Under GST, the duties and taxes which are paid on the closing stock held on 30th June, 2017 are allowed to be claimed as a transitional credit. If the trader is in possession of invoice or any other document which evidences tax payment, 100% of credit is allowed. Otherwise, traders will be eligible to get only part of the credit, when they actually supply the goods under GST regime. The following are the percentages of transitional credit in the absence of invoice or duty paying document.

Rate of Tax 18% & 28%
30% IGST


Rate of Tax 5% & 12%
20% IGST

To know more on transitional credit calculation, please read GST Migration – Demystifying the Closing Stock Dilemma.

An excise dealer who has purchased excisable goods, directly from the manufacturer / 1st stage dealer / 2nd stage dealer, having Rule 11 invoice will be eligible to get 100% credit of the excise paid on closing stock.

On the other hand, a VAT dealer, who has purchased excisable goods, but from wholesalers, will have a  tax invoicecontaining only the VAT component. The excise duty paid will not be shown separately, instead, it will be passed on as part of the cost. In this case, the dealer will not be eligible for 100% credit, but instead will get only partial credit as discussed.

This will have a huge impact on the traders who are engaged in selling high value products such as cars, televisions and so. Thus as a makeshift arrangement, the concept of “Credit Transfer Document” (CTD) was introduced.

As per this, an excise registered manufacturer may issue a Credit Transfer Document evidencing the payment of excise duty to a dealer who was not registered under excise but registered under GST. Now, such a dealer can avail 100 % transitional credit on the basis of ‘Credit Transfer Document’ (CTD). This is again subject to certain conditions as listed below:

  • The value of such goods is more than rupees twenty-five thousand (Rs.25,000/-) per piece
  • Goods should bear the brand name of the manufacturer or the principal manufacturer, and are identifiable by a distinct number. For example, chassis or engine number of a car
  • Verifiable records of clearance and duty payment relatable to each piece of such goods are maintained by the manufacturer and are made available for verification on demand by a Central Excise officer
  • CTD is serially numbered and contains the Central Excise registration number, address of the concerned Central Excise Division, name, address and GSTIN number of the person to whom it is issued, description, classification, invoice number with date of removal, mode of transport and vehicle registration number, rate of duty, quantity, value and duty of excise
  • The manufacturer is satisfied that the dealer to whom CTD is issued, is in possession of such manufactured goods in the form in which it was cleared by him
  • CTD is issued within 45 days of the appointed date of GST coming into force, and a copy of the corresponding invoices is enclosed with the CTD
  • Copies of all invoices relating to buying and selling from manufacturer to the dealer, through intermediate dealers, is maintained by the dealer availing credit using CTDs
  • CTD is not issued in favour of a dealer to whom invoice was issued for the same goods before the appointed date
  • The dealer availing credit on the basis of CTD, at the time of making supply of such goods, mentions the corresponding CTD number in the invoice issued by him