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Key highlights of CGST / IGST Amendment Bill 2018

Central Government has introduced 4 GST amendment bills in Lok Sabha on Eighth August 2018 which are 1. CGST (Amendment) Bill 2018 2. IGST (Amendment) Bill 2018 3. UTGST (Amendment) Bill 2018 and 4. GST (Compensation to States) Amendment Bill 2018. 

Key highlights of the Central Goods and Services Tax (Amendment) Bill 2018

1. Scope of Supply [Section 7]

New sub-section is proposed to be introduced to remove anomaly in section 7 and accordingly activities/transaction which constitute supply shall be treated either as supply of goods or supply of services as referred in Schedule II as against earlier provision which treated schedule II activities as supply.

2. Levy and Collection [Section 9]

Reverse charge tax mechanism on purchases from unregistered suppliers to be restricted to notified registered recipient of supplies of certain categories of goods or services or both similar amendment also proposed in IGST/UT Amendment Bill.

3. Composition levy [Section 10]

Sub-section (1) proposed to be amended to

– Raise statutory threshold of turnover for a taxpayer eligible for composition scheme from one crore to one crore and fifty lakh rupees and

-Allow composition scheme taxpayer to supply services (other than restaurant services), for value not exceeding ten per cent of turnover in preceding financial year or rupees five lakh, whichever is higher

4. Eligibility and conditions for Input Tax credit [Section 16]

Sub-section (2) proposed to be amended in order to allow input tax credit for bill-to-ship-to model for supply of services

5. Apportionment of credit and blocked credits [Section 17]

Seek to amend the section to expand the scope of eligibility of input tax credit.

-Activities or Transactions specified in Schedule III which shall not be treated neither as a supply of Goods nor a supply of services’ (except para 5 of the schedule) not to be treated as exempt supply

-Ineligible credits in relation to motor vehicle have been restricted to the following

-Motor Vehicles for transportation of persons having seating capacity of not more than thirteen (including driver), vessels and aircraft except when they are used for making specified taxable supplies

-General Insurance, servicing, repairs and maintenance in respect of motor vehicles for transportation of persons having seating capacity of not more than thirteen (including driver), vessels and air craft on which credit is not available

-Credits on General Insurance, servicing, repairs and maintenance shall be available

-motor vehicles, vessels or aircrafts for making specified taxable supplies

-Taxable person engaged in Manufacture of motor vehicles, vessels or aircrafts; or

– Supply of general insurance services in respect of such motor vehicles, vessels or aircrafts insured by him

-Goods or services which are obligatory for an employer to provide to its employees under any law

6. Compulsory Registration [Section 24]

Compulsory registration to only those e- Commerce operator who are required to collect Tax at source.

7. Procedure for Registration [Section 25]

Seek to amend to allow option of multiple registration within states/union territory in respect of multiple places of business located within state/union territory and separate registration for a person having a unit(s) in special economic zone (SEZ) or SEZ developer, distinct from his other units located outside the SEZDefinition of business vertical is proposed to be deleted and correspondingly the concept of business vertical wise registration is proposed to be deleted and allow registration basis place of business.

8. Cancellation of Registration [Section 29]

Amendment proposed to provide for temporary suspension of registration while cancellation is under process.
This would help assessee who had applied for cancellation of registration to not file GST returns.

9. Credit and Debit Notes [Section 34]

To allow registered person an option to issue consolidated credit/debit notes in respect of multiple invoices issued in a financial year.

10. Accounts and Other records [Section 35]

Department of the Central or state Government or local authority which are subject to audit by Comptroller and Auditor General of India to not get their books of account audited by any Chartered Accountant or Cost Accountant.

11. Furnishing of Returns [Section 39]

Amendment proposed to prescribe procedures for filing quarterly returns with monthly payment of taxes and also to prescribe procedures for rectification of returns.

12. Procedure for filing of return and availing Input tax credit [Section 43A]

For new returns which is proposed in coming months, new section is inserted as a step towards ‘Simplification of GST Return – Ease of doing business’. The insertion to provide for prescribing the procedure for quarterly filing of return and availing input tax credit.

13. Payment of Tax, interest, penalty and other amounts [Section 49]

Credit of State tax or Union Territory tax to be utilised for payment of integrated tax only when the balance of the input tax credit on account of central tax is not available for payment of integrated tax.

14. Utilisation of Input Tax credit and order of utilisation of Input tax [Section 49A and 49B]

New sections to specify that taxpayer would be able to utilise the input tax credit on account of central tax, State tax or Union territory tax only after exhausting all the credit on account of integrated tax available to him towards payment or integrated tax, Central tax, State tax or Union territory tax. Section 49B seeks to empower the Government to prescribe any specific order of utilisation of input tax credit of any of the taxes for payment of any tax.

Corresponding amendment also proposed in UT Amendment Bill.

15. Refund of Tax [Section 54]

  • Unjust enrichment principle to apply in case of refund claim arising out of supplies made to SEZ developer or unit
  • To allow receipt of payment in Indian rupees, where permitted by the Reserve Bank of India in case of export of services

16. Recovery of Tax [Section 79]

Scope of authorities enhanced to enable recovery to be made from distinct persons registered in different states/Union territory from other establishments of the registered person.

17. Appeals to Appellate Authority [Section 107 and 112]

To set upper limit for pre-deposits for filing of appeal

  • Appeal before appellate authority – 10 per cent of tax demand subject to maximum of 25 crore/50 crore
  • Appeal before appellate tribunal – 20 per cent of tax demand subject to maximum of 50 crore/100 crore

18. Transitional arrangement for Input tax credit [Section 140]

To clarify that with retrospective effect i.e. 1 July 2017, cesses and additional duty of excise (on textile and textile articles) levied under the pre- GST laws shall not form part of transitional input tax credit.This is a major retrospective amendment proposed.

19. Job Work procedures [Section 143]

To empower Commissioner to extend the time limit for return of inputs and capital goods sent on job work, up to a period of one year and two years respectively

20. Schedule I ‘Activities to be treated as supply even if made without consideration’–

To enhance the scope of Import of services made from a related person to include even ‘unregistered person’. Currently the entry is restricted only to taxable person.

21. Schedule III –

Following additional activity to be treated neither as a supply of goods nor a supply o services

  • Goods supplied from a place in a non- taxable territory to another place in non- taxable territory without goods entering into India
  • Supply of warehoused goods (bond sales) to any person before clearance for home consumption
  • High sea sales

Key highlights of the Integrated Goods and Services Tax(Amendment) Bill 2018

1. Export of Services [Section 2(6)]

Supply of services to qualify as export even were payment is received in Indian rupees wherever permitted by RBI.

2. Place of Supply of services where location of supplier and recipient is in India [Section 12]

Provide where the supply of service is towards transportation of goods and where the transportation is to a place outside India, the place of supply shall be the destination of such goods.

Though it exempts the transaction, the same would be required to be considered as exempts supply for the purpose of reversal of Input tax credit.

3. Place of Supply of services where location of supplier or recipient is outside India [Section 13]

Proposed to provide, where goods are temporarily imported into India for job work and then exported without putting them to use in India – Place of supply shall be deemed to be outside India

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