Daily Dose of GST Update By CA Pradeep Jain

Taking further to our discussion, we are continuing our discussion the definitions given under Section 2 of revised IGST law and comparing the same with old model GST law to know the changes made in revised law:-

Section 2(73) Outward Supply: the new definition reads as follows:

Outward Supply” in relation to a person, shall mean supply of goods or services, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal or any other means made or agreed to be made by such person in the  course or furtherance of business;”

The old definition reads as follows

“outward supply” in relation to a person, shall mean supply of goods and/or services, whether by sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made by such person in the course or furtherance of business except in case of such supplies where the tax is payable on reverse charge basis;”

The amendment bought in this definition is that earlier outward supply was restricted to transactions like sale, transfer, barter, exchange, licence, rental, lease or disposal, whereas in the new definition “any other means” has been added thereby widening the scope of the definition. Apart from that the transactions entered on which reverse charge was applicable were excluded from the definition. As a result, the biggest impact would have been on the persons opting for composition levy and the cenvat availment. Composition levy is not allowed to person engaged in inter-state outward supplies. Thus where any inter-state supply is under reverse charge mechanism then under the old draft, it would have been interpreted as composition levy will be allowed to such persons also. After the amendment such an inference is not allowed.

Section 2(29) of IGST Act: Zero rated supply: the new definition reads as follows:

Zero rated supply shall have the meaning assigned to it under section 15.

Interestingly the definition is given in the section 16 of the act which reads as follows:

(1) “zero rated supply” means any of the following taxable supply of goods and/or services, namely –

(a) export of goods and/or services; or

(b) supply of goods and/or services to a SEZ developer or an SEZ unit.

The amendment bought in the definition is that earlier the supply of goods/services to SEZ was not included in the definition resulting in taxability of such supplies. After the amendment supplies to SEZ or SEZ developer will also be termed as zero rated supply and no tax will have to be paid on such supplies. On the other hand cenvat will be available against such supplies without any restriction. Although it is subject to debate that why EOU has not been included in the definition resulting in supplies being made to EOU subject to tax. It will considerable to look out for inclusion or exclusion of EOU in the final draft of law.

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