Transferring closing balance credit of KKC and education cess to GST

In this article, we will understand that whether Transfer of credits of cesses such as Education Cess, Secondary and Higher Education Cess, Swatch Bharat Cess and Krishi Kalyan Cess are allowed or not as per the transitional provisions?

The expression “eligible duties and taxes” means- 

  1. the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985
  2. the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985(5 of 1986);
  3. the service tax leviable under section 66B of the Finance Act, 1994 in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day.”

The list of items does not include cesses viz. education cess, secondary higher education cess, krishi kalyan cess that are allowed to be taken as CENVAT Credit under current regime.

The Transitional provisions under the CGST Act allow carryover of only the Cenvat Credit and Credit of eligible duties mentioned in the explanations given at the end of section 140. Education Cess & Secondary and Higher Education Cess are not mentioned there. Therefore these will not be carried forward as credit of these cesses is not allowed under GST.

Swatch Bharat Cess(SBC) and Krishi Kalyan Cess will not be eligible for carry forward to GST regime as credit of these cesses is not allowed under GST. The cesses will also not be leviable under GST to the extent they are levied as duties of excise (except on excluded items) or Service Tax or as a surcharge.

Thus, to conclude we come to the point that credits of cesses such as Education Cess, Secondary and Higher Education Cess, Swatch Bharat Cess and Krishi Kalyan Cess are not eligible for TRANS-1.



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