As the GST date draws closer, retailers are worried about what to do with Stocks lying with them on 30th June 2017. Will they get credit for Excise Duty on these stocks? Also what steps are to be taken for being GST ready........

1. MIGRATION TO GST
By CA Piyali Parashari
25/6/2017

2. Business Categories on Transition
Date
Businesses not liable to
be registered under the
current law, but are
liable for registration
under GST
For Eg under current laws a
manufacturer had to
register when his
clearances exceeded ` 1.5
crores in a year. Under VAT
thresh hold turnover was
different in all states. In GST
the thresh hold limit is `
20 lakhs
Business which are
engaged in the
manufacture or
sale of exempted
goods or services
under current laws
and which are
becoming taxable
on migration to GST
First stage dealer or
a second stage
dealer or a
registered
importer.
The excise duty
paid by a VAT
dealer only is not
available for credit
to him as the 1st
stage and 2nd stage
dealer add these as
part of cost of
goods and do not
disclose them
separately in the
invoice.
CA Piyali Parashari26-06-2017

3. The BIG QUESTION?
CA Piyali Parashari
• Can I avail Input Tax credit on the stock held on
the last day prior to GST implementation ??
Ans: Yes, you CAN avail the ITC on (CENVAT, input
VAT, entry tax and Service Tax) held in the closing
stock of inputs (raw- materials), semi- finished
goods, and finished goods.
BUT there are certain conditions………
26-06-2017

4. How can a person be eligible?
CA Piyali Parashari
You can avail Input Tax credit held in your closing
stock if,
26-06-2017
3. The person is eligible for ITC under GST. A person is eligible for ITC if he is
a regular tax payer. A person registered under COMPOSITION SCHEME cannot
get ITC
2. The benefit of this ITC is passed on to the receiver in the form of reduced
prices. Currently duty is added to product cost and no credit is allowed. With
GST since ITC will be allowed cost base will reduce and hence final price to
consumer is reduced. GST is calculated on base prices always without adding
taxes.
1. Closing stock is in the form of raw materials, semi-finished goods, or
finished goods, and is held/ intended to be held for TAXABLE SUPPLIES

5. How can a person be eligible?
CA Piyali Parashari26-06-2017
4.In the absence of tax evidencing document, the credit will be allowed
as per table below
18% & 28%
60% CGST/SGST
30% IGST
5% & 12%
40% CGST/SGST
20% IGST
3.There are invoices or any other prescribed duty/tax paying
documents in respect of the closing stock of inputs (including semi-
finished goods and finished goods). 100 % input tax credit will be allowed
if there are invoices or any other document evidencing tax payment.

6. How can a person be eligible?
CA Piyali Parashari26-06-2017
6.The SUPPLIER OF SERVICES is not eligible for any benefit under these
provisions
5. The date of invoices or any other prescribed duty / tax paying
documents is within 12 months from the date of transitioning to GST.

7. Lets take examples…….
CA Piyali Parashari
• EXAMPLE 1
• Lucky Sweets is A REGISTERED EXCISE DEALER in chocolates. On 1st June,
2017, they purchased chocolates, and the details of transaction are given
below:
• Date Qty Rate / qty Total Value Vat @ 14.5% excise duty 12.5%
• 01-03-17 50 pcs ` 100/pc ` 5000 ` 815.6 ` 625
• Excise duty is added as part of cost and then VAT is calculated. This Excise duty
is not allowed as credit to a VAT dealer under current laws.
• However on migration to GST the Excise Duty on closing stock will also be
available as credit to a VAT dealer
• If out of the 50 pcs , 20 pcs are in stock on 30.6.2017 then Excise duty on the
same is 20/50 x 625 = ` 250. This entire amount is allowed as ITC if Invoice
showing excise duty payment is available with him and all the conditions as
discussed earlier are satisfied.
26-06-2017

8. Lets take examples…….
CA Piyali Parashari
• If on 15.7 2017, the 20pcs are sold and GST rate is 28%. The Invoice will be as
follows
• Selling price ` 2000 (assuming no profits)
• CSGT 14% 140
• SGST 14% 140
• Total 2240
• Now, let’s see how the GST is set-off against existing tax credits.
Overall, from the perspective of Lucky Sweets, the net tax credit is still positive.
26-06-2017
Since CGST is set-off
against excise credit,
therefore ` 250 will be set
off against ` 140 and still `
90 is available for further
set off
Since SGST is set-off
against VAT credit,
therefore ` 326.24 will be
used for set off against `
140 and still ` 186.24 is
available for set off.

