Filing for Returns- GST Transition Form 1(TRAN 1) and GSTR-3B

Filing for Returns- GST Transition Form 1(TRAN 1) and GSTR-3B

Goods and Service Tax combine multiple taxes into one so that tax payers are required to pay a single tax. However, to guarantee a smooth transition of several businesses into GST format and adapt them, it is necessary to have several rules. On June 3, 2017, the GST Council settled upon a few rules that will be implemented, namely as GST Return Rules and the GST Transition Rules. The businesses which were registered under GST were apprehensive about Input Tax Credit. It was a matter of concern for businessmen to claim Input Tax Credit, as according to new rules closing stock was set to be 30th June 2017. Registered businesses were required to file the Forms TRAN-1 and TRAN-2. This would enable them to claim ITC on the stock as maintained by the tax paid before the introduction of GST. As a result, it is important to have a brief idea on these new rules before“.There are three types of transitional specification. They are as follows:

1. Input Tax Credit
2. Refunds and Arrears
3. Job Work, Input Service Distributor, Composition Scheme filing for returns”.

What are transition forms?

Introduction of GST by the government led to several changes. Businesses now listed under GST state their tax benefits along with input credits of the former tax system. These taxes were paid during attainment of raw materials, semi-finished goods, or on materials sent to job worker and so on. Transition Form 1 or TRAN 1 can be filed by persons registered under GST. It can also be filed by individuals who were unregistered in the VAT Act, Central Excise and Service Tax regime i.e. in the pre GST establishment. However, those who are registered under GST as a composition dealer cannot file TRAN 1. Taxpayers claiming credit for past taxes paid may file TRAN 1 by August 28. Transition Form 2 or TRAN 2 is filed by registered persons under GST system, whereas unregistered under the previous tax establishment. Moreover, a dealer who failed to acquire documents of duty paid may also file TRAN 2. However, a manufacturer registered under Central Excise or a service provider registered under Service Tax cannot file TRAN 2. In addition, an individual possessing any document evidencing payment of tax is not eligible to file TRAN 2. It can be filed monthly from July onwards until December 2017.

Important Features of Transition to GST

In this new GST regime, the transition is an important phase.

1. The TRAN 1 report enables the taxpayer to claim Input Tax Credit of the earlier tax system.
2. The TRAN 1 report guarantees no disruption to material sent to job workers.
3. The TRAN 1 report offers information about agent’s principal dealing and shipment of goods, works contracts and more.
4. However, tax refunds under old tax system are not reportable in either TRAN -1 or TRAN -2

Details about TRAN-1

TRAN 1 demands important information while filing for returns. Firstly, it is important to mention the following terms:

1. Thereafter, the legal name of the registered person needs to be mentioned in the form. In case any trade names are used, that should be mentioned in the form as well.
2. After successful submission of all returns that existed under the law for the past six months, the closing balance of CENVAT / VAT returns can be transferred into your GST electronic ledger without any troubles. Furthermore, the tax credit can be shown in the return filed under the new laws.
3. The taxpayer needs to provide details of all the CENVAT credit in order to transfer the returns to GST.
4. Section 140(2) demands details of input credit valid on capital goods, which was not claimed. If by 30th June, the entire input credit taxes were not claimed, it is possible to claim the remaining by reporting here.
5. Section 140(2) of the CGST Act is responsible for carrying forward CENVAT credit for investment made earlier.
6. According to the terms of section 140(3), 140(4) (b) and 140(6) details of inputs held in stock are demanded when the input tax credit is claimed by a manufacturer or dealer.
7. This portion of TRAN-1 is applicable to businesses registered under GST. However, it is not necessary that the same business was registered under the previous tax system as well.
8. Dealers who were manufacturing exempted goods or not providing liable services are required to provide with a detailed list of stock. These terms are also applicable to individual or individuals who provided work contract service. This also applies to a first-stage or a second stage dealer and a registered importer.
9. All the information regarding the transfer of CENVAT credit for a person possessing a centralized registration under Section 140(8) needs to be present the TRAN 1 Form.
10. Moreover, details of supplies sent to job worker and present in his stock on behalf of the principal needs to be mentioned as per Section141.
11. Section 142(14) states that when any goods or capital goods that belong to the principal are in possession of the agent on the appointed day, it is legal for the agent to credit the tax paid on those goods under certain conditions.

What is GSTR-3B? Why is it important?

Introduced by the CBEC, GSTR-3B is a mandatory return form for GST registrants. This return format is introduced for the month of July and August. An individual needs to file a separate GSTR 3B for each GSTIN. It contains the summary of outward and inward supplies which will be submitted before 20th of the succeeding month as per government instructions. GSTR 3B is due on 25th August for July 2017.

GSTR 3B has to be filed by every individual to claim the return. Even if there are no transactions during the month of July and August, it is mandatory that the return form is filed and submitted. Few registrants of GST are not required to file GSTR 3B. These are Distributors; Composition; online information and database suppliers who have access or retrieval services and non-resident taxable person.

Steps to file GSTR 3B :

Thus, before “filing for tax returns”, it is important to have a detailed account of “GST Transition Form 1 and GSTR 3B”. Moreover, it is essential to have a further knowledge about any new forms that are introduced. Taxpayers intending to maintain their credit under the new goods and services tax system should calculate their tax account and pay it before the deadline.

1. Firstly, the month and year for which return is being filed have to be mentioned.
2. Secondly, GSTIN needs to be provided. In case there is no GSTIN, the provisional id can be used as GSTIN.
3. Afterwards, the Legal Name of the Registered Person is required.
4. Next, the detail concerning the outward supplies and inward supplies liable to reverse charge is demanded.
5. Details of input tax credit must be supplied separately for, SGST, IGST, UTGST, CGST, and Cess.
6. This section demands the tax payer to report the final tax amount payable on taxable supplies.