GST Law has provided Transitional provisions in respect of Input Tax Credits where dealer was paying taxes at a fixed rate or a fixed amount as a Central tax and /or State VAT/ Sales Tax (i.e. he might be a Composition dealer in existing tax laws and becomes a regular dealer in GST laws). Let us discuss these provisions as below:
A registered person under GST, who was either paying tax at a fixed rate or paying a fixed amount in lieu of the tax payable under the existing law, shall be entitled to take, in his electronic credit ledger, credit of eligible duties/VAT in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day (i.e. 01.07.2017) subject to the following conditions:
- such inputs or goods are used or intended to be used for making taxable supplies under this Act;
- the said registered person is not paying tax under section 10 (i.e. not opt to become a Composition dealer);
- the said registered person is eligible for input tax credit on such inputs under this Act;
- the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty or State VAT under the existing law in respect of inputs; and
- such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day.