9. Lets take examples…….
CA Piyali Parashari
EXAMPLE 2
• VAT Dealers, who have purchased excisable goods, from wholesalers – who
pass on the excise component as cost – will be eligible to get only part of the
credit, when they sell the goods post GST –
• 60% in case the GST rate is 18% or more, and 40% in case the GST rate is 12%
or less.
• Here the EXCISE HAS BEEN PASSED ON AS COST, AND NOT AS EXCISE
CHARGED IN INVOICE
• Let us consider a dealer Arjun Enterprises buying a product from Goodluck
Wholesalers on 15th of June 2017. The invoice will look as follows –
• Cost = ` 5625.00 (because the goods have suffered excise, absorbed into cost)
• VAT @ 14.5% = ` 815.625
• Total = ` 6440.625
• Now, the product is lying with him as closing stock when GST comes into
effect on 1st July, 2017. Assuming that product falls under the 28% GST rate,
since Arjun Enterprises does not have an invoice for the excise, he will not
get 100% credit, but 60% of the CGST paid as credit.
26-06-2017

10. Lets take examples…….
CA Piyali Parashari
EXAMPLE 2 contd
• On the 15th of July 2017, Arjun Enterprises makes a sale to Ratna Agencies, at
an assumed selling price of ` 5000. It has to be borne in mind, that these
goods have suffered excise worth ` 625. The invoice will look as follows –
• Selling Price ` 5625 (assuming no profits)
• CGST @ 14% 787.5
• SGST @ 14% 787.5
• Total Price ` 7200
• Since Arjun Enterprises does not have an invoice with an excise component,
and the rate of GST is 28%, he will be able to claim only 60% of the CGST he is
liable to pay, as tax credit.
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11. Lets take examples…….
CA Piyali Parashari26-06-2017
• They had borne the cost of excise worth ` 625. So equating that with the
credit of ` 472.5 available, we can see that, the effective percentage of
CGST credit available in reality, is = 472.5 /625 *100 = 75.6%.
• They had borne the cost of VAT ` 815.625. So equating that with the credit
of ` 472.5 available, we can see that, the effective percentage of SGST
credit available in reality, is only = 472.5 /815.625 *100 = 57.9%.
• Products Rated ITC Credit Effective Credit
<18% 40% <30%
28% 60% >75%
Hence, CGST credit
available = 60% of CGST
paid = 60% * 787.5= 472.5
SGST Credit available
=60% of SGST paid =60% *
787.5= 472.5

12. Way Forward- Credit Transfer Document
CA Piyali Parashari26-06-2017
CTD is serially numbered and contains the Central Excise registration number
records of clearance and duty payment maintained by the manufacturer
goods are valued at INR 25000 and higher, and bears the brand name of the
manufacturer identifiable as a distinct number. For e.g. – chassis / engine number of a
car.
to a registered dealer who is not registered under excise, but is liable to pay CGST under
GST regime.
By an excise registered manufacturer may issue a Credit Transfer Document evidencing
the payment of excise duty
Issue of a Credit Transfer Document

13. WAY FORWARD
CA Piyali Parashari26-06-2017
The dealer availing credit on the basis of CTD, at the time of making supply of such
goods, mentions the corresponding CTD number in the invoice issued by him
CTD is not issued in favour of a dealer to whom invoice was issued for the same goods
before the appointed date.
Copies of all invoices relating to buying and selling from manufacturer to the dealer,
through intermediate dealers, is maintained by the dealer availing credit using CTDs.
CTD is issued within 30 days of the appointed date at which GST comes into force
The manufacturer is satisfied that the dealer is in possession of the goods

