10 key aspects for smooth migration to GST

June 27,2017
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Rashmi Kedia, Partner, Reina Legal

With only few days to go for the Goods and Services Tax (‘GST’) to go live, we have enumerated below top 10 key aspects with respect to a smooth and hassle free transition to GST from the existing tax regime:

A. CARRY FORWARD OF INPUT TAX CREDITS (‘ITC’)

1) ITC with respect to tax payable under Reverse Charge Mechanism (‘RCM’): For the vendor payments made in June 2017 which are liable to Service tax under RCM as per Service tax law, it is recommended to discharge Service tax liability within June 2017 to ensure availability and disclosure of related ITC in the month of June 2017 itself. This is in absence of any relevant transition provision for availing credits in respect of Service tax payments made under RCM post appointed date i.e. the day on which the GST law would come into force

2) Input/ Input services in transit: Any inputs/ input services received after GST but on which duty/ tax has already been paid under earlier tax regime, ITC can be claimed under GST if the invoice/ duty or tax paying document is recorded in the books of accounts within a period of 30 days after GST. Accordingly, please ensure that all such transactions where tax has already been paid by vendors should be duly accounted for in books by 30th July 2017

3) Closing balance of ITC in the last returns: In order to carry forward of ITC from the tax returns filed under the existing tax regimes (viz. Service tax, Excise, VAT), please ensure the following:

  1. To file returns for the previous last six months under the existing law
  2. To furnish declaration in form GST TRAN 1 within 90 days from the appointed day
  3. Ensure collection of all pending statutory forms (like Form C, H, I, F).
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