Extension of Input Tax Credit Claim Period for Transition Stock

Many traders and retailers across India expressed concerns regarding the process of claiming input tax credit (ITC) for existing stock once the Goods and Services Tax (GST) system was implemented on July 1st. In response to these concerns, the GST Council has extended the deadline for claiming this input credit. Initially, the draft rules stipulated a 60-day window, but this has now been increased to 90 days.

Furthermore, specific provisions have been introduced for ‘deemed credit’ when these goods are subsequently sold and Integrated Goods and Services Tax (IGST) is paid on the transaction. If the IGST rate for the transaction is above 18 percent, a deemed credit of 30 percent will be available. For all other scenarios, where the IGST rate is not above 18 percent, a deemed credit of 20 percent will be applicable. This decision aims to ease the transition process for businesses as reported in the Economic Times.