FAQ on the GST in India

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Transition to GST

Can ITC from the previous tax regime be transferred to ITC under GST?

Under the Model GST Law, ITC from a previous tax regime can be passed as ITC under GST, if all the goods and services mentioned under the respective returns are declared while registering for GST.

How can ITC be moved into the GST system?

A taxpayer can move input tax credit into the GST system by submitting an electronic form (either TRAN-1 or TRAN-2) and an application with the following information:

  • Supplier name, serial number and date of issue of the document for which ITC is requested. 
  • Description, quantity and value of goods and services listed under the document.
  • Total amount of taxes and duty charged by supplier for the goods and services.
  • Date on which recipient issued the receipt for goods and services.

After the form and application are processed and approved, the applicable credit will be added to the taxpayer’s e-credit ledger under the GST portal.

What is the TRAN-1 form?

TRAN-1 is a form which is filled by registered taxpayers who have ITC on closing stocks and wish to claim it. 

What is the TRAN-2 form?

TRAN-2 is a form which is filled by taxpayers who have not registered under any tax regime prior to GST but are in possession of stock as of the 1st of July, 2017 for which they may or may not have records of taxes paid.

Can businesses transition from prior tax regimes to the composition scheme under GST?

Businesses are given the provision to transition from prior tax regimes to the composition scheme. To do this, they are required to pay a sum equivalent to the available input tax credit of the business. The amount of ITC is calculated based on the inputs, semi-finished goods and finished goods held in stock.

Can businesses transition from the composition scheme to a normal tax regime?

When businesses wish to transition to the normal tax regime from the composition scheme, they are allowed to take input tax credit. This credit will also be calculated based on the inputs, semi-finished and finished goods held in stock by the business.