How to File GST TRAN 1 Form
As per the provisions of the GST Council, businesses are allowed to carry forward the eligible CENVAT / VAT input tax credit (ITC) from the earlier regime to GST. The CENVAT credit including Excise & Service Tax will be carried forward as CGST input tax credit and the VAT credit including entry tax will be available as SGST input tax credit. And, also in certain businesses circumstances, input tax credit on closing stock held on 30th June, 2017, will be allowed to carry forward to GST regime.
However, to be eligible to carry forward the credit, businesses are required to meet certain conditions. On meeting those conditions, businesses can claim transitional input tax credit by filling GST TRAN 1. It is thus crucial for businesses to know how to file TRAN 1.
What is Form GST TRAN 1?
Form GST TRAN 1 is a form to be filed by the registered taxable person to claim transitional ITC. Considering the various business circumstances in which the ITC is allowed, the Form GST TRAN 1 is categorized into 12 tables. The tax payers 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 details related to the following will be relevant for most businesses:
- Amount of tax credit carried forward in the return filed under previous law
- Unavailed credit on capital goods
- Tax credit on closing stock
What is the due date to file Form GST TRAN 1?
The Form GST TRAN 1 needs to be filed within 90 days from the date of implementation of GST. However, with the GST committee’s decision to allow the transitional credit in discharging July’s tax liabilities, there are 2 sets of due dates to file TRAN 1:
- Businesses opting to avail transitional credit to discharge the tax liability of July 2017 - 28th August, 2017
- Businesses planning not to avail transitional credit to discharge the tax liability for the month of July 2017 - 31st October, 2017
Who are required to file Form GST TRAN 1?
Broadly, there are 2 types of transitional credits. The first being the closing balance of CENVAT, and input VAT credit from the last return to GST. The second being tax credit allowed on closing stock held on 30th June 2017, in certain business circumstances. Based on this, we are listing down the businesses who are required to file Form GST TRAN 1:
- Businesses that have registered under earlier regime (Excise, VAT or Service Tax) having closing balance of input tax credit in the June month’s return
- Businesses registered only under VAT but have closing stock as on 30th June, 2017, which has suffered Excise duty
- Businesses who have not registered under any of the earlier tax regime but registered under GST, and have the closing stock on which the various tax have been paid
- Businesses engaged in 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 on 30th June, 2017, on which the various tax has been paid
- Businesses who had opted for composition scheme in earlier regime and opted to be regular dealers, are allowed to claim the tax credit on closing stock held on 30th June, 2017
- Businesses having unavailed ITC on capital goods are allowed to claim the unavailed portion as Transitional input tax credit
- A principal manufacturer who has removed the goods for job work process under the earlier regime but those goods are to be returned in GST. The details of such goods are required to be provided in Form GST TRAN 1. Similarly, a job worker is also required to file Form GST TRAN 1.
The above are the common scenarios in which the businesses are required to file Form GST TRAN 1. This form is not mandatory. It is applicable only if one wishes to claim the transitional credit.
How to file TRAN 1 in GST?
To file GST TRAN 1, one needs to login to GST Portal -> Services -> Returns -> Transition Forms -> Form GST TRAN 1
Form GST TRAN 1 contains 12 tables and one is required to capture the details only in the relevant table as applicable to the business. To capture the details, one needs to enter the relevant table and click 'Add details'.
Table 5: Carry Forwarding Closing Balance of CENVAT Credit and Input VAT Credit
One of the most common scenarios applicable for most businesses is ‘Claiming closing balance of CENVAT and Input VAT credit available’ as on 30th June, 2017. This scenario is applicable to registered businesses who have closing balance of input tax credit and if they meet the conditions for claiming this credit, CENVAT credit will be carried forwarded as CGST and input VAT credit will be carried forwarded as SGST Credit.
Businesses claiming the above mentioned transitional credit need to capture the details in Table 5 of Form GST TRAN 1. The Table 5 will be available only when returns for last 6 months are filed and the option is set to ‘Yes’. Table 5 in Form GST TRAN 1 is further categorized into:
- Table 5(a) – Capture the amount of CENVAT including Service Tax carried from earlier regime
- Table 5(b) - Details of statutory forms received for which credit is being carried forward
- Table 5(c) – Details of VAT Credit carried forward+1
Table 6: Transitional ITC on Capital Goods
In the earlier regime of indirect tax, there were various conditions and restrictions for availing ITC on capital goods. For example, under Central Excise, a manufacturer can avail ITC up to 50% in the current year and remaining in the subsequent year. Similarly, under VAT, each state had different provisions for claiming input VAT on capital goods. As a result, on the date of transitioning to GST, businesses who have unavailed input tax credit on capital goods will be allowed to carry forward the unavailed portion as transitional ITC to GST.
To be eligible to carry forward such credit, the businesses need to meet the following conditions:
- CENVAT and input VAT are allowed as input tax credit in earlier regime
- It is admissible as input tax credit under GST
Once one is eligible, the details of unavailed tax credit on capital goods needs to be captured in Table 6 of Form GST TRAN 1. Table 6 in Form GST TRAN 1 is further categorized into:
- Table 6(a)– Details of unavailed CENVAT credit of capital goods
- Table 6(b) – Details of input VAT credit of capital goods
Table 7: Claiming ITC on closing stock held on 30th June 2017
In the earlier regime, certain duties and taxes under specific business circumstances were not allowed to avail ITC. As a result, those taxes were treated as expenses and added to the product cost. On the date of transition to GST , most of the businesses will have closing stock which has already suffered taxes. In order to eliminate the cascading effect of these taxes, GST allows the businesses to avail the tax credit of duties and taxes paid on closing stock held on 30th June, 2017. The closing stock refers to one’s inputs (raw materials) and also inputs which are contained in the semi-finished goods and finished goods.
The details of tax credit on closing stock held on 30th June, 2017, needs to be captured in Table 7 of Form GST TRAN 1. This table is categorized into 4 sections,
- Table 7(a) - For claiming central taxes paid in the earlier regime such as Basic Excise Duty, CVD, and SAD etc.
- Table 7(b) - For claiming taxes paid in the earlier regime but goods/services are received in GST regime
- Table 7(c) - For claiming VAT Including Entry Tax on closing stock having supported by invoice/document evidencing tax payment.
- Table 7(d) - For claiming the credit of VAT Including Entry Tax without having supported invoice/document evidencing tax payment.
Table 8: CENVAT Credit Transferred to Units
In the erstwhile regime of Service Tax, centralized registration was issued to Service Providers and the same registration was applicable for Pan India operations. Similarly, the concept of centralized registration was available for certain notified scenarios under Central Excise.
In GST, businesses are required to be registered in every State from where outward supplies are made. Now, these businesses who had centralized registration under the earlier regime for all India operations are required to obtain multiple state-wise registrations under same PAN. In such a case, the CENVAT credit of the centralized unit is allowed to be transferred to any of the units registered in other States, under GST with the same PAN. In such scenarios, Table 8 of GST TRAN 1 is applicable and details of the CENVAT credit transferred need to be furnished.
Format of GST TRAN 1
One has to adhere to the right GST TRAN 1 format, in order to effectively transition ITC into the GST era. The facility to download TRAN 1 is available at the GST portal. To download GST TRAN 1 format, click here