Article presents summary of Changes Proposed in GST Law by 28th GST Council in its meeting held on 21st July 2018 which includes Changes in Rate of GST on Goods and Services, GST Migration Facility till 31st August 2018 with late fee waiver, Increase in Composition Limit, Input Credit Law, Changes in GST Reverse Charge Mechanism, Simplified GST Return, Increase in threshold limit for GST registration etc.
Amendments to be effective after issue of notification:
GST Council in its 28th meeting held has approved the proposal to open the migration window for taxpayers, who received provisional IDs but could not complete the migration process.
Unanswered: Since the migration window will be reopened a question arises whether such tax payers shall be allowed to file TRAN 01 and avail input of transitional credit if any held by them in the existing laws.
Action Point: The taxpayers who filed Part A of FORM GST REG-26, but not Part B of the said FORM are requested to approach the jurisdictional Central Tax/State Tax nodal officers with the necessary details on or before 31st August, 2018.
Order dated 18.07.2018 F.No. 96/ACTT/GST/2018/391-93 has also been issued in this regard. Further procedural formalities are awaited.
It has also been decided to waive the late fee payable for delayed filing of return in cases discussed in paragraph 1 above.
Action Point: After the migration is completed the tax payer shall file the return after payment of late fees and then such late fees shall be refunded in the cash ledger under the respective tax head.
This would result in temporary blockage of funds.
There has been a downward revision in the rates of few goods and services. The HSN wise list shall be released in the notification. The 28% GST rate slab when introduced had 228 items in the list and has now reduced to just 35 items in a short span of one year.
Action Point: The benefit of reduction in rate of GST is required to be transferred to the customers by way of reduction in the price of the goods, in order to avoid attraction of the anti-profiteering rules.
Further in cases where exemption is granted, ITC on the closing stock and capital goods (after reducing 5% for every quarter or part thereof) will need to be paid either by debit in the cash ledger or the credit ledger. The balance if any in the credit ledger shall lapse.
Hotel industry has been given major relief by providing that the rate of tax on accommodation service shall be based on transaction value instead of declared tariff.
Services provided in sectors like banking, IT have been provided relief by exempting services supplied by an establishment of a person in India to any establishment of that person outside India [related party].
Impact: Even though the service is provided to a recipient outside India, such services shall not be regarded as export as the same excluded from the definition of “export of service” hence it led to additional tax cost.
Extend the exemption granted on outward transportation of all goods by air and sea by another one year i.e. upto 30th September, 2019 as relief to the exporter of goods.
Unanswered: While the filing of return has been made quarterly, the payment remains to be monthly and hence there is not much reduction the compliance. If the government really considers to ease the compliance of the “small tax payers” then payment could also have been made quarterly.
Amendments that will now be placed before the Parliament and the legislature of State and Union territories with legislatures for carrying out the amendments in the respective GST Acts:
The Upper limit of turnover for opting for composition scheme under GST to be raised from Rs. 1 crore to Rs. 1.5 crore.
Action Point: Though opting for GST composition Shceme has benefits of lower compliance, following are the two analyses to be made before opting for the scheme:
Composition dealers to be allowed to supply services (other than restaurant services as these are already allowed to opt for composition), for upto a value not exceeding 10% of turnover in the preceding financial year, or Rs. 5 lakhs, whichever is higher.
Impact: This is a welcome amendment as many tax payers who were providing services were unable to opt for composition scheme.
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: Reverse Charge on supply received from an unregistered person had caused hardships to the tax payers due to it having procedural complications of identification of the rate and HSN which would differ based on the nature of the supply. It had already received suspension thrice earlier and now is proposed to be limited to specified goods as may be notified.
The following transactions to be treated as no supply (no tax payable) under Schedule III:
Input Tax Credit will now be available on:
Impact: This is a tax payer friendly amendment expanding the scope of ITC availability.
Increase in threshold limit for GST registration in the States of Assam, Arunachal Pradesh, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand from Rs. 10 Lakhs to Rs. 20 Lakhs.