14. MIGRATION STEPS
CA Piyali Parashari26-06-2017
All
taxpayers
Enrollment
Provisional
Registration
(PR)
Final
Registration
PR may be
cancelled on
application
registered under
existing laws
Must enroll
under GST
Get certificate
on provisional
basis
Submit
documents
STEP 1: GST REGISTRATION
Every taxpayer registered under Excise/VAT/service tax will enroll on the
Common Portal.
On enrolment, he will get a provisional certificate of registration which will
have the GSTIN.
Provisional
Regn maybe
cancelled later

15. MIGRATION STEPS
CA Piyali Parashari26-06-2017
STEP 2: NEW REGISTRTATIONS UNDER GST
Manufacturers with a
turnover less than `. 1.5
crore (threshold under
GST has been reduced
to 20 lakhs)
Any trader with
turnover below ` 20
lakhs and are
selling online
Voluntary
registrations are
allowed
Any trader/ service
provider having
regular inter-state
sales
Any importer/
exporter of goods/
services
A service provider
whose taxable
services exceeds `
20 lakhs in the
financial year
Commission agent or
broker has to compulsorily
register irrespective of
threshold limit

16. MIGRATION STEPS
CA Piyali Parashari26-06-2017
STEP 3: CARRY FORWARD OF ITC AFTER MIGRATION TO GST
CENVAT Credit and VAT credit in stock will be available to be carried forward in GST.
• Carry
forward
• Unless all
returns under
existing laws for
6 months before
have been filed
• No Tax
invoices
only proof
of purchase
• If Excise/ VAT
invoice
available
Carry
forward
100% ITC
Carry forward
60% ITC on
Goods having
> 18% GST
and 40% ITC
on others
ITC will be
carried
forward as
per LAST
Return
No Credit

17. MIGRATION STEPS
CA Piyali Parashari26-06-2017
STEP 3: CARRY FORWARD OF ITC AFTER MIGRATION TO GST
• July 1, 2017 is the appointed day for the GST rollout.
• All business owners must make sure that they have a complete list of all
the stock as on June 30, 2017 and claim input tax credit while filing
returns for the period ending June 30, 2017.
• It will be eligible for input tax credit under GST only if all such goods and
services mentioned in the return are eligible for such credit under the
new GST law.
• This should be done within 60 days from the appointed day (in this case,
July 1, 2017).

18. MIGRATION STEPS
CA Piyali Parashari26-06-2017
STEP 4: TREATMENT OF GOODS RETURNED
• Seller will be
eligible for
refund of VAT
paid
• No GST payable
if goods are
returned within
6 months of GST
implementation
• It is a deemed
supply, as goods
were sold before
GST and hence
buyer would
claim ITC earlier
or c
• Can claim ITC
• Record in books
within 30 days
from GST
implementation
ITC for
goods in
transit
received
after GST
GST on goods
returned by
registered
person
GST on
goods
returned by
unregistere
d person
GST on
goods
sent on
approval
basis

19. MIGRATION STEPS
CA Piyali Parashari26-06-2017
a) Removal: must be max 6 months before GST
(b) Return: Within 6 months from the GST implementation date
If the goods are not returned within time, the supplier will not be eligible for
the tax refund.
Same provisions are applicable for excise.
STEP 4: TREATMENT OF GOODS RETURNED
STEP 5: Taxability of goods/services supplied after GST
This can be understood through the point of taxation rules /Time of supply
If point of taxation of goods/services is before the GST implementation then
it will be taxed under earlier law. GST will not be applicable.
Any portion of any supply whose point of taxation is after GST
implementation will be taxed under GST.
.

20. MIGRATION STEPS
CA Piyali Parashari26-06-2017
Composition scheme is available for persons with turnover upto `75 lakhs.
STEP 6: COMPOSITION SCHEME
Turnover
less than
` 75
lakhs
No
inter
state
sale of
goods
Not a
service
provider
Not
selling
online
Then
register
for
Compositi
on
Scheme
Pay
nominal
tax
Not allowed
to
Collect GST/
claim ITC
Manufacturers 1%,
traders 0.5%,
restaurants 2.5%

21. THANK YOU
CA Piyali Parashari26-06-2017
For queries contact
CA Piyali Parashari