Transition The Old Input Credits Under Vat To GST - TRAN 2


Date: 28 Jan 2023

Transition The Old Input Credits Under Vat To GST - TRAN 2


Form Tran 2 can be filed by a dealer/trader registered under GST but not under the old regime. A dealer who doesn't have VAT or excise invoices for stocks they hold can use TRAN 2 to claim credit tax. A manufacturer or service provider cannot submit Form GST TRAN 2. When a supply is sold, it must be reported by a dealer or trader at the end of each month to claim an input tax credit. They need to fulfil the following requirements:

  • The goods must neither be exempted entirely from excise/VAT nor subjected to a nil rate under excise/VAT.

  • The stock must be cleared by the end of December to be eligible for the credit because this plan is only creative for six months, beginning in July. 

  • You must have a document that shows the procurement of such goods. 

  • The inventory of products for which credit is being claimed is stored in a way that makes it simple to find.


Details To Be Filled In TRAN-2

  • GSTIN - Provide your GSTIN

  • Name of Taxable Person - Provide name here

  • Tax Period - Mention the month and year for which this form is filed. 

  • Details of input held on stock for which you don't have any invoice/document evidencing tax payment carried forward to electronic credit ledger.


Stock held without a supporting document attesting to the payment of excise duty (central tax); if you do not have a document certifying the cost of excise duty, you must fill out the following information:

  • HSN codes of opening stock for a month will be in column 1 

  • In column 2, the month's unit of measurement of opening stock will be entered.

  • Column 3 will contain the opening stock amount for the month.

  • Column 4 mentions the number of goods sold in the month.

  • The taxable value of items sold throughout the month is shown in column 5.

  • Column 6 includes CGST If goods are sold within the same state.

  • If goods are sold inter-state, the amount of IGST paid must be mentioned in column 7.

  • The credit of central tax (input credit of CGST) claims shall be mentioned in column 8.

  • If the CGST paid in the column is 9%, or above, the ITC that can be claimed is 60% of column 6. If it isn't, it takes up 40% of column 6.

  • If the IGST paid in column 7 is 18% or more, then the ITC that can be claimed is 30% of that column. If not less than it is 20% of column 7.

  • In column 9, the quantity of opening stock for the relevant tax period is calculated by deducting the value in column 4 from the value in column 3. (column no 4 minus column 3).


Unavailed ITC w.r.t. Capital Goods

During the acquisition of capital goods under the pre-GST regime, taxpayers were not entirely eligible for ITC. The remaining ITC could be claimed under GST if a registered person who acquired the capital goods could not claim the total amount of tax paid on the acquisition. Provide the following information for each capital good, broken down by invoice:

  • Including all CENVAT credit in such capital items

  • The amount of ITC availed or utilised till 1st July

  • The amount of ITC remaining unavailed or unutilised till 1st July


Stock Held Being Sent Or Received For Job Work  

When a principal manufacturer sends his products to a job worker for job work and those products are with the job worker as of July 1, it counts as a stock the principal manufacturer owns for which tax credit will be given. The principal manufacturer and the job worker for goods must fill in the following details:

  • Held as a job working on the principal's behalf

  • Sent to an employee for employment as a principal


The following is the essential information to include in the form:

  • Challan date and number

  • Variety of goods (raw material, semi-finished/finished goods)

  • Description of Goods - HSN, unit, amount, and GSTIN of the producer or employee


Goods Sent To Agent or Consignment Dealer For Sale 

When a principal dealer or manufacturer sends his merchandise to an agency or consignment dealer for sale, ownership of the products remains with the principal dealer or manufacturer.

The following is the essential information to include in the form:

  • GSTIN of the primary retailer or producer

  • Description of goods-unit, quantity, value and ITC to be taken 


Conditions To Claim ITC 

To fill out the TRAN form, the individual must abide by a few conditions. They are as follows:

  • This scheme is only for six months from 1st July or until the stock is cleared by the end of December to claim the credit.

  • The claimant must possess the paperwork proving the purchase of the goods.

  • The goods should not be exempted from VAT or Excise or should not be nil-rated goods under excise or VAT.

  • To make it simple to identify the stock of goods that will be claimed for credit, it is crucial to keep the things properly.

  • The closing stock should be lying on 30th Jun 2017.

  • The dealer or trader claiming the input tax credit should be registered under GST.

  • The dealer or trader claiming the input tax credit should not be registered under the pre-GST regime. 

  • The claimer should not have any documents that provide evidence of the payment of taxes.

  • The taxpayer must not supply or produce goods or services subject to central excise or service tax.


Percentage of ITC Claim Available

The registered person under GST will receive a credit for the tax paid on acquiring goods and kept in closing stock as of the specified date. Since it does not own an invoice or other documents evidencing payment of taxes under VAT, Central Excise, a credit will be allowed based on the IGST, CGST, and SGST of the closing stock under GST according to HSN codes. When the goods kept as closing stock are sold by the taxpayer. He will first have to pay appropriate taxes on such outward supply, and then he will be allowed the Input Tax Credit based on the tax rate paid for that outward supply. A registered person may claim ITC credit in the manner described above for the tax period starting on the designated date. By the conclusion of the tax period, a statement in form TRAN 2 detailing the supply details must be filed for each such period.


Condition To Be Fulfilled To Claim Credit Of Central And State Tax

  • The federal or state tax owed on this supply has already been paid.

  • Such goods were not NIL-rated, completely exempt from excise duty, or covered by the applicable state VAT laws.

  • The document needed to purchase these things is accessible from registered individuals.  

  • FORM TRAN-2 should be filled out with information on the stock held at the end of each tax period, including information about the supplies of those items that were impacted during that period.

  • The computerised credit ledger must be updated with the permitted amount of credit.

  • The stock of items used to secure the credit is kept in a location where the registered person may quickly locate it.