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 DutyDetailsType 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 by 31st October, 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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