Transition Forms TRAN 1 and TRAN 2

With the implementation & rollout of GST, people are concerned as to what will happen to the taxes paid in pre GST regime What form will be needed to avail the credit Full credit of taxes paid in earlier regime will be allowed or not How to claim the said credit in Form GSTR 3B What is the due date of forms TRAN 1 & Form TRAN 2
To facilitate the seamless transfer of ITC under GST for the existing physical stocks which has already suffered the incidence of taxes under different existing laws and are still lying with the registered dealers as on appointed date, Transitional Provisions have been incorporated in GST Act, 2017.Section 140 to 142 of GST Act,2017 and Rules made there under specifically deals with the provisions of input tax credit to be carry forward to the new GST regime.
If you wish to claim the credit of taxes paid for the closing stock held as 30.6.2017, you need to file TRAN-1 and TRAN-2 which are prescribed under the GST regime within 90 days from the appointed date. Registration under the GST regime is mandatory for availing the ITC whether it was registered earlier or not.

In this article we will discuss about how to claim the ITC on closing stock after the transition to GST regime from pre GST regime: –

• There are two types of forms notified by Government for claiming ITC on closing stock i.e. Form Tran 1 & Form Tran 2.
• The main basis for filing up these TRANS Forms is the presence of closing stock held as on 30^th June, 2017 and need to claim input of taxes paid on this stock.
• These forms are called TRANS forms as they are meant for transition of input tax credit which needs to be filed by every person who is in possession of stock and has to claim credit under the GST regime regardless of whether they were registered under the old regime or not.
• Sell your old stock within 6 months from the appointed date i.e. 31st December,2017 and such stock should not be purchased before 30th June,2016.
• Accumulated credits of old regime can be taken to GST only if you have filed the past six months returns under the VAT/ Excise/ Service Tax properly.
• Credit of Central Excise duties & Service tax will be carried forward as CGST and credit of any state taxes such as VAT will be carried forward as SGST.

Form TRAN 1

• As per section 140, every registered person under GST regime (but not a composite dealer) should submit a declaration electronically in FORM GST TRAN- 1, if they are entitled to claim ITC of stock as on 30.06.2017.
• Form TRAN 1 can be filed by a person who is registered under GST & wants to claim ITC on stock, whether he was registered or not registered under the old regime(VAT Act, Central Excise Act, Service Tax Act) is immaterial.
• It should be duly signed and filed on GSTN common portal mentioning the amount of ITC to which they are entitled under the provisions.
• This declaration needs to be made within 90 days from the appointed day i.e. upto 30^th September, 2017.
• The amount of credit specified in the declaration in FORM GST TRAN-1 shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.
• FORM TRAN 1 is not only for availing credit of ITC on stock, it is to be filed also when a registered person has purchased capital goods and was unable to claim the full amount of tax paid during the purchase, the remaining amount can be claimed under GST.
• Form TRAN 1 is likely to be available on GSTN portal from 21^st August, 2017.

Form TRAN 2

• Every registered person under GST regime satisfying all the below mentioned conditions should file Form GST TRAN 2.
  • Such person should not be registered under the old regime/ Pre GST regime.
  • Should possess closing stock on 30th June, 2017.
  • Should neither be a manufacturer under Central Excise Act nor a supplier of services under Service Tax Act.
  • Should not be in possession of any invoice or any other document as evidence of payment of taxes.
• Tran 2 form will be filed monthly from July 2017 to December 2017.

Compiled by CA Ankita Khetan.For any query write to us on [email protected]