The GST Council in its 28th meeting held on 21st July has recommended certain amendments in the CGST Act, 2017, IGST Act, 2017, UTGST Act 2017, and GST (Compensation to States) Act, 2017.
A quick glance of certain important recommendations and its impact to most of the common stakeholders.
Recommendation
Upper limit of turnover for opting for composition scheme to be raised from Rs. 1 crore to Rs. 1.5 crore. Present limit of turnover can now be raised on the recommendations of the Council.
Composition dealers to be allowed to supply services (other than restaurant services), for up to a value not exceeding 10% of turnover in the preceding financial year, or Rs. 5 lakhs, whichever is higher.
Impact
Recipient to identify such persons from supplier master. Purpose is to ascertain the input tax credit which was hereto available will no more be available hence forth and also the ITC availed by the supplier and his output tax will be built as a cost to his future supplies. Careful analysis have to be made in respect of competitive price weighing his past history in the business association.
The opted supplier has to undergo the statutory migration process involving cost and time
Recommendation
Levy of GST on reverse charge mechanism on receipt of supplies from unregistered suppliers, to be applicable to only specified goods in case of certain notified classes of registered persons, on the recommendations of the GST Council
Impact
To wait for the notification of such goods
Recommendation
Taxpayers may opt for multiple GST registrations within a State/Union territory in respect of multiple places of business located within the same State/Union territory.
Impact
A facility which was available for vertical business is now available to all. Now separate registration within the state can be availed if required for business reason
Recommendation
The following transactions to be treated as no supply (no tax payable) under Schedule III (few from the list selected)
- Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India;
- Supply of warehoused goods to any person before clearance for home consumption; and
- Supply of goods in case of high sea sales.
Impact
Flaw in the act is now rectified in respect of supplies not entering into India. To ascertain transactions impacting IGST payments
Recommendation
Scope of input tax credit is being widened, and it would now be made available in respect of the following: (most commonly applicable selected from the list)
- Motor vehicles for transportation of persons having seating capacity of more than thirteen (including driver)
- Services of general insurance, repair and maintenance in respect of motor vehicles, which credit is available; and
- Goods or services which are obligatory for an employer to provide to its employees, under any law for the time being in
Impact
Scope for more ITC credit is available now. Interpretation ( disputed ) issue in respect of canteen ,health services is resolved and outward supply becomes competitive
Recommendation
In case the recipient fails to pay the due amount to the supplier within 180 days from the date of issue of invoice, the input tax credit availed by the recipient will be reversed, but liability to pay interest is being done away with.
Impact
Saving interest where ITC reversed for non-payment of supplies within 180 days. Otherwise reversal of ITC with the cost of interest when credit is restored
Recommendation
Registered persons may issue consolidated credit/debit notes in respect of multiple invoices issued in a Financial Year.
Impact
A much-needed provision for accounting and uploading in portal is now available with less number of documents.
Recommendation
Commissioner to be empowered to extend the time limit for return of inputs and capital sent on job work, up to a period of one year and two years, respectively
Impact
An important one where process involves in-ordinate time and for capital goods where it could be difficult to unearth and reinstall.
But still suitable provision is required where capital goods are permanently fixed to carry out the job worth beyond the time limit as prescribed.
Recommendation
Supply of services to qualify as exports, even if payment is received in Indian Rupees, where permitted by the RBI.
Impact
In case of any such transaction where export benefit or any other benefit is denied, now the same is available
Recommendation
The order of cross-utilization of input tax credit is being rationalized.
Impact
To wait for the notification – Cash flow advantage
Recommendation
Downward revision in rate of tax
Impact
To identify from the list (Of the list, only few supplies are related to industrial input/output -Eg Paints for goods – Education/Training/Skill development for services). Reduction in ITC with equivalent saving in cash flow
Other Recommendations much needed relief to the trade
Extend the exemption granted on outward transportation of all goods by air and sea by another one year i.e. up to 30th September, 2019 as relief to the exporter of goods.
The return is made simple like VAT return. For the existing turnover, the return would be monthly
Any change or addition in the supplies, the profile can be changed by self and no need to interact with the department for updating in registration certificate.
The ITC is based on the uploading of invoices by the supplier. Huge impact as the existing system of accounting of supplies has to see through a major change in configuration. To optimize the cash flow management the payment would be subject to uploading of invoice in the gstn portal as against the present system.
It is a welcome move to lock the availed ITC. Any amendments of value and rate of tax would be through debit and credit note
Press Releases related to 28the GST Council Meeting on 21st July 2018
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