Home » GST » Articles » Transitional provisions under CGST Bill (Act)-Part-I

transitional provisions


When any taxation law is substituted by new taxation system, separate provisions are often needed to deal with the migration issues, these are often called as transitional provisions. The main objective of transitional provisions is to provide a safe cushion for existing taxpayers to adapt the new legislation without any shock.

GST is a not a tax reform but a business reform which will impact all kind of taxable & exempted person, intermediaries, job-workers, first & second stage dealers, person assessed under composition scheme. The transitional provisions under the CGST Act are provided under Chapter XX contains section 139 to 142. Chapter XX covers all kinds issues related with such persons.

The transitional provisions are broadly dealing with the following issues:

  1. Migration of existing taxpayers. Section 139
  2. Transitional arrangements for input tax credit. Section 140
  3. Transitional provisions relating to job work- Section 141
  4. Miscellaneous transitional provisions Section 142


Provisional certificate of registration

On and from the appointed day, every person registered under any of the existing laws and having a valid Permanent Account Number shall be issued a certificate of registration on provisional basis.

Permanent registration certificate

The conditions under which the provisional registration certificate issued will require to be complied with by the taxpayer to whom such certificate issued. On non compliance of the condition the certificate will liable to be cancelled. The certificate of registration issued to a person under sub-section (1) shall be deemed to have not been issued if the said registration is cancelled in pursuance of an application filed by such person that he was not liable to registration under section 22 or section 24.


The major objective for introduction of GST is to provide an integrated system of multi-stage taxation on Goods and Services, which allows seamless flow of input tax credit across the supply chain of goods and services.

The transitional provisions are made part of GST Act, to ensure smooth and logical transition of Credits of Input Tax for taxpayers who are transforming from the existing tax regime to GST regime. The major objective of transitional provisions to protect taxpayers from any loss of input credits during the transformation.

Section 140 provides for the transition of all credits that was available to the taxpayers under the existing laws otherwise.

The provisions of the Section 140 are summarises as below:

*Section 17(5)

(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:—

(a) motor vehicles and other conveyances except when they are used––

(i) for making the following taxable supplies, namely:—

(A) further supply of such vehicles or conveyances ; or

(B) transportation of passengers; or

(C) imparting training on driving, flying, navigating such vehicles or conveyances;

(ii) for transportation of goods;

(b) the following supply of goods or services or both:—

(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;

(ii) membership of a club, health and fitness centre;

(iii) rent-a-cab, life insurance and health insurance except where ––

(A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or

(B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and

(iv) travel benefits extended to employees on vacation such as leave or home travel concession;

(c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service;

(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.

Explanation.––For the purposes of clauses (c) and (d), the expression

“construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalization, to the said immovable property;

(e) goods or services or both on which tax has been paid under section 10;

(f) goods or services or both received by a non-resident taxable person except on goods imported by him;

(g) goods or services or both used for personal consumption;

(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and

(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.

Thus, the transitional provisions related with Input Tax Credit ensures that no Input Tax Credit will get blocked due to repeal of the existing laws and introduction of GST Laws.


Author of this article – Mr. Vineet Sahay – CS, Senior Manager Taxation

Print Friendly, PDF & Email

One thought on “Transitional provisions under CGST Bill (Act)-Part-I

Leave a Reply

Your email address will not be published. Required fields are marked *