The Provisions of GST (Amendment) Act 2018 have been made applicable from 1st February 2019. Below is the gist of the amendments made thereon :

1. Definitions

i. Central Board of Excise & Customs (CBEC) has been substituted with Central Board of Indirect Taxes & Customs (CBIC)

ii. Following has been included in the definition of business : Activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club

iii. Definition of Business vertical has been removed

iv. It has been clarified that – “services” includes facilitating or arranging transactions in securities

2. Reverse Charge for supplies from unregistered to registered persons

Now only the goods or services, which will be notified by government, will be taxable under reverse charge, if supplied from unregistered person to the notified registered persons. Accordingly, coverage of this section is restricted now.

3. Composition Scheme:

1. Limit for composition scheme has been increased from Rs. 1 crores to Rs. 1.5 Crores

2. Composition dealers may now supply services of value not exceeding- 10% of turnover in a State or Union territory in the preceding financial year or 5 Lakhs, whichever is higher

3. Rate of tax on services by composition dealer- 0.5% and 0.5%- SGST and CGST

4. Inadmissible Input Tax Credits (ITC) under GST- Section 17(5) of CGST Act 2017

Following are amendments in regards to the same:

1. Earlier the ITC on all types of motor vehicles was restricted, however, the same has not been restricted only to motor vehicles having approved seating capacity up to 13 persons (including driver). However, it shall be allowed, If input service used for following taxable supplies:

a) further supply of such vehicles or conveyances

b) transportation of passengers

c) imparting training on such motor vehicles

2. ITC is not available on Vessels. However, it shall be allowed, if input service used for following taxable supplies:

a) further supply of such vessels & aircrafts

b) transportation of passengers

c) imparting training on navigating such vessels or flying aircrafts

d) transportation of goods

3. ITC has been blocked on Services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft, as specified in clause (a) and (b) above

4. Restriction of ITC in following cases:

ITC not available on Exceptions
Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft as referred in clause (a) & (aa) above, except when used for the purposes specified therein, life insurance and health insurance When used in supply of similar nature of business
Membership of a club, health and fitness centre NO EXCLUSION
Travel benefits extended to employees on vacation such as leave or home travel concession If input service used for:

a) employees, if made obligatory by government under any law

For summarized position of inadmissible / blocked input tax credits under GST after amendment, refer link – https://taxguru.in/goods-and-service-tax/inadmissible-input-tax-credits-itc-gst.html

5. GST Registration –

1. Earlier every Electronic commerce operator was liable to mandatorily get registered under GST, however, such has now been made mandatory, only if he is liable to collect tax at source.

2. Earlier a person was not allowed to take multiple registrations within same state for same business vertical. Only different verticals were allowed to take separate registration. However, now multiple registrations can be taken within same state for same business & each of them shall be treated as distinct person.

3. During the ongoing process of cancellation of registration, there would be temporary suspension of registration. This would result into releasing the compliance burden while the cancellation of registration is under process.

6. Invoicing

Now consolidated debit notes / credit notes can be issued for more than one number of original invoices.

7. GST Audit

 The same is not applicable now to any Government Department, whose accounts are audited by Comptroller & Auditor General (C&AG) of India.

8. Place of Supply

1. New proviso has been inserted in Section 12 of IGST Act 2017, which states that the place of supply in case of transportation of goods to a place outside India shall be place of destination of such goods, i.e. place outside India. Accordingly, transportation of goods is not liable to GST when goods transported outside India from a place in India

2. As per the earlier provision of Section 13 of IGST Act 2017, tax exemption was available in case of job work services supplied in respect of goods which are temporarily imported into India only for the purpose of repairs and the said goods are exported back after such repairs.

However, amendment with effect from 1st Feb 2019 has been made to extent the tax exemption benefit in case of job work services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and the said goods are exported back after such repairs or treatment or process.
Accordingly, now the scope of exemption has been extended and covered all the process and treatment done on goods imported temporarily

9. Returns

It has been mentioned that Government may notify certain classes of registered persons who shall pay the tax due or part thereof as per the return on or before the last date on which he is required to furnish such return.

10. Input Tax Credit (ITC):

1. No reversal of common input tax credit is required on activities or transactions specified in schedule III other than sales of land and sale of building

2. New Section 43A has been introduced, which mentions to prescribe the procedure for furnishing return & availment of Input Tax Credit. It mentions that new rules may include that maximum ITC that can be utilized in that period shall not exceed 20% of ITC available.

3. The supplier and the recipient shall be jointly held liable for payment of tax or payment of input tax credit availed in relation to the outward supplies for which details have been furnished but the return has not been furnished.

4. The criteria for setting off of Input Tax Credit (ITC) has been changed by introduction of Section 49A & 49B

As per old rules, following was the priority of set-off of ITC was as below:

  • For CGST Output – First set off thru ITC of CGST, then IGST
  • For SGST Output – First set off thru ITC of SGST, then IGST
  • For IGST Output – First set off thru ITC of IGST, then CGST & then SGST

As per CGST (Amendment) Act 2018, the priority of set-off of ITC is as below:

  • For CGST Output- First set off thru ITC of IGST, then CGST
  • For SGST Output – First set off thru ITC of IGST, then SGST
  • For IGST Output – First set off thru ITC of IGST, then CGST & then SGST

Let us understand the same with help of an example:

Head

Output Liability Input Tax Credit available
(ITC)
As per old Set-off rules As per revised Set-off rules (applicable from 1st Feb 2019)
Paid thru ITC Paid thru Cash Paid thru ITC Paid thru Cash
CGST 800 500 CGST- 500
IGST- 300
0 IGST- 800 0
SGST 400 200 SGST-200
IGST-200
0 SGST- 200 200
IGST 0 800 0

(Author can be reached at simrankatyal96@gmail.com)

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One Comment

  1. S.K.Dash says:

    Dear Sir,
    Regarding IGST for distributors in fincial servi es such as brokers , Individual Financial Advisors GST limit increased from 20 Lakhs to 40 lakhs.
    Request to clarify.
    Thanks

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