Today we will discuss the very important topics Treatment of Duty on Closing stock in GST for the implementation of GST. In this blog we will discuss can a unregistered dealer in excise and vat can get the credit of closing stock in hands also how much GST credit unregistered person can get. Also we will discuss on confusion whether to kept the stock in hands or not.
Is unregistered person get the Credit ?
Yes, unregistered person will get the credit in GST If duty on goods paid at the first stage. This provision will be helpful for the Fabrics and textile dealer as they will collect the full duty on sale and get the credit of Stock in hands.
CGST credit on closing stock in GST
As per Section 140(3)
A registered person who was not registered under the existing law will be allowed to avail of input tax credit on goods (on which the duty of central excise or, as the case may be, additional duties of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975, is leviable) held in stock on the appointed day in respect of which he is not in possession of any document evidencing payment of central excise duty
How much Credit is allowed ?
CGST Rate 9% or more –
Such credit shall be allowed at the rate of sixty per cent
CGST Rate less than 9% –
Such credit shall be allowed at the rate of forty per cent.
If Integrated tax paid on the such goods –
The amount of credit shall be allowed at the rate of thirty per cent. and twenty per cent. respectively of the said tax
Time limit of the credit –
Six tax periods from the GST implemented date
Condition for claiming the Credit –
(i) such goods were not unconditionally exempt from the whole of the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated in the said Schedule.
(ii) the document for procurement of such goods is available with the registered person.
(iii) the registered person availing of this scheme and having furnished FORM GST TRAN 2 the details of stock held by him in accordance with the provisions of clause 40(1)(b)(2)
(iv) the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.
(v) the stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.
SGST credit on closing stock in GST
A registered person, holding stock of goods which have paid tax at the first point of their sale in the State and the subsequent sales of which are not subject to tax in the State availing credit in accordance with the proviso to sub-section (3) of section 140 shall be allowed to avail input tax credit on goods held in stock on the appointed day in respect of which he is not in possession of any document evidencing payment of value added tax.
How much SGST Credit is allowed ?
SGST Rate 9% or more –
Such credit shall be allowed at the rate of sixty per cent
SGST Rate less than 9% –
Such credit shall be allowed at the rate of forty per cent.
If Integrated tax paid on the such goods –
The amount of credit shall be allowed at the rate of thirty per cent. and twenty per cent. respectively of the said tax
Time limit of the credit –
Six tax periods from the GST implemented date
Condition for claiming the Credit –
(i) goods were not wholly exempt from tax under the Value Added Tax Act
(ii) the document for procurement of goods is available with the registered person.
(iii) the registered person availing of this scheme and having furnished FORM GST TRAN 2 the details of stock held by him in accordance with the provisions of clause 40(1)(b)(2)
(iv) the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.
(v) the stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person.
CLOSING STOCK CREDIT IN GST
How credit will be given in GST
If a person sale 100 Rs goods on which GST rate is 5% than how much CGST and SGST credit will be available ?
CGST credit –
As rate is less than 9 credit will be available @40%. of 2.5 = 1 percent of sale.
SGST credit –
As rate is less than 9 credit will be available @40%. of 2.5 = 1 percent of sale.
Therefore 1% SGST and 1% CGST credit will be available.
Opinion on stock in hands –
In our opinion person who sale goods on wholesale basis will get the benefits of stock in hands as they can pass the duty to the customer. Eg textile and fabrics dealer will get the benefits as they can collect the 5% GST from the retailer and they will get the credit of 2% on stock in hands.
