dear expert,
do a registered dealer have to pay the difference amount of tax on the closing stock in order to sell those goods under gst regime.
for example:if the vat on goods is just 5%, but under gst law the tax on such goods is 12% then will the dealer has to pay the diff amount of 7% to the govt. ?
if yes, will the dealer be able to collect the refund on the diff tax paid.
Goods procured before July 1st which sitting in the stock sold after July 1st should have revised selling price for the 2 reasons.
1) It should have GST included in it instead of VAT.
2) Due to anti-profiteering clause of GST, the benefit of ITC claimed on excise tax embedded in the stock item shoudl be passed on to the customer. See below explanation.
Since GST is not just replacement for VAT, but also replacement for central taxes (Excise etc), it is possible to take ITC (CGST portion only) for the excise portion sitting in the stock. Where the invoice that dealer has doesn't show the excise tax included, then GST rules provides for a scheme where trader can claim the ITC under deemed provision as below
a) where CGST paid on the sale is above 9% then ITC available for 60% of CGST
b) where CGST paid on the sale is below 9% then ITC available for 40% of CGST.
This credit is available only after the sale is taken place. Dealer has got time till Dec 31, 2017 to sell the products lying in stock and claim ITC by filing TRAN-2 form. After Tran-2 is filed, ITC will be credited to trader's electronic tax ledger of GST.
On Tran-1 form (should be filed within 90 days from July 1st), trader should indicate the stock that he has posession with.
CAclubindia
