Transitional Provisions

Present Scenario (Intra-State Trade of Goods) State Tax = ₹ 13.31 (₹ 11 + ₹ 1.10 + ₹ 1.21) VAT = ₹ 11 VAT = ₹ 12.10 ITC = (₹ 11) ₹ 1.10 VAT = ₹ 13.31 ITC = (₹ 12.10) ₹ 1.21 Input Manufacturer Output Manufacturer Dealer Consumer Excise = ₹ 10 Excise = ₹ 11 ITC = (₹10) ₹ 1 Central Tax = ₹ 11 (₹ 10 + ₹ 1) Excise = 10% VAT = 10% Value Addition = 10% ITC = Input Tax Credit Tax Invoice (A) Value = ₹ 100 Excise = ₹ 10 VAT = ₹ 11 ₹ 121 Tax Invoice (B) Cost = ₹ 100 Value = ₹ 110 Excise = ₹ 11 VAT = ₹ 12.10 ₹ 133.10 Tax Invoice (C) Cost = ₹ 121 Value = ₹ 133.10 VAT = ₹ 13.31 ₹ 146.41 www.idtc.icai.org

GST Scenario (Intra-State Trade of Goods) State Tax = ₹ 12.10 (₹ 10 + ₹ 1 + ₹ 1.10) SGST = ₹ 10 SGST = ₹ 11 ITC = (₹ 10) ₹ 1 SGST = ₹ 12.10 ITC = (₹ 11) ₹ 1.10 Input Manufacturer Output Manufacturer Dealer Consumer CGST = ₹ 10 CGST = ₹ 11 ITC = (₹10) ₹ 1 CGST = ₹ 12.10 ITC = (₹11) ₹ 1.10 Central Tax = ₹ 12.10 (₹ 10 + ₹ 1 + ₹ 1.10) CGST = 10% SGST = 10% Value Addition = 10% ITC = Input Tax Credit Tax Invoice (A) Value = ₹ 100 CGST = ₹ 10 SGST = ₹ 10 ₹ 120 Tax Invoice (B) Cost = ₹ 100 Value = ₹ 110 CGST = ₹ 11 SGST ₹ 11 ₹ 132 Tax Invoice (C) Cost = ₹ 110 Value = ₹ 121 CGST = ₹ 12.10 SGST = ₹ 12.10 ₹ 145.20 www.idtc.icai.org

Present Scenario (Inter-State Trade of Goods) State Tax (X) = 2.42 +(8.58-Refund Claim) State Tax (Y) = ₹ 16.91 (₹ 13.91 + ₹ 3) Entry Tax = ₹ 3 VAT = ₹ 11 CST = ₹ 2.42 ITC = (₹ 2.42) ₹ 0 VAT = ₹ 13.91 Input Manufacturer Output Manufacturer Dealer Consumer Excise = ₹ 10 Excise = ₹ 11 ITC = (₹10) ₹ 1 Central Tax = ₹ 11 (₹ 10 + ₹ 1) Excise = 10% VAT = 10% CST = 2% Value Addition = 10% ITC = Input Tax Credit Tax Invoice (A) Value = ₹ 100 Excise = ₹ 10 VAT = ₹ 11 ₹ 121 Tax Invoice (B) Cost = ₹ 100 Value = ₹ 110 Excise = ₹ 11 CST = ₹ 2.42 ₹ 123.42 Tax Invoice (C) Cost = ₹ 126.42 Value = ₹ 139.06 VAT = ₹ 13.91 ₹ 152.97 www.idtc.icai.org

