What is GST TRAN-1?

Generally, businesses that have a carry-over Cenvat credit and Input VAT credit are permitted to hold forward the eligible Cenvat/Input Tax Credit (ITC) from earlier taxation regulations to the Goods and Services Tax (GST) regime. The Cenvat credit including Service Tax is going to be carried forward as Central Goods and Services Tax (CGST) Input decrease and VAT including entry tax are going to be available as State Goods and Services Tax (SGST) Input decrease. Also, in certain business circumstances, the input decrease on closing stock persisted 30th June, is going to be allowed to hold forward to the GST regime.

Form GST TRAN-1 may be a form to be filed by the registered taxable person to say transitional input tax credit (ITC). Considering the varied business circumstances during which the ITC is allowed, the shape GST TRAN-1 is categorised into 12 tables. The taxpayers are required to fill the relevant tables of Form GST TRAN-1 as applicable to their business.

Out of the 12 tables in Form GST TRAN-1, the small print related to:

• Amount of decrease carried forward within the return filed under previous law
• Credit not claimed on capital goods
• Tax credit on closing stock would be relevant for many of the companies

Who are Eligible for Filing GST TRAN-1?

In order to be eligible to carry forward the credit, there are certain circumstances which businesses are required to adhere to. GST TRAN-1 is basically filed by taxpayers who are eligible for claiming credit on tax that is already paid prior to the implementation of GST. This credit may be in the form of Value Added Tax (VAT), excise duty, service tax etc.

Generally, there are two types of transitional credit – the primary being the closing balance of CENVAT and Input VAT credit from last return to GST. The second being decrease allowed on closing stock persisted 30th June, in certain business circumstances.

Thus, with regard to this, we have listed down a few companies who are required to file Form GST TRAN-1.

• Businesses that have registered under an earlier regime (Excise, VAT, or Service Tax) having a closing balance of Input decrease within the June month’s return.

• Businesses registered only under VAT but have closing stock as on 30th June, which has suffered Excise duty.

• Businesses who haven’t registered under any of the sooner tax regime but registered under GST, and have the closing stock on which the varied tax are paid.

• Businesses who are dealing in the manufacture/sale of exempted goods or provisions of exempted service but the said goods or services are taxable under GST and have closing stock as of 30th June, on which the varied tax has been paid.

• Businesses who had opted for composition scheme in earlier regime and opted to be regular dealers, are allowed to say the decrease on closing stock persisted 30th June.

• Businesses not having availed ITC on capital goods are allowed to claim the non-availed portion as Transitional Input decrease.

• A principal manufacturer who has removed the products for paperwork process under the sooner regime but those goods are to be returned in GST. the small print of such goods are required to be provided in Form GST TRAN-1. Similarly, employment worker is additionally required to file Form GST TRAN-1.

Mentioned above are the common cases during which the companies are required to File Form GST TRAN-1. However, this form filing is not mandatory, rather it is only applicable as long as you would like to claim the transitional credit.

What is the Due Date for Filing Form GST TRAN-1?

The Form GST TRAN-1 must be filed within 90 days from the date of implementation of GST. However, with GST committee’s decision to permit the transitional credit in discharging July’stax liabilities, there are 2 sets of maturity to file Form GST TRAN-1.

(a) Due Date: 28^th August – Businesses opting to avail transitional credit to discharge the liabilities of July.

(b) Due Date: 31^st October – Businesses planning to not avail transitional credit to discharge the liabilities for the month of July.

Step-by-Step Guide on How To File GST TRAN-1 Online on GST Portal

The following is a step-by-step guide on how to file Form GST TRAN-1 online on the GST portal.

Steps:

1. Open a web browser on your desktop/laptop/tablet/smartphone and visit the official GST portal, which is https://gst.gov.in.

2. On the main menu, go to the Services tab, then click Returns and click again on Transition Forms. You will be redirected to the page where you can view all with regard to Form GST TRAN-1.

3. Select either Yes or No option from the drop-down list box that is based upon whether you have filed a return for the past 6 months.

