Input credit transition: allow carry forward of eligible pre GST credit subject to identification, documentation and claimant's burden of proof. The proposed transition allows assessees to carry forward eligible pre GST credit on input goods, capital goods, input services and goods in semi finished or finished stock provided tax was appropriately paid and the inputs will be used for taxable supplies under GST. Claimants must identify such inputs and supply purchase invoices and certified stock records; the burden of proof lies with the claimant. Specific conditions and formulas may be prescribed for capital goods, and statutory mechanisms will be required to ascertain unutilized input service credit and to process transfers or refunds for previously unregistered taxpayers. (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.
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