CGST Act Amendment May Lead To Reversal Of Credit Availed On Cess Paid

Cabinet clears amendments to GST laws Taxpayers may have to pay extra tax or reverse the credit they availed for the cess paid before the Goods and Services Tax was rolled out.

The government has excluded the credit that taxpayers could avail at the time of transitioning to GST for the cess paid in the previous indirect tax regime, according to amendments in the Central Goods and Services Tax Act moved in the Lok Sabha. The change in the amendment bill has been made effective from from July 1, 2017 ie retroactively.

Prior to the amendment, Section 140 (1) didn’t place a bar on transition of various cesses which were part of the Central Value Added Tax credit ledger of companies.

The retroactive amendment made in the proposed law seeks to limit the credit available for transition only to “eligible duties” defined in the section.

They are:

  • Additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957.

  • Additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975.
  • Additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975.
  • Additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978.
  • Excise Duty specified in the first schedule of the Central Excise Tariff Act, 1985.
  • Excise duty specified in the second schedule of the Central Excise Tariff Act, 1985.
  • National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001.

 

 
 
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