Goods and Services Tax – GST – By: – CASanjay Kumawat – Dated:- 30-5-2017 Last Replied Date:- 2-7-2017 – Trader s eligibility to claim credits on unsold stock on stock- Transitional Provision – Section 140(3) State Levies Taxpaying document available Q. Whether a person can claim the credit for taxes paid in relation to goods lying in the stock where such person is having taxpaying documents? Ans. As per section 140(3) of SGST Act, 2017, a registered person under GST who was- not liable to be registered under the existing law, or sale of exempted goods or tax-free goods, or goods which have suffered tax at the first point of their sale in the State and the subsequent sales of which are not subject to tax in the State under the existing law but which are liable to tax under this Act, or where the person was entitled to the credit of input tax at the time of sale of goods can claim the credit of VAT paid in relation to goods lying in stock or semi-finished goods or finished goods held i
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registered person is eligible for input tax credit on such inputs under this Act, the said registered person is in possession of invoice and/or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs, and such invoices and /or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day. Notional Credit @40% Taxpaying document not available Q. Whether a person can claim the credit for taxes paid in relation to goods lying in the stock where such person is not having taxpaying documents? Ans. As per proviso to section 140(3) of SGST Act, 2017 read with Rule 1 (3) of the Transition Rules, 2017, a registered person under GST can claim credit in relation to goods which have suffered tax at the first point of their sale in the State and the subsequent sales of which are not subject to tax in the State under the existing law but which are liable to tax under this and such goods are lying in stock
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not having taxpaying documents (like tax invoice, bill of entry etc.) then a person can claim the credit equivalent to the 40% of SGST paid on the supply of such unsold stock. For example, a person is having the stock worth of ₹ 50,000/- as on appointed date. Such person has supplied goods for ₹ 60,000/- and on which he has paid SGST @28% i.e., ₹ 16,800/-(Rs. 60,000@28%). Now, in accordance with the provisions of Transition Rules, he can claim credit to the extent of 40% of SGST paid, i.e., ₹ 6,720/- (Rs. 16,800@40%). Q. Is there any time period to avail this scheme? Ans. Yes, to claim benefit under this scheme, a person has to claim credit within 6 tax periods. Q. What are the conditions to avail credit of tax/duty paid in relation to unsold stocks as on appointed date? Ans. Following are the conditions: Such goods were not wholly exempt from tax under the
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be available as credit. – Reply By CASanjay Kumawat – The Reply = For the credit of excise duty – 40 percent of CGST [Legal reference : proviso to section 140(3) of the CGST Act, 2017 read with Rule 1(3) of the Transitional Rules, 2017 (For CGST only)] For the credit of VAT -40 percent of of SGST [Legal reference : proviso to section 140(3) of the SGST Act, 2017 read with Rule 1(3) of the Transitional Rules, 2017 (For SGST Only) ] In the present case, I have discussed about credit in relation to VAT , accordingly , 40 percent of SGST payable shall be allowed as credit. – Reply By Krishna Murthy – The Reply = Purchases made from outside the state (CST purchases) and tax paid to the seller and issued 'C' form to the seller. Such purchase is lying as stock as on appointed date. Can ITC of such CST tax (2% against 'C' form ) be claimed for carried forward under GST. – Reply By ankit shah – The Reply = There are stock with us which we had purchases from a manufacturer
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