Transition of The Old Input Credits under VAT to GST – TRAN 1

Making sure their registered firms under GST do not miss out on the tax advantages and input credits of the previous system is a top priority. These taxes may have been paid when purchasing inputs, raw materials, semi-finished items, and final goods. On July 30th, these taxes will be accessible to most enterprises as an input credit. Moving these to the GST regime is important to take benefit of them.

The Central Board of Excise And Customs (CBEC) has released transition rules and formats, and with the help of these, businesses can move the credit of the old regime to GST.

Aspects Of Transition To GST

Transaction aspects mainly relate to

• You want to claim an old regime’s input tax credit under the new regime (Report in TRAN 1)
• Ensure that the materials sent to the workers are uninterrupted (Report in TRAN 1)
• Report agent-principal dealing and dispatch of goods, work contract (Report in TRAN 1)
• Tax refunds and claims under the old regime (Not Reportable in TRAN 1 or TRAN 2)

Information Required In TRAN 1

Below is the list of all the details required in TRAN 1

1. GSTIN – Mention your GSTIN number
2. Legal Name Of Registered Person – Mention your full legal name.
3. Trade Name – If you are using any trade name, then mention it here
4. Verify That You Have Completed and Filed All Returns Necessary Under Existing Law for the Past Six Months – The response should be in yes/no. Only if you filed returns for the preceding six months under the previous regime will you be able to accept the closing balance of past returns’ CENVAT/VAT credit as a credit in your GST electronic ledger.
5. Tax credit Carried Forward In The Return Filed Uner Existing Laws: Under this, you must provide details of all the CENVAT credits you want to move to GST.
6. The Details To Be Provided As Under.

Sections 140(1) and 140(4a): Amount of CENVAT credit carried over to the electronic credit ledger as central tax (Central Excise and Service Tax): Applicable for a registered person other than the person paying tax under the old regime and has furnished the returns under the old regime. (Section 140 (1) of the CGST act.

Input credit related to a taxable supply where the registered person was providing/manufacturing both taxable as well as exe3mpte goods and services under the old regime (Section 140(4)(a) of the CGST act).

This person can claim the excise and service tax input credit balance shown in return. So this table must be filled if you are registered as a manufacturer or service provider and have a closing balance of CENVAT credit in your return for the end of the given period.

2. Tax Credit for C forms, F forms and H/I Forms which you want to carry forward:

• C Form – When an interstate sale is conducted, a registered dealer issues the c form to a registered seller. Central sales tax (CST), which applies to purchases made using a C form, is 2%.
• F Forms: Are employed to make tax-free branch transfers. The branch office or consignment agency receiving the products issues the form F to the head office or principal, who is delivering the items, as part of a branch or stock transfer. The head office uses Form F to prove that goods sent are stock/branch transfers, not sales.
• H/I Forms: Used in case of exports for local purchases made without tax payment. This form is provided when an exporter makes an interstate or export purchase. The seller is not obligated to charge or pay any CST on the transaction if the exporter/buyer provides an H form.

Give the following details for each of these forms: TIN of Issuer, Name of Issuer, Form Amount, and Applicable VAT Rate.

State/UT tax credit Tax for unpaid C Forms, unpaid F Forms, and unpaid H/I Forms (For all registrations on the same PAN and in the same state) –

If you are registered under any state VAT and have any pending C Form/F Fom/H or I Form, you must pay the differential tax as you are not eligible to charge a concessional CST rate. The input tax credit that was available in the last return you submitted by you will be used to offset the differential tax payable, and any remaining credit will be carried forward under the GST regime.

The details To Be Provided Are As Under-

• In column 1, mention the registration number under state VAT, i.e. the TIN.
• In column 2, state the closing balance of the input tax credit in the return filed.
• In columns 3, 5, and 8, the turnover for which Form C, Form F, and Form H/I, respectively, are pending must be provided
• In columns 4, 6, and 9, the differential tax on its respective turnover must be entered. This will be deducted from the closing balance of input tax credit in return and hence will be deducted from column 2
• In Column 7, the ITC reversed by you elated to 3 and 5 must be entered. This amount will be eligible to be carried forward as ITC under GST and hence will be added to the amount in column 2
• Column 10 is calculated as follows: Column no. 2 – (4+6-7+9) This is the balance ITC of VAT/Entry Tax that will be transferred to you under the GST regime.