GST Scenario (Inter-State Trade of Goods) State Tax (X) = ₹ 1.10 (₹ 10 - ₹ 10* + ₹ 1.10) State Tax (Y) = ₹ 12.22 (₹ 2.44 + ₹ 9.78**) Add. Tax = ₹ 1.10 SGST = ₹ 10 SGST = ₹ 12.22 IGST = (₹ 9.78) ₹ 2.44 ** Centre will transfer IGST used for payment of SGST to State Y Input Manufacturer Output Manufacturer Dealer Consumer IGST = ₹ 22 CGST = (₹10) SGST = (₹10) ₹ 2 CGST = ₹ 10 CGST = ₹ 12.22 IGST = (₹12.22) ₹ 0 Central Tax = ₹ 12.22 (₹ 10 + ₹ 2 + ₹10* - ₹ 9.78**) CGST = 10% SGST = 10% IGST = 20% Value Addition = 10% *State (X) will transfer ₹ 10 (SGST) used for payment of IGST to Centre. **Centre will transfer ₹ 9.78 (IGST) used for payment of SGST to State (X). Tax Invoice (A) Value = ₹ 100 CGST = ₹ 10 SGST = ₹ 10 ₹ 120 Tax Invoice (B) Cost = ₹ 100 Value = ₹ 110 IGST(20%) = ₹ 22 Add. Tax = ₹ 1.10 ₹ 133.10 Tax Invoice (C) Cost = ₹ 111.10 Value = ₹ 122.21 CGST = ₹ 12.22 SGST = ₹ 12.22 ₹ 146.55 * State X will transfer SGST used for payment of IGST to Centre www.idtc.icai.org

Migration of Existing Taxpayers to GST – S. 166 Every registered person under the earlier law will be issued a provisional registration certificate (PRC) Such PRC will be valid for six months or for such extended period Final RC will be issued by Central / State Government on furnishing of the prescribed information The PRC issued to a person not liable for registration under GST shall be cancelled upon filing application or deemed to be cancelled

Migration of Existing Taxpayers to GST – S. 166 Procedure to registered: To begin with the State department will be communicating the Provisional ID and password taxpayers registered with the VAT department. Access the GST Common Portal, create your unique username and new password after using provisional ID and password provided by the VAT department. Login to the GST Common Portal with your new login details Fill the enrollment application and provide business details. Verify the auto populated details from the VAT system. E-Sign and submit the application and attached necessary attachments. (E-sign ie. digitally or Aadhar OTP) If details are satisfied an application number (ARN) will be issued. Provisional ID Status- Migrated till appointed date. On appointed date, Provisional ID status would be activated

Carry forward of CENVAT Credit – S. 167 Carry forward of Input tax/ CENVAT credit – through a return to registered person other than COT Credit* –relating to the period ending the date immediately preceding appointed day Such credit must be eligible under earlier law and GST law Credit can be taken in the electronic credit ledger Excess credit taken will be recovered as arrears of tax under GST law Return to be filed within 90 days of appointed day under SGST *Credit attributable to any claim related to specified sections of CST Act, 1956 not eligible to be carried forward. - COT means Composition Taxpayer

Unavailed CENVAT Credit on Capital goods – S. 168 A registered taxable person other than COT shall be eligible to take the credit In the electronic credit ledger Credit on Capital Goods) not carried forward in a return Such Unavailed credits must be eligible under the earlier law AND under GST law Unavailed Credit = (Total eligible credit – credit availed) under the earlier law

Person eligible for input tax credit Credit of eligible duties and taxes on input held in stock to an UR dealer in earlier law– S. 169 Person eligible for input tax credit Person engaged in manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of the benefit of notification No. 26/2012-Service Tax, or a first stage dealer or a second stage dealer or a registered importer under the earlier law but liable to tax under GST law Credit available on Inputs held in stock and inputs contained in semi-finished goods or finished goods held in stock as on appointed day Above benefit not available for input services Such credit can be taken in the electronic credit ledger Conditions Goods must be used for taxable supply Such person should be in possession of invoice or other prescribed document Invoice or other document should be within 12 months from the appointed day Excess claims will be recovered as arrears of tax under GST law Benefit of Reduced Prices to the recipient NOTIONAL CREDIT TO THE VAT DEALERS : Prior to this amendment a manufacturer was eligible to claim input tax credit of excise duty paid on inputs under earlier law whereas traders were faced with additional tax burden as they were not be able to claim the credit as done by manufacturers.

Credit of eligible duties/ taxes in respect of inputs held in stock for providing exempted and non-exempted goods or services – S. 170 A registered taxable person engaged in manufacture/ provision of Exempted/ non-exempted goods/ services Can carry forward amount of CENVAT c/f in return, Credit in electronic credit ledger in terms of section 167 Amount of CENVAT Credit of eligible duties in respect of inputs held in stock related to exempted goods/ services – in terms of section 169

Credit of eligible duties/ taxes in respect of inputs/ input services during transit – S. 171 Appointed Day Input / Input Services received after appointed day Supplier Recipient Statement for credit taken to be furnished in prescribed format Duty / Tax Paid prior to appointed day Provided invoice for the same was recorded in books of accounts within 30 days or extended period (30 days) of appointed day

