Transitional Provisions under Karnataka GST Act 2017 (KAR SGST Act)

We have entered into the GST regime and we have to transit from the old law to the new law i.e. GST law by applying the transitional provisions. Basically the transition provisions under the CGST law and SGST law is similar except few changes. In the following paragraphs the old regime denotes the Karnataka VAT Act 2003. The following synopsis is covered towards transitional provisions under Karnataka GST Act 2017.

Transitional Provisions under Karnataka GST Act 2017

Transitional Provisions under Karnataka GST Act 2017

  • The Regular person is eligible to carry forward the VAT credit in his June 2017 return. They shall not be allowed if the credit is not admissible as input tax credit under GST Act. He shall not be allowed transitional credit if he has not furnished the returns for the period from Jan 2017 to June 2017. The VAT credit as carry forward should be disclosed in transitional form by end of September 2017 and accordingly it will be credited to Electronic credit ledger. Till that time the VAT credit cannot be set off against the July 2017 or August 2017 liability if any.
  • If the statutory forms are not received within three months from 1st July 2017 then in such instance the credit pertaining to CST sales/ Transfers will not be credited to Electronic credit ledger.
  • The Regular person is eligible to take input tax credit on capital goods to the extent not availed in the old regime subject to the condition that such input tax credit on capital goods should be eligible under the old law and GST law.
  • The person who was not liable to be registered under the old law, or who was dealing in exempted goods or who was dealing tax free goods is eligible to take input tax credit on stock of inputs, inputs in semifinished goods and finished goods and should apply in Transitional form. To avail the credit, it should be eligible credit under the GST law and such inputs/goods should be used for making taxable supplies. Such invoices should pertain to not earlier than twelve months (Not prior to 1st July 2016).
  • The registered person who was engaged in sale of taxable goods as well as exempted/tax free goods under the old law but which are liable to tax under GST Act shall be entitled to take credit as carried forward in return and pertaining to exempted goods/tax free goods the credit shall be as per above immediate Para).
  • The registered person shall be entitled to take credit of VAT in respect of goods received after 1st July 2017 but the tax in respect of which has been paid by the supplier under the old law subject to the condition that the recipient records the invoice in his books of accounts by 3oth July 2017.
  • The Composition dealer is entitled to take credit of inputs held in stock and inputs contained in semifinished or finished goods subject to the condition that such inputs or goods are used for making taxable supplies and has not applied for composition scheme under the GST Act. Such credits should be eligible credits under the GST law and the registered person is in possession of invoice or other prescribed documents evidencing payment of tax under the existing law in respect of inputs and such invoices were not issued earlier than twelve months (Not prior to 1st July 2016)
  • Where any inputs received are dispatched after being partially processed to a job worker for further processing and if such inputs are returned by 31st December 2017 no tax shall be payable if such inputs after completion of the job work or otherwise, are returned to the said place within six months from the appointed day. If not received within six months then the input tax credit availed shall be reversed accordingly. The condition for not paying the tax is that person dispatching the goods and the job worker declares the details of the inputs or goods held in stock.
  • Where any goods are sold and tax is paid under old law and if such goods are returned within six months from 01/07/2017 by the registered person then such transaction shall be deemed to be supply. And if such goods are returned by unregistered person, then the registered person shall be entitled for refund of the tax paid under the old law.
  • Where there is Increase in the prices of the contract which are entered prior to July 2017 then the supplier should issue the debit note/ Supplementary Invoice and where there is decrease in the prices of the contract which are entered prior to July 2017 then the supplier should issue the Credit Note. Such Credit Note/Debit Note should be issued within thirty days from the price revision. The issue of Credit note is permissible subject to the condition that the recipient reduces his input tax credit corresponding to such reduction of tax liability.
  • The refund claimed filed towards input tax credit, tax, interest or any other amount under old law shall be disposed of in accordance with the old law. In case if the refund claim is rejected then it shall be lapsed. Such amount shall not be carried forward as transitional credit.
  • The refund claim filed for the tax paid under the old law for the goods exported shall be disposed of under the old law. In case if the refund claim is rejected then it shall be lapsed. Such amount shall not be carried forward as transitional credit.
