Tax Insights
from India Tax & Regulatory Services
www.pwc.in
CBEC issues enabling notification to claim transition credit and use it for payment of GST liability for
July, 2017 and extending due date to file Form 3B for July, 2017 for taxpayers opting to claim
transition credit; also amends other rules
August 18, 2017
In brief
CBEC has issued a notification1, clarifying the mechanism to claim carry forward of closing credits in previous indirect tax regime (“transition credit”) and use it for payment of GST liability for July, 2017. The notification also extends the time limit for filing summary return in Form 3B to 28 August, 2017 for the taxpayers opting to file Form GST TRAN 1 on or before 28 August 2017.
In detail
The details are mentioned below:
Claim of transition credit:
Sr.
No.
Situation Due date for filing form
GSTR 3B
Process to be followed
1 A registered person entitled to claim transition credit and opting to file Form GST TRAN 1 on or before 28 August, 2017
28 August, 2017
Compute GST for the month of July, 2017 as per the following formula:
Tax payable = (Output tax liability + Tax payable under reverse charge) – (transitional credit + input tax credit (ITC) availed for July, 2017);
Deposit the amount of tax payable in cash by 20 August 2017;
1 Notification no. 23/2017-Central Tax dated 17 August, 2017
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Sr.
No.
Situation Due date
for filing form GSTR
3B
Process to be followed
Submit Form GST TRAN 1 by 28 August 2017 (the return is expected to be available for filing online by 21 August 2017);
Submit Form GSTR 3B for the month of July, 2017 by 28 August 2017, only after submission of Form TRAN 1.
The above process has to be followed sequentially.
It is specifically provided that in case, the tax payable for July, 2017 is higher than the amount actually paid then the taxpayer will need to pay interest @ 18% from 21 August 2017 till the date of such deposit.
2 A registered person entitled to claim transition credit and not opting to file Form GST TRAN 1 on or before 28 August, 2017
20 August, 2017
3 All other cases 20 August,
2017
Other important
amendments in GST rules:
The time limit for
submission of stock details at the time of opting for composition by a composition dealer is increased to 90 days from 60 days.
The Commissioner has been given a power to extend the date of making a declaration about eligibility of credit in cases where the person becomes liable for payment of tax, either as a new registrant or due to exit from composition scheme or exempt supply becoming a taxable supply.
Presently the declaration needs to be made in 30 days from the date of becoming so eligible to avail the ITC. This
provision is applicable from 01 July, 2017.
A non-resident online information and database access or retrieval services provider, providing service to a non-taxable online recipient in India may generate tax payment challans through CBEC’s payment system namely, Electronic Accounting System in Excise and Service Tax. Further, such persons can also deposit tax though international money transfer though SWIFT payment network.
Both these facilities will come into effect from a date to be notified.
Minor changes have been made in Form GST TRAN 1.
PwC comments
The facility to claim and utilise the transition credits against GST liability for the month of July, 2017 is quite welcome and addresses a very important demand of the industry. However,
the requirement to make payment in cash before submission of form TRAN 1 (after considering the credits accrued during the month as well as the transition credits) and extremely short notice for preparing estimate of credit which will be claimed in form TRAN 1 makes possibility of claiming such transition credit challenging and difficult. Ideally, the Government could have extended the due date of making payment also in such cases, so that the taxpayers could properly assess and claim all the eligible credits. Alternatively, the Government may clarify about possibility of submission of multiple Form GST TRAN 1, so that the industry has a window to claim the credits, which were missed out in submission of Form GST TRAN 1, despite being eligible. This is quite important since the rules are silent about possibility of revising Form GST TRAN 1 for any potential errors.
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For exporters of goods/ services having no domestic turnover (including 100% EOU), who do not opt to file the GST TRAN 1 before 28 August 2017, the due date for filing Form 3B will remain 20 August 2017.
The States would also be required to issue similar notifications for extension of due dates under the respective SGST Acts.
For due dates of filing other returns, refer to our news alert dated 12 August 2017. The facility to file Form 6 (for input service distributor) and Form GST TRAN 2 for deemed credit were not available till last night on GSTN website.
The amendments made in rules seem to be of consequential nature without any major change.
The industry also awaits the notifications on the decisions taken on amendments in tax rates in the previous GST Council meetings.
Let’s talk
For a deeper discussion of how this issue might affect your business, please contact your local PwC advisor
Tax Insights
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