcome.
TaxTMI 
TaxTMI 
