Model gst law transitional provisions

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Text of Model gst law transitional provisions

MODEL GST LAW TRANSITIONAL PROVISIONS

MODEL GST LAW TRANSITIONAL PROVISIONS

Presented byCA. VINAY KAUSHIK

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PreambleWith the enactment of GST, various issues which a business unit/service provider shall face in this change over from earlier law to GST would be:Registration under GST when already registered under any of the earlier laws; CENVAT Credit;Goods return/Movement of Goods and Services;Revision of prices;Refunds pending in the earlier law;Issues relating to continuous supply of goods and servicesIssues of tax in case of goods lying with the agent.Credit Distribution of service tax by Input Service Distributor.Treatment of long term construction/works contracts.Deduction of Tax Source.

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Preamble

Model GST Law takes care of Transitional Provisions under Chapter XXV of the Goods and Service Tax Act, 2016 comprising section 141 to section 162E and under Chapter X of the Integrated Goods and Service Tax Act, 2016 comprising section 31.

The object of this presentation is to impart understanding on various issues which a business unit/service provider shall face in this change over from earlier law to GST.

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RegistrationAs per Section 142 every person registered under any of the earlier laws be it Central Excise, VAT, Service Tax etc.SHALLbe mandatorily given registration on provisional basis. This provisional registration is only for six months.

Further on furnishing of such information and required documents and subject to the provisions of section 19, the provisional registration shall be confirmed by the government and shall be granted on a final basis by the Central/State Government. 01/08/2016 10:48 AM4

Input Tax Credit CENVAT credit carried forward Under Section 143. A registered taxable person shall be entitled to take, in his electronic credit ledger, credit of the amount of CENVAT credit (under CGST Law) or Value Added Tax (under SGST Law), as the case may be, carried forward in a return furnished under the earlier law in respect of the period ending with the day immediately preceding the appointed day in such manner as may be prescribed.

Provided that the taxable person shall not be allowed to take credit unless the said amount was admissible as CENVAT credit or Input Tax Credit, as the case may be, under the earlier law and is also admissible as input tax credit under this Act.

The amount taken as credit shall be recovered as an arrear of tax under this Act from the taxable person if the said amount is found to be recoverable as a result of any proceeding instituted, whether before or after the appointed day, against such person under the earlier law.01/08/2016 10:48 AM5

Input Tax Credit CENVAT credit on capital goodsAs per section 144. A registered taxable person shall be entitled to take, in his electronic credit ledger, credit of the un-availed CENVAT credit (under CGST Law) or un-availed input tax credit (under SGST Law) on capital goods, not carried forward in a return furnished under the earlier law by him.

The only condition where such carry forward shall not be allowed is when the CENVAT credit permissible under the earlier law is not admissible under the GST Law for the particular capital goods. As per Explanation 2 to section 144 Capital goods means the goods defined under clause (a) of rule 2 of CENVAT Credit Rules 2004.

The amount taken as credit shall be recovered as an arrear of tax under this Act from the taxable person if the said amount is found to be recoverable as a result of any proceeding instituted, whether before or after the appointed day, against such person under the earlier law. 01/08/2016 10:48 AM6

Input Tax Credit Credit of eligible duties and taxes on inputs held in stock As per Section 145 the registered taxable person shall be entitled to take the credit ofeligible duties and taxes(under CGST law) and Value Added Tax (under SGST Law)in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to fulfilling of ALL the following conditions:such inputs and/or goods are used or intended to be used for making taxable supplies under this Act;the said taxable person was eligible for CENVAT credit / input tax credit on receipt / purchase, as the case may be, of such inputs and/or goods under the earlier law but for his not being liable for registration or the goods remaining exempt under the said law;the said taxable person is eligible for input tax credit under this Act;Contd01/08/2016 10:48 AM7

Input Tax Credit Credit of eligible duties and taxes on inputs held in stock the said taxable person is in possession of invoice and/or other prescribed documents evidencing payment of duty/tax under the earlier law in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day; andsuch invoices and/or other prescribed documents were issued not earlier than 12 months immediately preceding the appointed day.The amount of credit shall be calculated in accordance with generally accepted accounting principles in such manner as may be prescribed. The amount taken as credit shall be recovered as an arrear of tax under this Act from the taxable person if the said amount is found to be recoverable as a result of any proceeding instituted, whether before or after the appointed day, against such person under the earlier law.

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Excise Duty

Additional Excise Duty

National Calamity Contingent DutyDuties and taxes eligible for taking credit

Additional Custom DutyService Tax01/08/2016 10:48 AM9

Tax payer opting out composition scheme under GST LawTax payer opting in composition scheme under GST LawInput tax credit In relation to taxpayers covered under the composition scheme01/08/2016 10:48 AM10

Taxpayers opting OUT of Composition schemeA registered taxable person who was paying taxes under the composition scheme of earlier law shall be entitled to take the credit of eligible duties provided he fulfilsALL the following conditions:

such inputs and / or goods are used or intended to be used for making taxable supplies under this Act;the said person is not paying tax under section 8 i.e. composition scheme under GST;the said taxable person was eligible for CENVAT credit on receipt of such inputs and/or goods under the earlier law but for his being a composition taxpayer under the said law;Contd..01/08/2016 10:48 AM11

Taxpayers opting OUT of Composition schemethe said taxable person is eligible for input tax credit under this Act;the said taxable person is in possession of invoice and/or other prescribed documents evidencing payment of duty / tax under the earlier law in respect of inputs held in stock and inputs contained in semi- finished or finished goods held in stock on the appointed day; andsuch invoices and /or other prescribed documents were issued not earlier thantwelve months immediately preceding the appointed day. 01/08/2016 10:48 AM12

Taxpayers opting in the Composition scheme of GSTFor opting the composition scheme as prescribed by section 8 of Model GST Law the registered taxpayer shall pay the amount equivalent to the credit of the input tax in respect of inputs held in stocks and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of such switch over. After payment of such amount the balance of input tax credit if any lying in the account of the tax payer shall lapse.01/08/2016 10:48 AM13

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Exempted Goods returned to place of business after theenactment of GST.Goods are identifiable to the satisfaction of the proper officer - Covered under Section 148

No Taxif the goods were removed 6 months prior to date of enactment.AND the goods are returned within 6 months of enactment Tax have to be paid if the goods are returned after 6 monthsMovement of goods after the enactment of GST01/08/2016 10:49 AM14

Duty Paid Goods Returned to a place of business on or after the date of enactment.Goods are identifiable to the satisfaction of the proper officer - Covered under Section 149

No Taxif the goods were removed 6 months prior to date of enactment.AND the goods are returned within 6 months of enactment Tax have to be paid if the goods are returned after 6 monthsMovement of goods after the enactment of GST01/08/2016 10:50 AM15

Goods sent on approval basis returned on or after the date of enactment - Covered under Section 162D

No Taxif the goods were removed 6 months prior to date of enactment.AND the goods are returned within 6 months of enactment Tax have to be paid if the goods are returned after 6 months. Competent Authority can extend this period bymaximum for 2 mothsMovement of goods after the enactm