90 Days Input Tax Credit Carry Forward Allowed

Giving significant relief to car and consumer durables manufacturers, the Finance Ministry on Wednesday, 7 June released the final rules for transition provisions under the Goods and Services Tax (GST), allowing them to carry forward input tax credit for 90 days, against the earlier provision of 60 days.

The new rules by the Central Board of Excise and Customs (CBEC) also allow dealers and makers of such goods to claim as much as 60 per cent of the input tax credit on stocks lying unsold up to June 30. Higher credit will be allowed for goods that attract GST at 18 per cent or more. For other goods, credit of 40 per cent will be available.

In the case of goods where Integrated GST (IGST) is paid, a credit of 30 per cent will be given for those taxed at 18 per cent or above and 20 per cent for items taxed at lower rates.

Credit transfer draft

Additionally, the CBEC released the draft credit transfer document to pass on full credit of excise duty to a dealer for unsold stocks before the end of the month. However, this facility will be available only for high-end goods priced over Rs. 25,000 that “are identifiable as a distinct number, such as chassis or engine number of a car”. The document has to be issued within 30 days of July 1, the planned GST rollout date.

The facility will, however, be exclusive of the transition provision, meaning, those using it will not be eligible to claim input tax credit on unsold goods. (Trade Reacts: Facility available only to Manufacturers, Importers not covered.)

The CBEC has also warned of a severe penalty and using “provisions for recovery of credit, interest and penalty under the CENVAT Credit Rules, 2004” against manufacturers who take tax credit twice on the same goods. Dealers and manufacturers will be expected to submit an online declaration within 60 days on the GSTN.