Inputs held in stock and inputs under gst

1. Inputs held in stock and inputs contained in semi-finished or finished goods
Conditions
• Such inputs and/or goods are used or intended to be used for making taxable supplies under
this Act
• The said taxable person passes on the benefit of such credit by the way of reduced prices to
the recipient
• He is eligible for ITC on such inputs under the GST
• He must have the possession of the invoices and/or other prescribed documents evidencing
payment of duty under the earlier law in respect of such inputs
• Invoices issued should not be earlier than 12 months from the appointed day, and
• Not applicable if applied for Composition Levy .
• Admissible under both the earlier law and the GST law.
Not Eligible IF
1. The said credit is not admissible as ITC under the GST Act, or
2. The taxable person has not furnished all required returns under existing regime for the period of
6 months immediately preceding the appointed date, or
3. The said credit related to goods manufactured and cleared under exemption notification
Treatment of Credit on Input/WIP/Finished Goods held in Stock – Deemed Calculation
a.who was not liable to be registered under existing law, or
b. who was engaged in supplying exempted goods or services or both, or
c.First Stage Dealer or Second Stage Dealer or Importer or Depot then, he shall be entitled to
claim credit of taxes in respect of inputs or WIP or finished goods held in stock.
Registered in GST , credit is allowed with following condition:
• He is eligible for ITC on such inputs under the GST
• He must have the possession of the invoices and/or other prescribed documents evidencing
payment of duty under the earlier law in respect of such inputs
Deemed Provision:
However, a person other than a manufacturer or a supplier of services shall be allowed to take
credit even if he is not in possession of invoice or duty paying document. The deemed credit will be
available at the rate of 40% after payment of complete GST as per rules. This is mainly for traders who do
not possess invoice to claim credit of excise duty.
For example - A trader has stock of Rs. 10 lakhs on July 1, 2017.In July, 2017 he sold goods worth 7 lakh. Suppose
CGST is payableon the goodssold at Rs. 70,000.After payment of this tax of Rs.70000, he will get credit of 40% of
70,000,i.e., Rs. 28,000.

2. Thus, deemed credit is not available for manufacturer and supplier of services. It is, therefore, essential for them to
always possess the duty paying documents.