Person eligible for input tax credit Credit of eligible duties and taxes on inputs held in stock on switching over from composition scheme – S. 172 Person eligible for input tax credit A registered taxable person paying taxes under the composition scheme under earlier law Credit available on Inputs held in stock and inputs contained in semi-finished goods or finished goods held in stock as on appointed day Above benefit not available for input services Such credit can be taken in the electronic credit ledger Conditions Person not paying taxes under composition scheme under GST law Goods must be used for taxable supply Otherwise eligible to take the credit under earlier law and under GST law Such person should be in possession of invoice or other prescribed document not older than 12 months period.

Exempted goods returned to the place of business on or after the appointed day – S. 173 Exempted goods were removed/ sold under the earlier law (not prior to 6 months from appointed day); Appointed Day Supplier Recipient Exempted goods are returned to the any place of business within 6 months from the appointed day without payment of tax Provided Goods are identifiable to satisfaction of proper officer

Duty/ Tax paid goods returned to the place of business on or after the appointed day – S.174 Supplier Recipient Goods are returned to the any place of business within 6 months from the appointed day with payment of GST- B2B Claim Refund in case of B2C Duty / Tax Paid prior to appointed day Provided Goods are identifiable to satisfaction of proper officer

Inputs removed for Job work and returned on or after the appointed day – S. 175 Inputs removed/ dispatched as such or after partial processing etc. for job work under the earlier law prior to appointed day; Appointed Day Inputs are returned within 6 months or within the extended period (2 months) from the appointed day to the said factory/ said place of business. Manufacturer Job Worker Manufacturer and Job worker need to declare details of inputs held in stock by the job worker on behalf of the manufacturer on the appointed day If returned after 6 months, ITC liable to be recovered as per S. 184

Semi-finished goods removed for Job work and returned on or after the appointed day – S. 176 Semi-Finished Goods removed for job work under the earlier law prior to appointed day; Appointed Day Semi-finished Goods are returned within 6 months or within the extended period (2 months) from the appointed day to the said factory/ said place of business. Manufacturer Job Worker Manufacturer may transfer such goods to premises of any registered taxable person for purpose of supplying therefrom with (in India) or without (exports) payment of tax, within 6 months from appointed day. Manufacturer and Job worker need to declare details of inputs held in stock by the job worker on behalf of the manufacturer on the appointed day If returned after 6 months, ITC liable to be recovered as per S. 184

Finished goods removed for carrying out certain processes and retuned on or after the appointed day – S. 177 Excisable Goods removed w/o payment of duty for tests/ processes etc. under the earlier law prior to appointed day; Appointed Day Finished Goods are returned within 6 months or within the extended period (2 months) from the appointed day to the said factory/ said place of business. Manufacturer Job Worker Manufacturer may transfer such goods from the other premises with (in India) or without (exports) payment of tax, within 6 months from appointed day. If returned after 6 months, ITC liable to be recovered as per S. 184

Issue of supplementary invoice, etc Issue of supplementary invoice, etc. where price is revised in pursuance of a contract – S. 178 Contract entered prior to the appointed day and price of goods and / or services is revised on or after the appointed day Upward revision in the price Issue of supplementary invoice or debit note within 30 days from such revision Downward revision in the price Issue of supplementary invoice or credit note within 30 days from such revision Note - Taxable person shall be allowed to reduce his tax liability, if the recipient of invoice or credit note has reduced his input tax credit corresponding to such reduction of tax liability.

Pending refund claims to be disposed off under earlier law – S. 179 Refund claim of duty/tax and interest and any other amount due under earlier law Application to be filed before the appointed day Refund proceeding will be in terms of earlier law other than Section 11B (2) of Central Excise Act, 1944 Eligible refund to be paid in cash and if fully or partially rejected; balance to lapse (CGST) Eligible refund to be paid in terms of provision of law and if fully or partially rejected; balance to lapse (SGST) No Refund claim allowed if where credit balance has been carried forward under GST

Claim of CENVAT Credit to be disposed off under the earlier law – S Refund claims filed after the appointed day for goods cleared or services provided before the appointed day and exported before or after the appointed day Refund claims filed after the appointed day for payments received and tax deposited before the appointed day in respect of services not provided Proceedings of appeal revision, review or reference relating to claim of input tax / CENVAT credit will be disposed of in accordance with earlier law; Inadmissible Credit to be recovered as arrears of tax under GST law Not eligible for claim of input tax credit under GST law Admissible CENVAT credit to be refunded in cash (CGST) Admissible input tax credit to be refunded in accordance with provision earlier law (SGST)

