New GST registration can unlock credit on qualifying opening-stock inputs, but the correct stock date depends on the registration route. Section 18(1)(a) uses the day before compulsory liability begins for a person who applies within thirty days and is granted registration. Section 18(1)(b), for voluntary registration, uses the day before registration is granted. These clauses do not grant a general credit for old services or capital goods.
This guide covers those two new-registration routes, under the text checked on 23 October 2026. It excludes composition exit, exempt-to-taxable changes, business-transfer credits and cancellation reversals, each of which has a different statutory basis.
Freeze the route and stock snapshot before opening the form
Read CGST Act section 18(1)(a), (b) and (2), and CGST Rule 40 together. The April 2026 ICAI bare-law compilation reproduces the provisions and amendment notes. Distinguish the thirty-day condition for applying for compulsory registration from Rule 40’s declaration period. They are different controls, with different trigger events. A registration application acknowledgement is not the same document as the grant order.
| Registration route | Stock snapshot | Main boundary |
|---|---|---|
| Timely compulsory application; registration granted | Day immediately before liability to pay tax begins | Application within thirty days; do not substitute grant-date stock |
| Voluntary registration under section 25(3) | Day immediately before grant of registration | Do not substitute the application date |
| Other section 18 circumstances | Separate statutory event and conditions | Do not import their capital-goods rules into a new-registration claim |
Build an invoice-to-stock bridge at that snapshot. Separate raw inputs from inputs embedded in work in progress or finished goods. For manufactured stock, use the documented bill of materials, consumption and available tax invoices. The credit is qualifying input tax attributable to inputs still in stock, not a percentage of the selling value of finished goods. Service expenditure already consumed does not become a stock input merely because accounting allocates it into inventory cost.
The invoice-age test and declaration clock both matter
Section 18(2) bars credit under subsection (1) after one year from the relevant tax invoice. Check age at the intended credit-taking stage; it is unsafe to check it only on the stock date and then defer the claim. Rule 40 requires an electronic declaration in FORM GST ITC-01 within thirty days of becoming eligible, subject to an applicable notified extension. An extension of that declaration period should not be assumed to rewrite the separate statutory invoice-age limit.
For voluntary registration, diary the period from grant and retain the grant order. For a delayed compulsory grant, establish the correct eligibility trigger from the actual order and applicable legal/portal position rather than copying a voluntary-registration deadline. If the claim is approaching expiry, resolve that issue before filing. This guide does not assume a general extension or offer a remedy for an already time-barred claim.
Certification is measured across tax heads
Under Rule 40(1)(d), a practising chartered accountant or cost accountant must certify the declaration details if the aggregate claim across central, State, Union territory and integrated tax exceeds ₹2 lakh. The ICAI guide to CA certificates in GST includes a new-registration certificate framework. The threshold concerns tax credit, not inventory value, and cannot be tested separately for each tax head.
Complete the ordinary eligibility and restriction review, supporting invoices and duplicate-credit check before submission. Record excluded goods and the reason for exclusion. Reconcile the filed declaration, acknowledgement and actual electronic-credit-ledger consequence. Portal acceptance is useful filing evidence; it does not validate an incorrect stock snapshot or a legally ineligible invoice.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Compulsory liability and grant fall in different months
A trader becomes liable on 1 September 2026, applies on 20 September and is granted registration on 1 October. The application is 19 elapsed days after liability, within thirty days. Qualifying input tax attributable to stock is ₹90,000 at 31 August and ₹1,20,000 at 30 September. The section 18(1)(a) stock base is ₹90,000; using grant-date stock would overstate this opening-stock figure by ₹30,000. Other eligibility and timing conditions are assumed met.
Illustrative example 2: Voluntary registration uses the grant snapshot
Voluntary registration is granted on 1 October 2026. A documented batch has 48 units remaining on 30 September, with qualifying input tax of ₹50 per unit: credit attributable to that batch is 48 × ₹50 = ₹2,400. The 100 units recorded on the 15 September application date would produce ₹5,000, overstating this snapshot by ₹2,600. The invoice and claim-age conditions are assumed satisfied.
Illustrative example 3: Inputs embedded in finished goods
There are 100 finished units in stock at the correct snapshot, each containing two kilograms of an invoiced input carrying ₹12 qualifying input tax per kilogram. Attributable input tax is 100 × 2 × ₹12 = ₹2,400. Do not multiply an assumed ₹500 selling price by an assumed 18% output rate to claim ₹9,000. The rates and quantities here are stipulated for calculation, not a classification ruling on any product.
Illustrative example 4: Do not include every pre-registration purchase
The reconciled file contains qualifying stock-input tax of ₹18,000, GST of ₹36,000 on a capital machine, and GST of ₹9,000 on past consultancy services. Total historical GST is ₹63,000, but only ₹18,000 enters this new-registration stock calculation under clauses (a)/(b). The excluded ₹45,000 cannot be rescued by applying the capital-goods reduction used in the different clauses (c)/(d).
