CENVAT CREDIT BALANCE

[DR.MARIAPPAN GOVINDARAJAN]

It is expected that with effect from 01.04.2017 GST will be introduced. Definitely there will be balance of CENVAT credit for every manufacturer or provider of output service as on 31.03.2017. Such credit could not adjusted in GST. Whether such balance may be allowed to be refunded? Any opinion in this regard please.

[Rajagopalan Ranganathan]

Sir,

Section 16 (2) of Model GST Law provides that " a person who has applied for registration under the Act within thirty days from the date on which he becomes liable to registration and has been granted such registration shall, subject to such conditions and restrictions as may be prescribed, be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act.

If this section is retained in the ensuing GST Law to be enacted by the Parliament then the registrant under GST Law is eligible to take the credit accrued to him under erstwhile laws.

[DR.MARIAPPAN GOVINDARAJAN]

Thank you, Sir. Whether the same is applicable for the credit on input services and capital goods?

[Ganeshan Kalyani]

The input credit balance declared in the return for the month of March 2017 (last return- assuming) shall be allowed to take credit in GST regime. Hence if Cenvat of input service is declared in the last return , then credit should be allowed.

[Ganeshan Kalyani]

The balance of 50% credit on capital goods to be taken in following year is allowed to be taken in GST regime. The provision is included in the draft law.

[Ganeshan Kalyani]

Sir I am doubtful about refund , but for credit I am sure.

[YAGAY and SUN]

Under GST Transitional provisions CENVAT credit would be allowed on the stock held on 31-03-2017.

[Ganeshan Kalyani]

The credit should have been disclosed in the last return under gst.

AI Summary

Transitional input tax credit: registrants may carry forward CENVAT balances into GST upon timely registration.
Transitional entitlement allows persons who timely register to take credit of input tax for inputs and goods held in stock immediately before GST commencement, subject to conditions; input service credit disclosed in the last return is eligible, capital goods receive phased transitional recognition, and refund of residual CENVAT balances was considered doubtful.