A. Highlights of the Central Goods and Services Tax (Amendment) Bill, 2018
- Scope of Supply [Sec.7]
To remove anomaly in section 7, against the earlier provision which treated schedule II activities as supply, in the proposed amendment the activities/transaction which constitute supply shall be treated either as supply of goods or supply of services as referred in Schedule II – New sub-section is proposed to be introduced.
- Levy and collection [Sec.9]
Reverse charge mechanism (RCM) on purchases from unregistered suppliers shall be restricted to notified registered recipient of supplies of certain categories of goods or services or both. – Similar amendment has also been proposed in IGST/UT Amendment Bill, 2018.
- Composition levy [Sec.10]
– Statutory threshold of turnover for a taxpayer eligible for composition scheme will be raised from one crore to one crore and fifty lakh rupees, and
– The composition scheme taxpayer will be allowed to supply services (other than restaurant services), for value not exceeding ten per cent of turnover in preceding financial year or rupee five lakh, whichever is higher.
Amendment to Sub-sec.(1)
- Eligibility and conditions for taking input tax credit – [Sec.16]
Allow input tax credit for bill-to-ship-to model for supply of services – Amendment to Sub-sec.(2)
- Apportionment of credit and blocked credits [Sec.17]
To expand the scope of eligibility of input tax credit (ITC).
– 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
- Compulsory registration in certain cases [Sec.24]
As per proposed amendment the compulsory registration will be required to only those e- Commerce operator who are required to collect Tax at source.
- Procedure for registration [Sec.25]
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 SEZ Definition 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.
- Cancellation of registration [Sec.29]
To help assessee who had applied for cancellation of registration to not file GST returns, the amendment has been proposed to provide for temporary suspension of registration while cancellation is under process.
- Credit and debit notes [Sec.34]
The amendment has been proposed to allow registered person an option to issue consolidated credit/debit notes in respect of multiple invoices issued in a financial year.
- Accounts and other records [Sec.35]
The amendment has been proposed to allow Department of the Central or State Government or local authority which are subject to audit by Comptroller and Auditor General of India (CAG) to not get their books of account audited by any Chartered Accountant or Cost Accountant.
- Furnishing of returns [Sec.39]
Amendment has been proposed to prescribe procedures for filing quarterly returns with monthly payment of taxes and also to prescribe procedures for rectification of returns.
- Procedure for filing of return and availing input tax credit [Sec.43A]
For new returns which is proposed in coming months, as a step towards ‘Simplification of GST Return – Ease of doing business’, the new section has been inserted. The insertion is to provide for prescribing the procedure for quarterly filing of return and availing input tax credit.
- Payment of tax, interest, penalty and other amounts [Sec.49]
As per proposed amendment the credit of SGST or UTGST to be utilised for payment of IGST only when the balance of the input tax credit on account of CGST is not available for payment of IGST.
- 1 Utilisation of input tax credit and order of utilisation of input tax [Sec. 49A and Sec. 49B]
Sec.49A is inserted to specify that taxpayer would be able to utilise the input tax credit on account of CGST, SGST or UTGST only after exhausting all the credit on account of IGST available to him towards payment of IGST, CGST, SGST or UTGST.
New Sec.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 has also been proposed in UT Amendment Bill, 2018.
- Refund of tax [Sec.54]
- Unjust enrichment principle is to apply in case of refund claim arising out of supplies made to SEZ developer or unit.
- In case of export of services, to allow receipt of payment in Indian rupees, where permitted by the Reserve Bank of India.
- Recovery of tax [Sec.79]
Scope of authorities has been enhanced to enable recovery to be made from distinct persons registered in different states/Union territory from other establishments of the registered person.
- Appeals to Appellate Authority [Sec.107 and Sec. 112]
The upper limit for pre-deposits for filing of appeal will be:
Appeal before Appellate authority – 10% of tax demand subject to maximum of 25 crores/ 50 crores.
- Appeal before Appellate authority – 10% of tax demand subject to maximum of 25 crores/ 50 crores.
- Appeal before Appellate tribunal – 20% of tax demand subject to maximum of 50 crores/ 100 crores.
18. Transitional arrangement for input tax credit [Sec.140]
It has been clarified that with retrospective effect from 1.07.2017, 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 and will have severe adverse impact.
- Job Work procedures [Sec.143]
The Commissioner will have power 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
- Schedule-I ‘Activities to be treated as supply even if made without consideration’
As per proposed amendment, the scope has been enhanced, of Import of services made from a related person to include even ‘unregistered person’. Presently the entry is restricted only to taxable person.
Following additional activities to be treated neither as a supply of goods nor a supply of 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, and
- High sea sales.
Highlights of the Integrated Goods and Services Tax (Amendment) Bill, 2018
- Export of services [Sec.2(6)]
Supply of services to qualify as export even where payment is received in Indian rupees wherever permitted by RBI.
- Place of supply of services where location of supplier and recipient is in India [Sec.12]
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.
It will exempt the transaction, however, the same would be required to be considered as exempts supply for the purpose of reversal of Input tax credit.
- Place of supply of services where location of supplier or recipient is outside India [Sec.13]
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.