  • The amount of input tax credit reversed under the old law like under Special rebating scheme (Section 14 of KVAT Act), such credit shall not be admissible as transitional credit under this Act.
  • Every proceedings relating to appeal. revision, review or reference relating to claim for input tax credit initiated under existing law shall be disposed in accordance with existing law and if it is found admissible then it shall be refunded in cash and in case it is rejected then it shall not be admissible as input tax credit/ transitional credit under this Act.
  • Every proceedings relating to appeal, revision, review or reference relating to claim for input tax credit initiated under existing law shall be disposed in accordance with old law and if it is found admissible then it shall be refunded in cash and in case it is rejected then it shall not be admissible as input tax credit/ transitional credit under this Act.
  • Every proceedings relating to appeal, revision, review or reference relating to recovery of input tax credit initiated under existing law shall be disposed in accordance with old law and if it is found recoverable then it shall be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act.
  • Every proceedings relating to appeal, revision, review or reference relating to any output tax liability initiated shall be disposed in accordance with old law and if any amount is found recoverable then it shall be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act.
  • Every proceedings relating to appeal, revision, review or reference relating to any output tax liability initiated shall be disposed in accordance with old law and if any amount is found admissible then it shall be refunded in cash in accordance with the provisions of old law.
  • Where in pursuance of an assessment or adjudication proceedings instituted under the old law and any amount of tax, interest, fine or penalty becomes recoverable from the person then it shall be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act.
  • Where in pursuance of an assessment or adjudication proceedings instituted under the old law and any amount of tax, interest, fine or penalty becomes refundable to the taxable person then it shall be refunded in cash under the old law.
  • Where any returns are revised after July 2017 for the returns filed under the old law and in pursuant to such revision if any amount is found to be recoverable or any amount of input tax credit is found to be inadmissible then the same shall be recovered as an arrear of tax under GST Act and the amount so recovered shall not be admissible as input tax credit under this Act.
  • Where any return, furnished under the existing law, is revised after the appointed day but within the time limit specified for such revision under the existing law and if, pursuant to such revision, any amount is found to be refundable or input tax credit is found to be admissible to any taxable person, the same shall be refunded to him in cash under the existing law, and the amount rejected, if any shall not be admissible as input tax credit under this Act.
  • No tax shall be payable on goods under GST Act to the extent tax was leviable on the said goods under the KVAT Act 2003
  • No tax shall be payable on goods under GST Act to the extent tax was leviable on the said services under the Finance Act 1994
  • Where tax has been paid on any supply under KVAT Act and Finance Act like works contract, hotelier contract then tax shall be leviable under GST Act to the extent of supplies made under the GST Act in such manner as may be prescribed.
  • Where a supplier has made any sale of goods in respect of which tax was required to be deducted at source under the KVAT Act 2003 has also issued an invoice for the same before 1st July 2017 then no deduction of tax at source under section 51 shall be made by the deductor under the said section where payment to the said supplier is made on or after 1st July 2017.
  • Where any goods sent on approval basis, not earlier than 1st January 2017 and are rejected or not approved by the buyer and returned to the seller after 1st July 2017 no tax shall be payable thereon if such goods are returned within 31st December 2017. If the goods are returned after 31st December 2017 then they are treated as supply and tax shall be payable.
  • Where any goods or capital goods belonging to the principal are lying at the premises of the agent on 1st July 2017, the agent shall be entitled to take credit of the tax paid on such goods or capital goods subject to fulfillment of the following conditions that the agent is a registered taxable person under this Act and both the principal and the agent declare the details of stock of goods or capital goods lying with such agent on the day immediately preceding 1st July 2017, the invoices for such goods or capital goods had been issued not earlier than 1st July 2016 and the principal has either reversed or not availed the input tax credit in respect of such goods or capital goods or having availed of such credit, has reversed the said credit, to the extent availed of by him. (This provision is only in SGST law and not in CGST law).

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