Illustrative example 5: An invoice can age out before the declaration is filed
Voluntary registration is granted on 1 October 2026 and credit is proposed to be taken on 20 October. An input invoice dated 10 October 2025 is then 375 days old, beyond one year, so its ₹12,000 cannot enter a valid claim under section 18(1). A second invoice dated 10 April 2026 is 193 days old; its ₹9,000 remains within this age test, assuming all other requirements are met. The eligible age-tested amount from the pair is ₹9,000, not ₹21,000.
Illustrative example 6: The certificate threshold combines tax heads
A claim contains CGST ₹1,10,000 and SGST ₹1,10,000. Aggregate credit is ₹2,20,000, exceeding ₹2,00,000 by ₹20,000, so Rule 40 certification is required. Testing each head separately would miss the trigger. At an aggregate exactly ₹2,00,000, this particular exceeds-threshold condition is not triggered; documentation and all other conditions remain necessary.
Illustrative example 7: A declaration deadline is not an invoice-age extension
For an uncomplicated voluntary grant dated 1 October 2026, the ordinary thirty-day declaration endpoint, excluding the trigger date, is 31 October 2026, assuming no applicable notified extension or other adjustment. A claim prepared on 20 October is within that declaration window. That does not save the 10 October 2025 invoice in the preceding example, whose separate one-year period has already expired.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Identify compulsory or voluntary registration | Liability analysis, application and grant order |
| 2 | For compulsory registration, verify the thirty-day application condition | Liability date and acknowledged application timestamp |
| 3 | Fix the statutory stock snapshot | Route-specific dated inventory statement |
| 4 | Reconcile physical stock and inventory books | Count sheets, movement cut-off and ledger bridge |
| 5 | Trace inputs in work in progress and finished goods | Bill of materials and invoice-linked consumption schedule |
| 6 | Exclude services, capital goods and independently restricted items | Item classification and reason-coded exclusion list |
| 7 | Test each invoice against the one-year condition | Invoice dates, intended claim date and age exceptions |
| 8 | Diary ITC-01 and verify any applicable notified extension | Eligibility trigger, deadline working and notification if used |
| 9 | Aggregate tax heads and obtain certification where required | Credit-head summary and practitioner certificate |
| 10 | File and reconcile the actual credit outcome without duplication | Submitted ITC-01, acknowledgement and credit-ledger reconciliation |
Sixteen practitioner FAQs
1. Does every new registrant get opening-stock credit?
No. Identify the relevant section 18 route and satisfy its conditions, including timely application where clause (a) applies.
2. Which date matters for voluntary registration?
The stock date is the day immediately before grant. Preserve the grant order rather than relying only on the application receipt.
3. Can a compulsory registrant use grant-date stock?
Clause (a) specifies the pre-liability snapshot. A later grant does not by itself change that statutory stock date.
4. Is the thirty-day application period the ITC-01 deadline?
No. The application condition and Rule 40 declaration period are different tests. Record their trigger dates separately.
5. Can a machine purchased before registration be included?
Clauses (a)/(b) cover the specified inputs in stock. They do not provide the capital-goods credit granted in certain other section 18 circumstances.
6. Can old legal or consultancy fees be claimed as stock?
Not merely because their cost was booked into inventory. These new-registration stock provisions do not create a general credit for prior input services.
7. How should finished goods be measured?
Trace qualifying input tax on inputs contained in the goods, supported by invoices and consumption records. Do not use output GST on selling value.
8. Does the one-year test apply only at registration?
Section 18(2) restricts credit after invoice expiry. Check the actual intended taking of credit, not just whether an invoice was younger on the stock date.
9. Does a declaration extension revive expired invoices?
Do not assume so. A Rule 40 declaration extension and the statutory section 18(2) restriction address different matters.
10. Is ₹2 lakh tested separately for CGST and SGST?
No. Aggregate the prescribed tax heads for the certification test.
11. Must the certifier be only a chartered accountant?
Rule 40 also permits a practising cost accountant. Use an appropriately qualified practitioner and retain the signed support.
12. Does exactly ₹2 lakh trigger that certificate rule?
The wording is exceeds two lakh rupees. Exactly that aggregate does not trigger this particular condition.
13. Is inventory value the certification threshold?
No. The test is the aggregate credit claim, not the purchase cost or selling value of stock.
14. Can the declaration duplicate ordinary purchase credit?
No. Maintain an invoice-and-quantity reconciliation so that the same tax is not claimed again through another route.
15. Is portal acceptance conclusive evidence of eligibility?
No. Keep substantive invoice, stock-date, age and restriction evidence as well as the filing acknowledgement.
16. What if the compulsory registration application was late?
Do not assume clause (a) remains available. Analyse the actual legal position separately; this article’s timely-application examples do not establish a cure.
Conclusion
Reconcile the registration route, stock snapshot, invoice age and actual claim date before filing ITC-01. A correct inventory total is only useful when the underlying credit and declaration are both timely and supported.