Note: If you have already submitted Form TRAN-1 previously, then you will see the Reopen button on the screen, which will allow you to add or modify the previously filed data. However, you can modify and submit the data only once.

4. Sections 5(a), (b) and (c) – Amount of tax credit carried forward:

This section contains details of ITC that are to be carried forward from the pre-GST regime to current regime. Here, you must provide details in all the required fields, then save it. Also, note that errors (if any) are going to be reflected and must be rectified.

5. Sections 6(a) and (b) – Details of capital goods for which non-availed credit has not yet been carried forward:

The details of capital goods for which non-availed ITC is to be carried forward will be displayed here. Under each tab, invoice-wise details needs to be entered separately. In case there are multiple entries, then you can upload JSON file.

6. Sections 7(a), (b), (c) and (d) – Details of the inputs held in stock:

It is required that the summary of the following must be mentioned in this section:

• Inputs held in stock as on 1st July.
• Input contained in semi-finished goods or finished goods held in stock as on 1st July.

7: Section 8 – Details of transfer of CENVAT credit for a registered person having centralized registration:

In this section, a summary of ITC to be transferred as CGST credit to your current GSTIN must be mentioned. The PAN details of your current GSTIN and the PAN mentioned in the previous tax regime should match accordingly. The amount mentioned will add up to your electronic credit ledger.

8: Sections 9(a) and (b) – Details of goods sent to job-worker and held in his stock on behalf of principal under section 141:

You must provide a detailed summary of all the goods sent to the job-worker and hold in stock by the job-worker on behalf of a principal by the principal and agent.

This section contains two tabs, namely:

• Details of Goods Sent as Principal
• Details of Goods Held in Stock

Upon entering the details under each tab, now click on the Save button to continue. Also, any errors (if found) will reflect after saving the details. The errors must then be rectified in order to proceed further.

9: Sections 10(a) and (b) – Details of goods held in stock as agent on behalf of the principal under section 142:

You must provide a detailed summary of goods that are held in stock as an agent on behalf of the principal under Section 142(14) of the SGST Act and the admissible credit to the agents on such stock.

This section contains two tabs, namely:

• Goods in Stock (Held on behalf of principal)
• Goods in Stock (Held by Agent)

10: Section 11 – Details of credit availed in terms of Section 142(11(c)):

You must provide a detailed summary of tax paid under the pre-GST regime and the permissible credit under GST on supplies that were taxable under VAT and Service Tax regime and also taxable in GST regime.

11: Section 12 – Details of goods sent on approval basis six months prior to the appointed day (section 142(12)):

You must provide a detailed summary of goods that were sent on approval basis after 1st January (i.e. before 1st July), but returned after 1st July in the same year.

12. Submit Form TRAN-1:

Now, it’s time to submit your Form GST TRAN-1 by clicking the Submit button. Click the Submit button to freeze the details.

Please note that the data once frozen cannot be modified.

13. A warning message may be displayed on the screen. Click on Proceed button to proceed.

The status of the Form TRAN-1 on the GST portal will be automatically changed from ‘Not filed’ to ‘Submitted’.

Now, upon successful submission of Form TRAN-1, the transition credit claimed in the form will be added in the balance of Electronic Credit Ledger. However, it can be utilised only after filing of Form TRAN-1.

14. File TRAN-1 with a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC):

You must provide the authorized signatory detail and then click on either of the following options available:

• Select File with DSC, click to proceed on the warning screen, then select the required certificate and click on the Sign

• Select File with EVC, enter OTP sent via e-mail and registered mobile number of the authorised signatory who is registered on the GST portal, then click the Verify

The success message will be displayed and an acknowledgment will be generated. Click the OK button.

Now, you will see that the status of the TRAN-1 is changed from “Submitted” to “Filed”.

Note: The credit that is claimed in TRAN-1 will get credited to the taxpayer’s credit ledger on the successful filing of the form. The ITC posted in Electronic Credit Ledger can be used to offset liabilities of GSTR-3B (for the month of July) or any other subsequent returns.