Goods and Service Tax

General Idea on GST Input Tax Credit Transition Provision on Stock in India

calendar13 Feb, 2021
timeReading Time: 3 Minutes
GST Input Tax Credit on Transition Provision

Within GST input tax credit, duties and taxes are available to taxpayers on the basis of stock and input with respect to the semi-finished and finished goods which will be available to the taxpayer on the fulfilment of certain criteria elaborated in this article.

The following categories of registered taxable person eligible to take Goods and services tax input tax credit subject to certain conditions:-

The following categories of registered taxable person eligible to take GST input tax credit subject to certain conditions

When Individual is not Liable to Register under Current Law to Avail GST Input Tax Credit?

According to Central Excise Law, the manufacturer whose first gross turnover does not exceed Rs 1.5 crore is not required to register or discharge the obligation to pay taxes. As such, under the VAT Act, a taxpayer is not required to be registered in case the turnover does not exceed the authorize limit in a FY; which differs from state to state.

Under regime of GST, a taxpayer is responsible to register in case of total turnover in a financial year which is more than Rs 20 lakh or Rs 10 lakh for special category states. Therefore, those who did not need to be registered here would not be liable for the same transition to GST, which would discharge duties and taxes under GST.

Read our article:Understanding on Place of Supply of Imports of Goods or Services under the Regime of GST

Dealing in Exempted Goods or Services

Suppose a person is engaged in providing services which are exempted due to notice of exemption or is not liable to pay duties on engaged supply goods that are not taxed. Although, under GST, a person earlier was not liable to pay taxes will be held liable to pay the same.

Pre-Requisites for First Stage Dealer or Second Stage Dealer, and Registered Importer

Under the Central Excise Law, the first and second stage dealers are required to get enrolled themselves as a dealer and are not eligible to obtain credit of excise duty which they paid.

The involved excise duty is allowed to the registered manufacturer as a credit on the goods payable. Likewise, the importer of goods needs to be registered and will discharge the import duties. The above said categories of registered taxable person are entitled to take credit of inputs.

Conditions Needed to be Completed to Avail GST Input Tax Credit

  • According to the prevalent and existing tax regime, input tax credit is not permitted which leads to rising prices of goods or services. Under GST, credit of such input taxes or duties will be permitted, which will reduce the prices of such goods or services. This benefit should be given to the recipients of such goods or services through lower prices.
  • Under GST, the taxable person must be eligible for such input tax credit.
  • Taxable person[1] must possess the proof of invoices or documents which clearly showing about the payments of duty made under the existing current law.
  • The date of such proofs (invoices or documents) should be issued within the stipulated period of 12 months from the transition date i.e. appointed date.
  • The supplier of goods or services is not eligible for any repeal under GST. In the case where the registered taxable person is not in possession of the invoice and / or other documents, which are paying the fee under the existing law, the credit of input tax shall be subject to such limitations, conditions and protections, which can be determined by the law.

Duties and Taxes Eligible to claim GST Input Tax Credit

Duties and taxes eligible to claim for credit under regime of CGST are as follows:

  • Excise Duty
  • Additional Excise Duty
  • National Calamity Contingent Duty
  • Additional Custom Duty

Duties and taxes eligible for claim for credit under regime of SGST are as follows:

  • Service Tax
  • Value Added Tax
  • Entry Tax

Transition Provisions under Regime of GST

GST is a multi-step value-added tax on the consumption of goods or services or both. Detailed provisions have been made to advance ITC earned under existing law. Such credit should be allowed under the GST law. However, opting for taxable person composition plan will not be eligible to be carried forward existing ITC.

Transition Provisions can be Divided under Three Heads

  • Concluding Input tax credit related
  • Existing processes such as continuing to work
  • All claims (pending as well as future) relate to current laws filed before or after the current day


We all know that in GST for input tax and duties are available to every taxpayer on the basis of the stock and input on being categorized under the semi-furnished and furnished goods.

As per the new tax regime, every taxpayer has to fullfill the categorized conditions of the competent authority.  Kindly associate with the Corpbiz expert to know more about the GST input tax credit transition provision on stock

Read our article:An Outlook on Effect of VAT Return after GST Implementation

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