Analysis of Finance Bill (02) 2019- Goods and Service Tax

The major proposed amendment by Finance bill (02) 2019 under GST are as follows. Few amendments which are not so important are not covered.

1. Amendment in Section 10 (Composition Scheme)- To Extend the Benefit of Composition Scheme to Supplier of Service Also

History of Composition Scheme under GST.

Applicability only– on Supply of Goods or Mixed Supply of Service and goods being Food or any other article for Human Consumption (Commonly known as Catering Services) and Service also other than the service mentioned aforesaid.

Having T/O-

For Goods- Inception 50L increased to 1 Cr and further increased to 1.5 Cr

For Service- 50 L (Applicability- From 01-04-2019)

Rate of Taxation as on Date:

Sl No. Type of Supplier CGST SGST
1 Manufacturer 0.5% 0.5%
2 Traders 0.5% 0.5%
3 Supplier of food & drinks (restaurant business) 2.5% 2.5%
4 Service providers           (Other than-3) 3.0% 3.0%

Supplier refer at Sl. No. 1 to 3 allowed to make supply of service to the extent of 10% of Turnover in state or Rs. 5 Lacs (Higher of These)- Added by Amendment Act-18.

Further supplier refer at Sl. No. 4 are allowed to opt the Composition Scheme by the notification issue by the Govt dated 07-03-19. Although it has been brought in by the notification the same has been proposed to be inserted in Act

Addition of New Subsection (2A)- Notwithstanding anything to the contrary contained in this Act, but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, not eligible to opt to pay tax under sub-section (1) and sub-section (2), whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding three per cent. of the turnover in State or turnover in Union territory, subject to certain conditions.

2. Amendment in Section 22 (Registration)

No Registration requirement up to 40 L- for the person engaged in exclusively in supply of goods. No person supplying the service is take the benefit of 40L.

Provided also that the Government may, at the request of a State and on the recommendations of the Council, enhance the aggregate turnover from twenty lakh rupees to such amount not exceeding forty lakh rupees in case of supplier who is engaged exclusively in the supply of goods, subject to such conditions and limitations, as may be notified.

Explanation- For the purposes of this sub-section, a person shall be considered to be engaged exclusively in the supply of goods even if he is engaged in exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount.

After the amendment following are the position with respect to Mandatory Registration on account of threshold limit of Turnover:

Supplier of Service- 20L

Supplier of Goods- 40L

Supplier of Goods and Service Both- 20L

Above limit of 40L will not be available for Special Category State.

3. Amendment in Section 25 (Registration Process)

Now a day’s use of Aadhar has given more emphasis by Govt. Mandatory use of Aadhar (if person possess) in GST registration have been proposed. A series of sub-section 6A to 6D has been proposed to be inserted.

6A. Every registered person shall undergo authentication or furnish the proof of aadhar.

If person not possess Aadhar they will provide other viable means of authentication.

If person possess it and failed to undergo authentication or furnish he proof of possession of Aadhar, Registration allotted shall be deemed to be invalid and other provision of apply as person does not have registration.

6B. For New registration same shall be done during registration.

6C. For authentication of Aadhar for person other than individual.

6D. Exemption as may be prescribed for not application of 6A to 6C.

4. Insertion of New Section 31A (Mandatory to Provide Facility of accepting payment prescribed electronic mode)

“31A. The Government may, on the recommendations of the Council, prescribe a class of registered persons who shall provide prescribed modes of electronic payment to the recipient of supply of goods or services or both made by him and give option to such recipient to make payment accordingly, in such manner and subject to such conditions and restrictions, as may be prescribed.

Maintaining the parity with the Sec 269SU of the Income Tax Act here also amendment has been proposed to provide mandatory facility of accepting the payment by means of prescribed mode.

Govt. will notify the class of the person who shall require to provide such facility.

(Most probably the class of the person will be notified who has a T/O 50Cr or more)

5. Amendment in Section 39 (Return)

Sub-section 1 has been substituted to provide monthly return with monthly payment as well as quarterly return with monthly payment for the class of the person.

Sub-section 2 has been substituted to provide the quarterly payment and annual return in case of composition supplier.

6. Amendment in Section 49 (Electronic Cash Ledger)

Sub-section 49 has been inserted to facilitate the transfer of cash available in electronic cash ledger from one to another.

7. Amendment in Section 50 (Interest on Late Payment)

“Provided that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be levied on that portion of the tax that is paid by debiting the electronic cash ledger.”

The Govt. had no intention to charge the interest on whole amount of Output Tax except it is payable under 73 or 74. But the Act was drafted in such a way which lead to charge the interest on total amount of output tax.

By proposing this amendment, the hardship has been removed and now supplier has to pay interest only on the amount payable i.e. (Output Tax- ITC).

8. Insertion of New Section 101A, 101B and 101C (National Appellate Tribunal for Authority for advance ruling)

At present each state has AAR and Appellate Tribunal for AAR. The decision of AAR or AAAR shall be binding on the applicant who has sought it.

The difficulty is being faced by the person holding the registration in more than one state (legally known as Distinct Person u/s 25)

Say AAAR of the Bihar has ordered that “ITC will be allowed for tax paid on Motor Vehicle” and on the other hand Say AAAR of the Gujarat has ordered that “ITC will not be allowed for the same vehicle for same use.

In this case person aggrieved by the order of Gujarat AAAR can prefer the Appeal to NATAAR.

The order of the NATAAR will be binding on the applicant who had sought the ruling and all the other registered person having the same PAN.

Author is a chartered accountants in practice and can be reached through (M) 9350852757 and (E)

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February 2024