Please help to resolve this query, I am in big big confusion sir. Please, Please :-
We are manufacturer of Footwear & registered in existing law but exempt to pay Sales tax & Excise Duty as our footwear is below Rs. 500/-. Hence exempted in both excise duty & sales tax.
Now, as you know, our item has become taxable @5% & we have migrated as well. My Queries are below :- 1) Can we avail input vat as we have Vat paid documents on Closing stock as on 30-06-2017? If yes, how many? 2) Can we avail Excise Duty as we have duty paid documents on Closing stock as on 30-06-2017? If yes, how many? 3) In GST our ITC mostly shall be fall under 18%. But our Output shall be 5%. Can we avail all our ITC or not? If not how to calculate "Claimable ITC".
Help me Sir, I am in deep trouble & harass to understand the above in simple way.
02 August 2024
Certainly! Here’s how you can handle the transition from the old sales tax and excise duty regime to GST and the associated ITC claims:
### 1. **Availing Input VAT on Closing Stock**
Yes, you can avail input VAT on closing stock under the GST regime. Here’s how it works:
- **Eligibility**: You can claim the input VAT on the closing stock as on 30-06-2017 (the day before GST implementation) provided you have valid VAT invoices. - **Claim Process**: Under GST, you can claim credit for the VAT paid on inputs, work-in-progress, and finished goods as of 30-06-2017. The credit must be claimed in the GST returns filed for the period starting from July 2017.
**Steps:** 1. **Document Verification**: Ensure that you have VAT invoices and supporting documents for the closing stock. 2. **Filing GST Returns**: Claim the input VAT in your GST return for July 2017. This can be done using the GST TRAN-1 form.
### 2. **Availing Excise Duty on Closing Stock**
For excise duty, the situation is slightly different:
- **Eligibility**: You can claim a credit for excise duty on closing stock under GST if you were an excise duty payer before GST implementation. - **Claim Process**: This credit must be claimed in the GST returns for the period starting from July 2017 using the GST TRAN-1 form.
**Steps:** 1. **Document Verification**: Ensure that you have excise duty invoices and supporting documents. 2. **Filing GST Returns**: Claim the excise duty credit in the GST TRAN-1 form for the transitional credit.
### 3. **ITC Under GST**
Under GST, you can avail ITC on inputs, but the credit you can claim depends on the nature of your output supplies.
- **ITC on Inputs**: You can claim input tax credit (ITC) on inputs used for manufacturing, even if your output is taxable at a lower rate. However, if you have inputs taxed at 18% and your output is taxed at 5%, you can still claim the ITC but with some considerations.
**How to Calculate Claimable ITC:**
1. **Total ITC**: Calculate the total ITC available on your inputs based on the invoices and tax rates. 2. **Output Tax Rate**: Apply the GST rate on your output supplies (5%). 3. **Adjustment**: If your output tax rate is lower than the input tax rate, you can claim the full ITC on inputs but need to manage the difference in GST payable versus the input credit.
**Example Calculation:**
- **Input GST @ 18%**: Suppose you have input tax credit of ₹1,00,000 with an 18% GST rate. - **Output GST @ 5%**: Suppose you are selling goods at 5% GST.
You will be able to claim the full ITC of ₹1,00,000, but you need to pay GST on output sales accordingly. The excess ITC (if any) can be carried forward or adjusted as per the GST rules.
### **Summary**
- **Input VAT**: Yes, you can claim VAT on closing stock through GST TRAN-1. - **Excise Duty**: Yes, you can claim excise duty on closing stock through GST TRAN-1. - **ITC on GST**: You can claim the full ITC on inputs even if the output tax rate is lower. The key is to ensure proper documentation and compliance with GST filing requirements.
**Note**: Always consult with a tax advisor or GST consultant for detailed and personalized advice, especially to address specific transitional credits and compliance requirements.
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