Accumulated credit to GST means


What is Accumulated credit to GST


Accumulated credit to GST


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There seems to be a doubt in assesses who are registered under central excise and service tax, whether the unutilized credit in excise and service tax returns can be C/F into GST and used to pay the output tax liability under GST. The paper writer makes clear that under transition provisions of GST law, the accumulated CENVAT credit under CENVAT credit rules, can be carried forward by manufacturer/service provider into electronic credit ledger and set off against future liability of tax paid on taxable outward supplies made under GST.

Accumulated credit means credit availed on inputs, input services and capital goods to extent attributed to dutiable goods or taxable services/exported goods+ exported services, availed in excise/service tax returns and not utilized but C/F as closing balance in return filed in pre-GST. 

Such accumulated credit of central taxes, namely excise duty /CVD + eligible SAD [SAD credit-service provider cannot avail]paid on inputs and on capital goods+ service tax paid on input services can be c/f as Central tax(CGST). Similarly credit of input tax under VAT can be C/F as State tax (SGST). In this article, the relevance of carrying forward of unutilized CENVAT credit into Central GST has been set out.


Transition provision regarding C/F of closing CENVAT credit to GST


A registered person, [other than a person opting composition] shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit carried forward in the last return relating to the period ending with the day preceding the GST implementation date, furnished by him under the existing law.

Such credit shall not be permitted in the following circumstances:-

  1. Where the credit is not admissible as input tax credit under CGST; or
  2. Where all the returns required under the existing law were not filed for 6 months immediately preceding the date of GST implementation; or
  3. Where the credit relates to goods manufactured and cleared under exemption notifications notified by the Government. A registered person [other than person opting composition], can also take, in his electronic credit ledger, credit of the un availed CENVAT credit in respect of capital goods, not carried forward in a return, furnished under the existing law by him, for the period ending with the day immediately preceding the appointed day in such manner as may be prescribed. Un availed credit means the amount that remains after deducting CENVAT credit already availed in respect of capital goods by the taxable person under the existing law from total amount of CENVAT credit to which the said person was entitled in respect of the said capital goods under the existing law. Credit on capital goods shall not be allowed unless the credit was admissible as CENVAT credit under the existing law and is also admissible as input tax credit under this Act.

Relevance of complete availment of CENVAT credit

         i.            W.e.f 1.3.2015, the credit on inputs and input services to be availed within 1 year from invoice date. No such restriction on capital goods such as plant and machinery, electrical and electronic appliances. However depreciation under IT Act cannot be claimed on the duty paid portion on which credit is claimed as it is double benefit which is not permitted under law.

       ii.            This is one of the last chances for the manufacturer/service provider to avail all missed out credit, including credit of service tax paid under reverse charge/joint charge.

Steps to be taken to ensure optimal availment of credit under present CENVAT provisions in ST-3 to be filed for Oct 2016 to March 2017:

For VAT assesses reconciliation of the credit eligible and that availed can be examined. The time limit for credit maybe confirmed in the State VAT law. Credit availed in the next month return. b. For central excise assesses the inputs credit maybe reconciled and if anything missed availed within the limit of 1 years provided. Credit can be availed in the next return. c. For assesses under ST, avail credit from Oct 2015 onwards till March 2017 on eligible inputs, input services in ST-3 return which would be filed for Oct 2016 to March 2017. d. Missed out credit to be availed in ST-3 return filed under Service tax for period from Oct 2016 to March 2017. Due date 25th April 2017.


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