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Accumulated CENVAT credits under centralised registration can be carried forward as CGST into any State of registrant’s choice

Blog Post created by www.withdia.com Your Intelligent Assistant on May 26, 2017

In this blog, we look at a query on centralised registration and carry forward of CENVAT Credit.

 

Query:

As part of the transitional credits, the company apprehends that it will have an accumulation of CGST credit (carry-forward CENVAT Credit) in the electronic credit ledger under the GST registration in the State where it was centrally registered (say, Karnataka) while it will be required to pay the GST under the registrations in other States as well. Will the company be forced to make such payments out of electronic cash ledger i.e. by transferring funds as no credit is available initially in the form of brought forward credits?

 

Response:

Under the transitional provisions, the entire amount of admissible CENVAT credits will be carried forward into ‘electronic credit ledger’ as CGST in the State where the company was centrally registered (Karnataka).

 

Importantly, the credit may be transferred from the centrally registered location (in Karnataka) to a unit in any other State which was a part of the centralised registration under the current Service tax laws (say, in Maharashtra) provided that the Karnataka Branch and Maharashtra Branch are under the same PAN. This will be by way of transfer from the Karnataka Branch to the Maharashtra Branch after credit has been claimed in Karnataka.

 

Legislative reference: Third proviso to Section 140(8)

 

Authors: PV Srinivasan and NR Badrinath

 

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