Transitional provisions for Unutilized balance of CENVAT Credits

Transitional Provisions in case of Unutilized balance of CENVAT Credit (of Excise Duty) lying in books as on 30.06.2017 (Section 140(1) under CGST Act)

A registered person under GST (other than those who opt to pay GST under Composition Levy) shall be entitled to claim the amount of CENVAT credit carried forward in the return (filed under existing law relating to the period ending on 30 June 2017) as INPUT TAX CREDITS UNDER GST.

It means cenvat credits carried forward under Service Tax, Krishi Kalyan Cess, Excise Duty and other duties of excise will be allowed to carry as Input Tax Credit under Central GST.

However, a registered person shall not be allowed to take credit in the following circumstances:

  1. Where the said amount of credit is not admissible as Input tax credit under this act; or
  2. Where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date (i.e.01 July 2017); or
  3. Where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government.

Even if  CENVAT Credit is allowed under Excise or Service Tax provisions, it will not be automatically allowed under GST. Every dealer have to prepare some notes on CENVAT Credits carried in the tax returns for the period ending 30.06.2017. CENVAT Credits not allowed under GST should be claimed first in Excise/Service Tax returns. Hence, remaining balance of credits, if any, would be of those credits which is allowed to carry forward in GST.

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