Draft Credit Transfer Mechanism under GST Regime

Importer of Goods totally left out

Those who are importing goods have been totally left out under these provisions. There are many goods which are imported into India on which CVD and SAD have been paid. Credit of such duty should be also available. But the draft CTD rules doesn’t talk about this aspect.

 Limit of Rs. 25000/- per item is too high

The per item monetary limit given in these rules is too high. In our view, more than 60% of consumer durables will get out of these rules due to this monetary limit. There are many goods which are selling at below this limit.

Manual compliance is against the proposed scheme of GST

Form Trans-1, in our view is to be submitted manually. Why this manual form. Preparing and submitting this form manually will be herculean task for some of the retailers.


Online submission can be done

Alternatively, CTD mechanism can be done completely online. Those dealers who are having stock of certain manufacturer can upload the details of their stock serial number wise and confirmation from the manufacturer can be taken through online system only.


Condition of dealer having copies of all invoices in the chain is highly impractical

The condition that dealer claiming CTD should have copies of invoices of all the dealers in the chain is highly impractical. Nobody wants to disclose the purchase invoice to his dealer down the chain.


Verification by officer at both the places will increase corruption

As provided in the draft rules, the central excise officer can verify the claim made by the dealer and also the manufacturer. How one can expect from a retailer to deal with central excise officer who he has never dealt in past. In addition to that, this will become a big area of corruption.


Author: Amit Mundhra CA
Amit Mundhra FCA is a Fellow member of the Institute of Chartered Accountant of India. He is senior partner in Karnani & Co., Chartered Accountants. He is having 20+ years of experience in Income Tax, GST, VAT, Accounting, Audit and Assurance field.

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