Finalization of proceedings relating to output duty liability – S. 183 Proceeding of appeal revision, review or reference relating to any output duty liability initiated before, on or after appointed date disposed of in accordance with earlier law Any amount payable to be recovered as arrears of tax under GST law Not eligible for claim of input tax credit under GST law Admissible amount to be refunded in cash (CGST) Admissible amount to be refunded in accordance with provision of earlier law (SGST)

Treatment of the amount recovered or refunded in pursuance of assessment or adjudication proceedings – S. 184 Assessment or adjudication proceedings instituted under earlier law against recovery of tax, interest or penalty whether on or after the appointed day Amount payable to be recovered as arrears of tax under GST law Not eligible for claim of input tax credit under GST law Admissible amount to be refunded in cash in earlier law under Excise / ST Admissible amount to be refunded in accordance with provision of earlier law (VAT)

Treatment of amount recovered or refunded pursuant to revision of return – S. 185 Revision of return furnished under the earlier law revised after the appointed day Amount payable on account of revision Recovered as arrears of tax under GST and such amount shall not be eligible for input tax credit Amount refundable on account of revision Refund in accordance with provision of earlier Excise / ST/ VAT law

Treatment of long term construction / works contracts – S. 186 Liable for payment of taxes under the GST law Contract entered prior to the appointed day Goods and / or services supplied on or after appointed day

Progressive or periodic supply of goods or services – S. 187 Tax Shall not be payable if Duty or tax payable has been already paid under the earlier law Consideration is received prior to the appointed day ; and

Taxability of Supply of Goods/ Services – S. 188 Tax Shall be payable under the earlier law To the extent Point of Taxation arises before appointed day

Credit distribution of service tax by ISD (CGST) – S. 190 Input service distributor shall be eligible for distribution of credit Services are received prior to appointed day Invoices for such services are received on or after the appointed day

Person eligible for input tax credit Credit available on Conditions Tax paid on goods/ capital goods lying with agent to be allowed as credit (SGST) – S. 192 Person eligible for input tax credit Agent is eligible for taking credit on tax paid goods Credit available on Any goods/ capital goods belonging to the Principal; and Such goods are lying at the premises of Agent as on the appointed day Conditions Agent must be a registered taxable person under GST Details of goods lying must be declared by the Agent and Principal Invoices pertaining to such goods must be within twelve months from the appointed day; and Principal either reversed or should not have availed credit

Goods sent on approval basis returned on or after the appointed day (SGST) – S. 195 Tax not to be payable when Goods sent on approval basis under earlier law prior to six months from the appointed day; Such goods are returned within six months or within the extended period from the appointed date Tax to be payable when and by whom Goods are liable for payment of taxes under GST; and Such goods are returned after six month or within the extended period from the appointed day Tax shall be payable by person returning the goods, if the goods are returned after a period of six months or extended period of time from the appointed day Tax shall be payable by person who has sent goods on approval basis, if the goods are not returned within the six months or extended period of time from the appointed day

Deduction of tax at source – S. 196 TDS shall not be made when Invoices are issued before the appointed day Payment of such invoices is made on or after the appointed day

Other Provisions Branch Transfers (SGST) – Amount of ITC reversed prior to appointed day not admissible as ITC under GST. S. 194 Availing CENVAT Credit (CGST Act) – When CENVAT Credit has been reversed due to non-payment of consideration within a period of 3 months, such credit can be reclaimed provided taxable person has made the payment of consideration within 3 months from the appointed day. S. 197

General Provisions & Powers Officers under the existing laws to be subsumed into GST To be appointed as GST Officer / Competent Authority under the respective Act Provided they are continuing in office as on appointed day Central / State Government may issue order / make rules for smooth transition into GST

Email at : sharad.Singhal@icai.org Thanking You CA.Sharad Singhal Secretary Indirect Taxes Committee The Institute of Chartered Accountants of India ICAI Bhawan A-29, Sector - 62, NOIDA (U.P.) India Telephone Direct - +91 120 3045 954 Mobile : 9811996384 Email at : sharad.Singhal@icai.org