Arjun (Fictional Character): Krishna, What are the changes made in GST in Budget?

Krishna (Fictional Character): Arjuna, Recently the Finance Minister declared the Interim Budget for 2019-20. No such changes were proposed under GST. Earlier the recommendations were made to amend certain provisions. Some of the provisions are now made applicable from 1st Feb, 2019. Most of the taxpayers being unware of the same, let’s discuss them.

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Arjun: Krishna, Which are the amendments made applicable from 1st Feb, 2019?

Krishna: Arjuna the amendments made  applicable from 1st Feb, 2019 are as under:

1. Earlier supplier of goods and services were not allowed to opt for composition scheme but now they can apply if the value of supply of service does not exceed – higher of the amount-

a) 10% of the state turnover in the previous financial year and

b) 500000

For Eg. If a taxpayer supplies goods as well as services and had turnover of Rs.40 lakh in the previous Financial year then he can opt in composition scheme if the supply Value of services do not exceed Rs.500000 (Higher of (40 lakh*10%=400000 or Rs.500000))

2. Reverse charge mechanism shall be applicable to notified registered persons for the purchases made of notified goods but until now neither the class of registered persons nor the category of the specified goods has been prescribed by the Govt. Therefore until and unless notified, RCM will not applicable.

3. Input Tax Credit in relation to Passenger Vehicle having seating capacity of more than 13 , used for other than Personal purpose would be allowed

Due to this input tax credit would now be available in respect of dumpers, work-trucks, fork-lift trucks and other special purpose motor vehicles when used for other than personal purpose.

For ex. If a company purchases a bus for its employees conveyance, the ITC of tax paid on such bus purchased would now be available as its more than 13 seater and also not used for personal purpose

4. If ITC is allowed for purchase of motor vehicle as above then, ITC in respect of services of general insurance, servicing, repair and maintenance in respect of those motor vehicles, vessels and aircraft would also be allowed.

5. ITC was not available in respect of food and beverages, health services, travel benefits to employees etc.

But now it has been amended, to allow ITC in respect of such goods or services or both, where the provision of such goods or services or both is obligatory for an employer to provide to its employees under any law for the time being in force.

6. Government has now allowed a person having multiple places of business within the state to obtain separate registration for each place of business irrespective of nature of goods etc. as the definition of business vertical is omitted from the act.

7. Taxpayer can now issue single debit/credit note against multiple invoices there is no need to link the notes to individual invoices. This is a welcomed change, as the compliance burden on the taxpayers would be reduced.

8. Utilization of SGST for IGST liability would not be allowed until and unless credit of s CGST is totally utilized.

Arjun: What one should learn from this?

Krishna: Arjuna, Under GST, the GST Council is allowed to do the amendments in law. Therefore, in Interim Budget, no much more provisions relating to GST were referred. So the taxpayers must time to time refer the notifications, circulars, etc issued by the Council.

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June 2021