{"id":25159,"date":"2021-01-29T14:56:35","date_gmt":"2021-01-29T09:26:35","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=25159"},"modified":"2021-01-29T17:07:59","modified_gmt":"2021-01-29T11:37:59","slug":"things-to-keep-in-mind-while-transitioning-to-gst-regime","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/things-to-keep-in-mind-while-transitioning-to-gst-regime\/","title":{"rendered":"Things to Keep in Mind while Transitioning to GST Regime"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The introduction of GST was made in the <strong><em>Constitution (122<\/em><\/strong><sup><strong><em>nd<\/em><\/strong><\/sup><strong><em> Amendment) Bill<\/em><\/strong> in December, 2014. The Goods and Service Tax Act was passed in the Parliament on March 29, 2017 and enforced on July 01, 2017. The new laws on value addition taxes have replaced all indirect taxes levied on goods and services by the central government and state government. In this blog we are going to learn about things to remember while transitioning to GST Regime. First let\u2019s understand what is GST and ITC.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/things-to-keep-in-mind-while-transitioning-to-gst-regime\/#What_is_Goods_and_Services_Tax_GST\" >What is Goods and Services Tax (GST)?&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/things-to-keep-in-mind-while-transitioning-to-gst-regime\/#What_is_Input_Tax_Credit_ITC\" >What is Input Tax Credit (ITC)?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/things-to-keep-in-mind-while-transitioning-to-gst-regime\/#What_are_the_6_Things_to_Remember_While_Transitioning_to_GST_Regime\" >What are the 6 Things to Remember While Transitioning to\nGST Regime?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/things-to-keep-in-mind-while-transitioning-to-gst-regime\/#Configuration_of_Transitional_Process\" >Configuration of Transitional Process<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/things-to-keep-in-mind-while-transitioning-to-gst-regime\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Goods_and_Services_Tax_GST\"><\/span>What is Goods and Services Tax (GST)?&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Goods and Services Tax (GST) is value-added tax levied on the supply of goods and services. GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. Goods &amp; Services Tax is a domestic indirect tax paid across the country.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Input_Tax_Credit_ITC\"><\/span>What is Input Tax Credit (ITC)? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>GST have one important fundamental feature of consistent flow of input credit over the chain followed across the country. Input Tax Credit is the tax paid by the purchaser on purchase of the goods or services. It describes that, at the point of paying tax on output, you can reduce the tax already paid on input and paid balance amount.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/16-types-of-gst-return\/\">16 Types of GST Return your Business should be Aware of!<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_6_Things_to_Remember_While_Transitioning_to_GST_Regime\"><\/span>What are the 6 Things to Remember While Transitioning to\nGST Regime?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>The elements to be remembered along with legal provisions while transitioning to GST regimes are followed as:-<\/strong><\/em><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"985\" height=\"651\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/01\/What-are-the-6-Things-to-Remember-While-Transitioning-to-GST-Regime.png\" alt=\"What are the 6 Things to Remember While Transitioning to GST Regime\" class=\"wp-image-25171\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/01\/What-are-the-6-Things-to-Remember-While-Transitioning-to-GST-Regime.png 985w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/01\/What-are-the-6-Things-to-Remember-While-Transitioning-to-GST-Regime-300x198.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/01\/What-are-the-6-Things-to-Remember-While-Transitioning-to-GST-Regime-768x508.png 768w\" sizes=\"(max-width: 985px) 100vw, 985px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Migration of Taxpayers to GST Regime<\/h3>\n\n\n\n<p>The existing indirect tax payers who all are already registered under Excise\/VAT\/Service taxes, taxpayers would be migrated to GST regime. In this regime, they will be issued with <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>GST registration<\/strong><\/a> and also obtain GSTIN. The grant for GST registration will be approved on completion of provided additional details.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">New Registrations under GST <\/h3>\n\n\n\n<p><em><strong>The new registrations can be done by the following individuals or company-<\/strong><\/em><\/p>\n\n\n\n<ul><li>New business<\/li><li>Companies with an annual\nturnover less than INR 1.5 crores.<\/li><li>Any dealer with annual\nturnover below INR 20 lakhs and are selling their goods or services online<\/li><li>Any manufacturer having\nregular sale in inter-state area<\/li><li>Voluntary registrations are\npermitted<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Taxability of Goods and Services<\/h3>\n\n\n\n<p>In taxability of goods and services, the\ntax invoice issued on goods and services before implementation of GST, that\nwill be taxed under earlier tax laws even after enactment too. Later, when the\ninvoice is issued after implementation of GST that will be paid under GST as\npresent law will be applicable.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">ITC after Transitioning to GST<\/h3>\n\n\n\n<p>The new indirect tax laws\n(GST) carry forward the eligible credit of taxes induced under the earlier\nindirect tax laws into the GST regime. The transitional provisions allows with\ncertain terms and conditions and opportunity to extend unutilized credits in\ndifferent forms. Such as:<\/p>\n\n\n\n<ul><li>Unavailed credit on capital\ngoods, would not be allowed to carried forward in a return<\/li><li>The credit of inputs held in\nstock used for taxable supplies under GST <\/li><li>Credit for services received by\nan input service distributor (ISD) prior to implementation of GST, but invoice\nreceived post implementation<\/li><li>Credit carried by a taxpayer\nhaving centralized registration<\/li><li>Goods removed for job work,\ntesting, and prior to implementation of GST but returned post implementation.