Taxes Eligible for ITC on Opening Stock of 1st July

Last updated on August 8th, 2017 at 12:58 pm

GST, a comprehensive indirect tax system introduced on 1st July, 2017, has subsumed a host of Central and State levied taxes and has transformed the entire nation as ‘One Nation –One Tax –One Market’. The convergence of taxes into a single indirect tax system is a significant achievement. It aims at seamless availability of Input Tax Credit (ITC) across the supply chain and the state borders, and elimination of cascading effect. With the similar objective, GST is provisioned to allow the tax credit of duties and taxes paid on the closing stock held as on 30th June, 2017.

As the saying goes ‘Change is hard at first, messy in the middle and gorgeous at the end’, the challenge for businesses here is, transitioning to GST. Among the various challenges, one of the daunting tasks for businesses is to claim the tax credit on eligible duties and taxes paid on the closing stock. This is because the business needs to meet the various conditions laid down by the law to be eligible to claim the credit on closing stock.

In our earlier blog, Moving to GST: Can I Avail Input Credit on Closing Stock?, we have discussed about various conditions to be eligible to claim the tax credit. We have also discussed about the specific business scenarios in the blog, GST Migration – Demystifying the Closing Stock Dilemma. In this blog, we will list down the different types of duties and taxes which are eligible for ITC Claim on closing stock.

Broadly, the Excise Duty paid on the inputs will be allowed as CGST input tax credit and VAT will be allowed as SGST input tax credit. The following are the specific duties and taxes which are allowed to be claimed.

Type of Duty Details Type of GST Credit
Central Excise Duty (Basic Excise Duty) Excise Duty paid on the Inputs listed in Schedule-I and Schedule-II of CETA Act. CGST
Countervailing Duty (CVD) This an additional duty levied on import of goods. This is similar to Basic Excise Duty levied on removal of goods within the Domestic Tariff Area (DTA). CGST
Special Additional Duty(SAD) This is again levied on import of goods, to counter balance the levy of VAT on sale of goods within the State. CGST
Additional Duties of Excise (GSI) This is levied on specified goods as per the Goods of Special Importance Act, 1957. CGST
Additional Duties of Excise (TTA) This is levied on specified goods as per Textile and Textile Articles Act, 1978. CGST
National Calamity Contingent

Duty (NCCD)

This is levied on goods listed in Schedule-7 like Pan Masala, cigarettes, vehicles, and so on, in addition to the excise duty as applicable. CGST
Value Added Tax (VAT) VAT (including Entry Tax) paid on your inputs as per the relevant State VAT laws. SGST

The claim of input tax credit on above mentioned duties and taxes are subject to the conditions (refer our earlier blog mentioned above). The claim needs to be made in Form GST TRAN-1 within 90 days from 1st July, 2017. The details of eligible duties and taxes are to be filed in Table No 7 of Form GST TRAN -1.

In our upcoming blog, we will discuss in detail on: How to fill the Form GST TRAN-1 for claiming ITC on Closing Stock.

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Pugal T & Yarab A

27 Comments

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  • I small garments business doing only state purchases under vat regime migrated to GST . our total annual turnover is below 20 lakhs only. As government mentioned below 20 lakhs turnover businesses having option to register in GST is not Compulsory. So i want cancel my GSTIN. How to cancel my GSTIN no, and is any tax is levied on closing stock.

  • We are Service Provider engaged in PHE works (Plumbing Works). We purchase material and install it as per the requirement of of our work order.Previously we were covered under Works contract Tax and Service tax. Now in GST, please give details about following,

    1 How to claim input tax on our stock as on 1.7.2017?

    2. We purchased all material (eg Pipes, pipe fittings, valves, sanitaryware, faucets) from Distributors and Manufacturer. Shall we be able to claim ITC of Excise Duty for the material purchased from Distributor? If yes, how to calculate the ITC available?

    3. We were having WCT/VAT registration in all the states where ever we were awarded the works (3 States). So to migrate we had to take GST registration in all the states. But ours is Delhi based company. We file our ITR in Delhi, Service Tax Return in Delhi and VAT/WCT return in respective state. In GST regime, can we work any where in India with our Delhi GSTIN?

    4. How raise Invoices to our clients?

    5. We purchase pipes (measured In Meter) and fittings(measured in Numbers) and install them along with necessary supporting method (with MS angle etc measured in Kg). But we raise our invoice for pipes(measured in Metre). How to adjust stock against invoiced item?

    6. Our bank is in Delhi and all payments coming from any state is deposited in it. How to show payments to our suppliers in other states?

    Please advise.

  • 1.When I submit transition 1 form for opening ITC service tax .

    In Gst portal not avail above form.so kindly suggest.

    2.GSTR1 E RETURN DOWNLOADED EXCEL FROM TALLY BUT IT IS NOT UPLOAD IN THE GST PORTAL.

    CAN YOU EXPLAIN GST PORTAL EXCEL STATEMENT AND TALLY EXCEL STATEMENT IS different.
    SO PLEASE SUGGEST.

  • i have imported stock of raw material lying in outside warehouse. i was registered under cex. undercex rules credit could be only taken when goods were bought into factory. so i have not taken credit till 30th june. can i take credit of these raw materials when they bought to factory. i have invoice bill of entry and all duty paid docs. please advise i am a customer of tally.

  • Sir we are doing timber business. Most of the timber import from other countries only. Local and interstate purchase also was there. Every return we have adjusted input tax and balance we paid. Import time we have paid custom duty. Now my question is can we eligible for ITC or not.

  • whether municipality is required for taking registration of g s t? what rate is applicable for controractar supplier who are engaged in municipality for suppling material and doing contracting

  • Balance on Input Tax Credit as on 30.06.2017 as submitted in VAT Return for the quarter ending June 2017 and Excise Credit on Stock as on 30.06.2017 will be carried forward to GST through Tran-1 & 2, but will be adjusted with non-furnishing C & F Form since 01.04.2015 to 30.06.2017 within 30th September 2017. Please confirm.

    • Yes, for non-furnishing of declaration forms, adjustment needs to be done for differential amount i.e. rate charged in lieu of Statutory Forms, and actual VAT Rate applicable on the product/commodity. The differential rate payable on sales on which the forms are pending, should be reduced from balance of ITC as per last VAT Return and remaining balance will be your final eligible ITC to be carried forwarded as SGST Credit. For more details, please read How to Carry Forward Closing Balance of ITC from Earlier Regime to GST?

  • If we are not claiming any input credit on our closing stock , as it was payable by us, & subsequently paid, now there a is no input credit to be claim in this scenario also I have to show my stock details in GST TRAN-1 , Table No.7?

  • If my party send goods from Gujrat to me in maharashtra, our policy is that on security gate only we took sample of material sent by supplier , tested in our own lab ,if it is not according to our specifications it returns from our gate only, which document will require to sent that material back to Gujrat from According to GST Law?

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