Major Amendments proposed in CGST Act, IGST Act & GST (Compensation to States) Act, 2017

Section 2(4)- Adjudicating Authority

• National Anti-Profiteering Authority constituted by the Central Government under section 171 of the CGST Act
• excluded from the definition of ‘adjudicating authority’.
• Although ‘securities’ has been excluded from the definition of ‘goods’ and ‘services’ , facilitating or arranging transactions in securities is liable to GST
• Following explanation inserted in order to remove any doubts
• Explanation-For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or arranging transactions in securities.

Schedule III

• Following activities inserted in Schedule III – Activities treated as neither supply of goods not supply of services
• Out of scope/ Out and Out Supplies: Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering the taxable territory
• Supply of warehoused goods to any person before clearance for home consumption.
• Supply of goods as high seas sales

Section 7(1A)

• A new sub-clause (1A) to section 7 of CGST Act
• Certain activities or transactions, when constituting a supply in accordance with the provisions of sub-section (1), shall be treated either as supply of goods or supply of services as referred to in Schedule II.
• Earlier an activity listed in Schedule II would be deemed to be a supply even if it does not constitute a supply as per section 7(1) (a) or (b) or (c)

Section 9(4) of CGST Act, 2017

• Scope of supplies by unregistered person to registered person( under reverse charge mechanism) reduced
• Section 9(4) omitted and replaced with following ( so as to limit the provision to select class of persons)-
• 9 (4) The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of taxable goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.

Composition Scheme

• The limit is being raised from Rs. 1 crore to Rs. 1.5 crore as a measure of trade facilitation
• At present manufacturers and traders supplying services are unable to opt for the scheme even if its percentage is very small as compared to the supplies of goods.
• Therefore, a new proviso is being added in order to allow them to be eligible for the scheme even if they supply services of value not exceeding 10% of the turnover in the preceding financial year in a State/Union territory or Rs. 5 lakhs, whichever is higher.

Section 16(2)(b)- ITC

• One of the conditions for availing of credit by the registered person under the Act is the receipt of goods or services or both by him. In the case of “bill-to-ship-to” situations, for the purposes of availing of ITC on goods by the registered person, a deeming provision is present as an Explanation to section 16(2)(b) vide which the registered person is deemed to have received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of the said registered person.
• It is now proposed to provide this deeming fiction in case of services as well

Section 16(2) proviso

• It is proposed to remove the liability to pay interest in case where the recipient has been made liable to pay an amount equal to the ITC availed in case he fails to pay to the supplier of goods or services or both the amount towards the value of supply along with tax payable thereon within a period of 180 days from the date of issue of invoice by the supplier.

• Upon payment of the due amount to the supplier, the recipient shall be eligible to avail ITC of the said amount

Section 17(3)

• It is proposed to allow availment of ITC on activities or transactions specified in Schedule III (other than sale of land and sale of building) by excluding it from the ambit of ‘exempt supply’ on which ITC is blocked.

• Following italicised portion inserted at the end of section 17(3)-
• 17 (3) The value of exempt supply under sub-section (2) ………… but shall not include the value of activities or transactions (other than sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building) specified in Schedule III.

Section 17(5)

• Input tax credit would now be available in respect of dumpers, work-trucks, fork-lift trucks and other special purpose motor vehicles.
• Input tax credit would be denied only in respect of motor vehicles for transport of persons having approved seating capacity of not more than 13 persons (including the driver), vessels and aircraft when these are used for personal purposes.
• ITC will not be denied in respect of motor vehicles if they are used for transportation of money for or by a banking company or a financial institution.
• ITC in respect of services of general insurance, servicing, repair and maintenance in respect of those motor vehicles, vessels and aircraft on which ITC is not available under clause (a) of Section 17(5)
• Following sub-clause to be inserted
• (aa) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels and aircraft for which the credit is not available in accordance with the provisions of clause (a);
• Section 17(5)(b) is being amended
• ITC in respect of food and beverages, health services, travel benefits to employees etc., 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, to be allowed
• Following Proviso being added
• Provided that the input tax credit in respect of such goods or services or both shall be available, 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.

34 (1) & 34 (3)- Credit/Debit Notes

• At present, a credit/debit note which is issued by the registered person is required to be issued invoice-wise.
• It is proposed to allow issuance of consolidated credit/debit which is in line with the best international practices. The amendment seeks to permit a registered person to issue consolidated credit / debit notes in respect of multiple invoices issued in a Financial Year without linking the same to individual invoices.

Section 39(9)- Amendment of return

• Amendment of return:
• It is proposed to provide for allowing taxpayers to amend the returns. This would enable the taxpayers to correct inadvertent mistakes in the returns by filing an amendment return.

Section 43A

• 43A. Procedure for furnishing return and availing input tax credit.
• A new section is being introduced in order to enable the new return filing procedure as proposed by the Returns Committee and approved by GST Council.

Section 48- GST Practitioners

• Presently, the GST Practitioners are authorised to furnish the details of outward and inward supplies and various returns under sections 39, 44 or 45 on behalf of a registered person.
• It is proposed to allow the GST practitioner to perform other functions such as, filing refund claim, filing application for cancellation of registration etc.

Section 12(8) of IGST Act, 2017

• In order to provide a level playing field to the domestic transportation companies and promote export of goods, it is proposed that the transportation of goods from a place in India to a place outside India by a transporter located in India would not be chargeable to GST, as place of supply will be outside India.
• Following proviso inserted to section 12(8)
• Provided that if the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods

Section 13(3)(a)

• It is proposed to not tax job work of any treatment or process done on goods temporarily imported into India (e.g., gold, diamonds) which are then exported. Place of supply in such cases shall not be the place where services are actually performed
• The proviso to section 13(3)(a) amended
• Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and are exported after repairs or such treatment or process without being put to any other use in India, than that which is required for such repairs or such treatment or process;

Source- CBIC

Role of Delivery Challan under GST