<\/li><\/ul>\n\n\n\n<p>When there is transition provision, the\ntaxpayers must ensure that all details as of record of receipts and other\nrelated documents with tax invoice must be safely stored till the appointed\ndate of GST to avoid any credit loss. <\/p>\n\n\n\n<p>To move your Input Tax Credit into the GST\nRegime, you are required to log in the GST portal and submit any one of the Forms\nthat is either the&nbsp;<strong><em>TRAN-1<\/em><\/strong>&nbsp;or the&nbsp;<strong><em>TRAN-2<\/em><\/strong>&nbsp;as\nrelevant. You have to mention the amount of tax as well as tax duty, whichever\nyou wish to claim as ITC.<\/p>\n\n\n\n<p><em><strong>The application should also provide the following details:-<\/strong><\/em><\/p>\n\n\n\n<ul><li>Details of the supplier such as\nname of the supplier, sequence number and date of issue of the invoice by the\nsupplier. Any other relevant document on the basis of which ITC will be\nadmissible under the existing law.<\/li><li>The quantity, description and\nvalue of the Goods &amp; Services.<\/li><li>The aggregate of eligible taxes\nas well as duties, the value added tax (or entry tax) charged by the supplier with\nrespect to Goods &amp; Services.<\/li><li>The date on which the receiving\nof Goods &amp; Services is entered in the books of account of the receiver.<\/li><\/ul>\n\n\n\n<p>The submitted request will be managed by the Tax\nDepartment. Upon approval, the amount of credit permitted will be credited to\nthe credit ledger of the applicant under the <strong><em>Form<\/em><\/strong>&nbsp;<strong><em>GST\nPMT-2<\/em><\/strong>&nbsp;on the Common GST Portal.<\/p>\n\n\n\n<p>The transfer of credit to GST is alike for companies\nwho were formerly registered under Excise duty, Service tax or VAT.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Tax Treatment of Transactions Spanning of the GST Regime<\/h3>\n\n\n\n<p>Goods and services supplied on and after the enforcement of GST shall be subject to GST.<\/p>\n\n\n\n<p>In any of the contract entered prior to\nimplementation of GST that affect increase or decrease in price of goods and\nservices, further may be issued a debit or credit note. If any difficulty\narises from issue of credit note, may lead to double taxation.<\/p>\n\n\n\n<p>Tax liability could be regulated in\ncondition, if recipient of the credit note reverses his corresponding credit.\nThe challenge in adjusting the tax liability because of non-reversal of credit\nby the recipient would arise as per liability.<\/p>\n\n\n\n<p>Under such transition provisions of GST,\ntaxpayers may revisit the procuring strategies considering the taxation\naftermath. It is recommended to revisit the existing contracts to mutually\nagree on the terms of contracts traversing the transition laws and the GST.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Composition Scheme<\/h3>\n\n\n\n<p>Composition scheme\nhenceforward be another critical aspect of the transition process, as further\nthe taxpayer should keep himself updated about the implication from migration\ninto the new regime. Composition scheme is available\nfor persons with annual turnover up to INR 50 lakhs.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Transition from previous tax regime to Composition scheme\nin GST<\/h4>\n\n\n\n<p>When a business owner decides to move from the former <strong><em>tax<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Tax\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> regime to composition scheme under GST, it has to pay an amount equal to its available Input Credit. The ITC will be calculated based on the amount of input materials held in stock, including semi-finished as well as finished goods.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Configuration_of_Transitional_Process\"><\/span>Configuration of Transitional Process<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Extensive amounts of\ntransitional compliances are required to extract utmost benefit on the\napplication of GST. To avoid any litigation due to transition issue, taxpayers\nshould evaluate transitional requirements and mandatorily note down the\neligible credit accumulated. All pending refunds, assessments, litigations,\nproceedings and other relevant documentation is required to determine the\nstatus and impact stand up from transitional compliances. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the Good and\/ or\nServices transition rules, a registered taxpayers can claim input tax credit\nfrom any of the central and state taxes (applicable in current GST regime) paid\non goods and\/ or services implemented after GST.<\/p>\n\n\n\n<p>These key highlights relating transition issues that emerge on practical implementation. To avoid any the timely awareness and preparation efficient procedures required to be evolved to encounter the fiscal obligations of the upcoming transition.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/procedure-for-registering-the-dsc-on-the-gst-common-portal\/\">Step by Step Procedure for Registering the DSC on the GST Common Portal <\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The introduction of GST was made in the Constitution (122nd Amendment) Bill in December, 2014. The Goods and Service Tax Act was passed in the Parliament on March 29, 2017 and enforced on July 01, 2017. The new laws on value addition taxes have replaced all indirect taxes levied on goods and services by the [&hellip;]<\/p>\n","protected":false},"author":18,"featured_media":25174,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[1483],"acf":{"service_id":"96"},"authorName":"Sakshi Srivastava","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG-20180130-WA0007.jpg","authorDescription":"Sakshi has pursued B.B.A.LL.B.(IPR Hons.). She is an avid reader and is keen to gather and share her knowledge on the subjects relating to IPR, Company Law and GST. Priorly she has worked as a legal researcher and vide her articles she aims at improving the core knowledge of the subjects to the masses.","postViews":2867,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25159"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=25159"}],"version-history":[{"count":19,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25159\/revisions"}],"predecessor-version":[{"id":25198,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/25159\/revisions\/25198"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/25174"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=25159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=25159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=25159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}