FICO demanded Deemed Input Tax Credit on Stock for Bicycle Industry

Ludhiana, July 10, 2017: FICO met Sh.Naresh Penumaka, IRS, Commissioner, Goods & Service Tax, GST Commissionerate, Ludhiana. The main point discussed was Deemed Input Tax Credit on Stock as on June 30, 2017 to Bicycle industry should be allowed.

FICO has drawn his attention towards anomalies in eligibility criteria for credit on goods of bicycle components held in stock on appointed day. As these parts are exempted from whole of excise duty, hence credit of eligible duties embedded in cost is not available to dealer/traders and to manufacture who procure these components from outside as intermediary products as per section 140(3) of Transition provisions of CGST Act, 2017. But however, manufacturers of these components are eligible to get credit of eligible duties of inputs contained in finished goods held in stock on appointed day as per section 140(3) of CGST Act, 2017. Further as per condition (I) of Rule 3(b) of transition provisions, traders/dealers are entitled to get credit @ 40% or 60% as the case may be, only if such goods were not wholly exempted from duty of excise specified in First Schedule to the Central Tariffs Act, 1985 or were not Nil Rated.

Hence small trader/ dealers of bicycle parts and also manufacturers who procure these components from outside parts as intermediary products have been deprived off from otherwise rightful claim.

Approximately 70% of material used to manufacture these components is duty paid and the same is embedded in the cost of the component. Anomaly is that credit of the same is not available for inputs held in stock on appointed day. You will appreciate that the government is very much concerned to check increase in prices in GST regime and also keen to pass on the benefits to the customer. But however these anomalies in transition provision are hindrance to achieve the objective.

“We therefore request Commissioner to address their genuine issue and advise suitable amendments in transition provision”, said the delegates.

Amongst Present were, Sh. Gurmeet Singh Kular President FICO, Sh. Manjinder Singh Sachdeva General Secretary FICO, Sh. Ravinder Arora Convener Bhartiya Janta Party Industrial Cell Punjab, Sh. Rajeev Jain Secretary, Sh. Mandeep Chowdhry Media Advisior, Sh. Satnam Singh Makkar Propaganda Secretary FICO, Sh. Ashok Kumar & Sh. Rajneesh Dhiman.