4. The central tax portion of unavailed input tax credit on capital goods Amount of Unavailed cenvant credit for capital goods which you want to carry forward to the electronic ledger as central tax, which is for CENVAT or excise, or countervailing duty or special additional duty (central taxes). In this table, you have to give details of unavailed CENVAT Credit of excise duty or special additional duty or CVD of capital goods-

• In columns 2 & 3, provide the invoice number and date of capital goods.
• The registration number of the supplier as per the old regime, under excise, which is the ECC number, must be provided in column 4
• Give your registration number, which is either service tax registration or ECC number, in column 5
• In column 6, provide the value of capital goods; in column 7, the excise duty or CVD paid; in column 8, the SAD paid.
• Enter the CENVAT credit, eligible under the old regime, in column 9. This amount cannot exceed the total of columns 7 and 8
• Column 10 must contain the CENVAT credit that was previously obtained under the previous administration. Such a sum cannot be more than column 9’s value.
• Column No. 9 minus Column No. 10 equals the remaining CENVAT credit that is qualified for the ITC of central tax, which is represented in Column No. 11.

6. Details of inputs held in stock in terms of sections 140(3), 140(4)(b) and 140(6): A manufacturer or dealer who was previously unregistered or who dealt in exempt items may claim an input tax credit under this clause. This part asks for details of input held as stocks. This portion asks for detail of input held as stocks. This portion of TRAN 1 basically applies to a business registered under GST but

• In the previous system, such businesses were exempt from registration requirements.
• Was manufacturing-exempted goods
• Providing exempted services
• Who was providing works contract services and was availing abatement
• A first-stage or second-stage dealer
• A registered importer
• A depot of manufacturer

It applies to a person manufacturing taxable and exempted goods or providing taxable and exempted services. And tax in stock/inputs was used for exempted supply under the old regime but is taxable under GST.

Section 140 (4)(b) of the CGST Act also applies to a person registered as a composition dealer (paying tax at a fixed rate or fixed amount) in the old regime but a normally registered taxpayer under GST. A credit of eligible taxes can be claimed for stocks they hold in the following condition.

• Such stock is currently being used or will be used to make GST-taxable supplies.
• The input credit is eligible under GST.
• They have an invoice or other documents evidencing payment of duty under the old regime for such inputs;
• The services provider is not qualified for a GST reduction.
• They have not opted for a composition scheme.

Amount of VAT and entry tax paid on inputs supported by invoices or other documents proving tax payment carried forward as SGST or UTGST under sections 140(3), 140(4)(b), and 140 (6)

• The details of stock, such as the description, unit, quantity of goods held, the value of goods and state tax (VAT or entry Tax), must b provided in columns 1-5
• The total input tax credit previously claimed under the previous regime must be provided in column 6.
• In column 7, input tax related to exempt sales (old regime) but taxable under GST must be filed. The input tax credit would not have been claimed by the old regime and is eligible now if such goods are taxable or where a composition dealer in the old regime is now registering as a normal taxpayer.
• The remaining balance will be eligible for input credit of SGST/UTGST in column 8.
• The stock of goods not supported by invoices/documents evidencing payment of tax (for only those states having VAT at a single point)

8. Details of goods sent to the job worker and held in his stock on behalf of the principal under section 141

A principal who has sent goods to the job worker must fill-

• Provide the GSTIN of the job worker if registered under GST.
• In column 2, provide the unique number of the challan issued while transferring the goods to the job worker, and the challan date must be mentioned in Column 3
• In column 4, give the types of goods – whether it is input/semi-finished/finished goods.
• Columns 5-9 provide further details with the HSN code of the good held with the job worker, the description, and the unit of measurement.

10. Details of the goods kept in stock as the principal’s agent pursuant to section 142(14) of the SGST act. According to Section 142(14), if any capital goods or goods belonging to the principal is at the agent’s premises on the day of the appointment, the agent may claim a tax credit for the tax paid on such goods or capital goods if he satisfies the requirements listed below.

• The agent is registered under GST.
• Both principal and agent must declare the details of the stock of goods or capital goods lying with such agents.
• Such capital goods had not yet been the subject of invoices older than a year.
• The principal has either reversed (if he claimed any input tax credit) or not availed of the input tax credit for such goods or capital goods.

12. Details of Credit As Per Section 142(11)

This is for works contractors who pay VAT and service tax on any supply. GST shall be leviable and shall be entitled to take credit of VAT and service tax is paid by him on any supply, then GST shall be leviable, and he shall be entitled to take credit of VAT and Service Tax paid by him to the extent of supplies made. Below are the details required.

• Column 1 should contain the registration number or TIN (State VAT registration number).
• Service Tax Registration Number in column 2
• The invoice number and invoice date are in columns 4 & 5, respectively.
• He must put the GST that he paid in column 6.
• In the last column, the VAT and service tax paid by him to the extent of supplies made are claimed as ITC of SGST and CGST, respectively.

Conclusion

The TRAN 1 format and due date play a critical role in the transition of old input credit to the Goods and Services Tax (GST) regime in India. The TRAN 1 form enables taxpayers to claim an input tax credit for taxes paid under the old tax regime and carry it forward to the new system.

By understanding the requirements and deadlines for the TRAN 1 form, taxpayers can ensure a smooth transition to the GST system and take advantage of the input tax credit available to them. It is recommended that taxpayers seek professional guidance and support to ensure compliance with the transition process.