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Revision of VAT returns and other returns of old tax regime will be allowed after GST is implemented, with certain restrictions.
GST will be implemented on 1st July 2017. One of the most important questions is the treatment of excise & VAT returns for the June/June quarter.
What happens when revision of VAT returns is required?
Here are a few questions that businesses might find themselves asking during the transition to GST.
Businesses will file their excise June returns and VAT June quarter returns according to prevalent provisions of the current regime (unless extended by a later notification). Excise returns will be filed by 10th July. VAT returns will be due on 21st July (in most states). Service tax returns are to be filed by 25th July. Last returns will be filed normally.
Returns can be revised if mistakes were made. Revisions of old returns as per current regime are possible even after GST rolls out.
Although there is no time limit explicitly mentioned in GST Act for revisions, but refunds will be admissible only for revision done within a specified time limit. As per Central Excise Act, a person can claim refund of excise within 1 year. So it is expected under GST, revision of old returns and subsequent refunds will be allowed within 1 year from the relevant date (the original date for return filing).
Refunds will be made according to old tax laws. All refunds will be paid directly to the tax payer and not adjusted with GST liabilities.
For e.g., Mr. B has a VAT refund of Rs. 10,000 which he receives in August. He wishes to adjust this against GST dues of Rs. 18,000. He will receive this amount directly (through bank) and cannot adjust it with GST dues.
Additional amount becomes payable if during the revision/proceedings:
Any additional amount which becomes payable will be recovered as arrears of tax under GST. This amount paid cannot be taken as input tax credit under GST. So Mr. Vinod cannot claim Rs. 10,000 ITC.
If he submits the invoices within 1 year from original return then he will get a refund of the ITC on the missed invoices.
Input tax credit as per current regime will be carried forward directly under GST in the GST electronic ledger. CENVAT credit will appear as CGST & VAT Credit as SGST. In such cases, the question of refund does not arise.
If any refund is claimed for excise/VAT after GST implementation, for goods/services sold before GST, then such refund will be processed as per excise/VAT laws.
All pending appeals and revisions relating to CENVAT/VAT input tax credit or output tax will be disposed of according to excise/VAT laws. Conclusion While returns under old tax regime will be allowed to be revised after GST is implemented, there are certain restrictions. Following “prevention is better than cure”, businesses should carefully file their last returns to avoid any hassles.
Have a question on transition? ClearTax has extensive articles on the transition to GST. Let our experts help you when you transition your business to the new regime!