Last updated: February 5th, 2020 12:43 PM

Transferring Input Tax Credit to GST

Transferring Input Tax Credit (ITC) to GST applies to all the taxpayers after registering with GST. Nearly 80 lakh businesses migrated to the new GST Platform, in anticipation of a July 1st, 2017 rollout of the GST regime. All existing taxpayers having service tax or VAT or central excise registration are mandatorily required to obtain GST registration and complete GST migration. In this article, we look at how taxpayers can transfer the input tax credit they have on account of service tax or VAT or central excise to GST.

Transferring ITC

The Transitional Provisions rules of GST provides the procedure for transferring existing input tax credit to GST. As per the GST Transitional Provisions, all persons registered under GST and entitled to receive input tax credit shall file GST TRAN-1 within 90 days of GST implementation date on the GST Common Portal. To ease the pains GST migration, the rules allow for the Commissioner, on the recommendations of the Council, to extend the period for transferring existing input tax credit of 90 days by another 90 days.

Form GST TRAN-1 for Transferring Input Tax Credit

The taxpayer shall file the Form GST TRAN-1 as shown below on the GST Common Portal for transferring any existing ITC to GST input tax credit. After filing of the application and verification, the electronic credit ledger receives the credit amount as specified in the application FORM GST TRAN-1. The taxpayer shall receive the credit amount through the electronic credit ledger to FORM GST PMT-2 on the GST Common Portal. [pdf-embedder url="https://www.indiafilings.com/learn/wp-content/uploads/2017/06/Form-GST-TRAN-1.pdf" title="Form GST TRAN-1"]

GST TRAN-1 Filing Procedure

The taxpayer shall file the GST TRAN-1 on the GST Common Platform. GST TRAN-1 must contain the following information:

• For the item of capital goods
  • The amount of tax or duty availed or utilized by way of ITC under each of the existing laws till the appointed day, and
  • The amount of tax or duty yet to be availed or utilized by way of ITC under each of the existing laws till the appointed day;
• For stock held
  • The name of the supplier, serial number and date of issue of the invoice by the supplier or any document on the basis of which credit of input tax was admissible under the existing law;
  • The description and value of the goods or services;
  • The quantity in case of goods and the unit or unit quantity code;
  • The amount of eligible taxes and duties or, as the case may be, the value-added tax [or entry tax] charged by the supplier in respect of the goods or services, and
  • The date on which the receipt of goods or service entered in the books of account of the recipient.

Filing Declaration for ITC

All taxpayers who are migrating their existing ITCt to GST will be required to submit a declaration in Form GST TRAN-1, furnishing the proportion of supply on which VAT or service tax has been paid before the GST implementation date but the supply is made after the implementation date and the Input Tax Credit is admissible.

Know more about Input Tax Credit under GST