Transitional Credit

[saket s]

The Company opts for new rates under GST for its ongoing projects and there is transitional credit available to the Company (“Tx” is negative) as per notification 3/2019 CTR. What is the treatment of the transitional credit available?

Can the credit be utilized for subsequent GST payments?

Can only new credit be availed to the extent of transitional credit?

Thanks

Saket

[Shilpi Jain]

The amount of Tx can be availed by way of credit contained in the procurement made from 1st Apr '19. However, its utilisation would be difficult if the assessee does not have any liability other than 5%. If other liabilities are there which do not have credit utilisation restriction, the Tx can be used for that liability.

AI Summary

Transitional credit under GST: usable against eligible post-rate-change procurements, but may be restricted if only reduced-rate liabilities exist. Transitional credit under GST can be availed only for procurements made after the rate change; claimants must allocate Tx to eligible post-change acquisitions. Utilisation is limited where the taxpayer's sole liability is a reduced-rate output tax subject to credit-use restrictions, but Tx may be applied to other liabilities that lack such restrictions.