CGST/IGST Amendment Bill 2018: Key Highlights

On 8^th of August 2018, the Central Government of India introduced these four GST amendment bills in the Lok Sabha.

1. CGST Amendment Bill – 2018
2. IGST Amendment Bill – 2018
3. UGST Amendment Bill – 2018, &
4. GST (Compensation to States) Amendment Bill – 2018

We shall now review only the key highlights of CGST and IGST Amendment Bill 2018.

A. Key Highlights of CGST Amendment Bill – 2018

1. (Section – 7) Scope of Supply – New sub-section is proposed to be introduced to remove anomaly in this section (Sec. 7) and activities/transaction which constitute supply shall be treated either as supply of goods or supply of services as referred to in Schedule II as against earlier provision which treated schedule II activities as supply.
2. (Section – 9) Levy and Collection – The mechanism for Reverse Charge Tax 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 has also been proposed in IGST/UT Amendment Bill).
3. (Section – 10) Composition Levy – (Sub-section (1) proposed for amendment to) –

(i) – Raise the statutory threshold of the turnover for a taxpayer eligible for composition scheme from ₹ 1 crore to ₹ 1.5 crores, and;

(ii) – Allow composition scheme taxpayer to supply services (other than restaurant services), for value not exceeding 10% of turnover in preceding Financial Year or ₹ 5 lakhs, whichever is higher.

4. (Section – 16) Eligibility and Conditions for Input Tax Credit (ITC) – Sub-section (2) proposed to be amended in order to allow Input Tax Credit for a bill-to-ship-to model for the supply of services.
5. (Section – 24) Compulsory Registration – Compulsory registration should be applied to only those e-Commerce operators who are required to collect Tax at Source (TCS).
6. (Section – 25) Procedure for Registration – Looking for the amendment 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 SEZ definition of business vertical is proposed to be removed and correspondingly the concept of business vertical wise registration is proposed to be deleted and allow registration basis place of business.
7. (Section – 29) Cancellation of Registration – With a view to helping those assessees who had applied for cancellation of registration to not file GST returns. Amendment has been proposed to provide for temporary suspension of registration while the cancellation is under process.

8. (Section – 34) Credit Note & Debit Note – To provide the registered person an option to issue consolidated Credit Notes/Debit Notes in connection of multiple invoices issued in a Financial Year.
9. (Section – 35) Accounts and other Records – Department of the Central / State Government or local authority which is subject to audit by Comptroller and Auditor General (CAG) of India to not get their books of accounts audited by any Chartered Accountant or Cost Accountant.

10. (Section – 39) Furnishing of Returns – A separate proposal has been placed for Amendment to prescribe procedures for filing quarterly returns with monthly payment of taxes and also to prescribe procedures for the rectification of returns.
11. (Section 43 A) Availing Input Tax Credit & procedure for filing of Return – For the filing of new Returns (proposed in coming months), a new section is inserted as a step towards ‘Simplification of GST Return – Ease of doing businesses’. The insertion to provide for prescribing the procedure for quarterly filing of return and availing input tax credit.

12. (Section 49) Payment of Interest, Tax, Penalty and other amounts – Credit of State tax or Union Territory tax to be utilized for the payment of integrated tax only if the balance of the input tax credit on account of central tax is not available for payment of integrated tax.
13. (Section 79) Recovery of Tax – 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.
14. (Section 140) Transitional arrangement for ITC (Input Tax Credit) – This is a major retrospective amendment proposed for the clarification that with retrospective effect (i.e. since 1 July 2017), cesses and additional duty of excise (on textile and textile articles) levied under the pre- GST laws shall not form any part of transitional Input Tax Credit.
15. (Section 143) Job Work Procedures – Empowering the Commissioner to extend the time limitation for the return of inputs up to a period of one year and capital goods sent on job work up to two years.
16. Activities to be treated as supply even if made without consideration (Schedule – I) – For the enhancement of the scope of Import of services made from a relevant person to include even ‘unregistered person’. Currently, this entry is restricted only to taxable persons.
17. (Section 107 & 112) Appeals to Appellate Authority –

For setting the upper limit for pre-deposits for the filing of appeal-

• The appeal before the Appellate Authority – 10% of tax demand subject to a maximum of 25 crore/50 crores.
• The appeal before the Appellate Tribunal – 20% of tax demand subject to a maximum of 50 crore/100 crores.

18. (Section 49A & 49B) Utilization of Input Tax Credit (ITC) & the order for the utilization of Input Tax – New/Modified sections for specification that taxpayer would be able to utilize 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/her towards the payment / integrated tax, Central tax, State tax or Union territory tax. While Section 49B seeks for empowering the Government to prescribe any specific order of utilization of Input Tax Credit of any of the taxes for paying any kind of tax.
19. (Section 17) Apportionment of Credit and Blocked Credits – Seeking to amend the section to expand the scope for Input Tax Credit eligibility.

• Activities or Transactions specified in Schedule III which shall not be treated either as a supply of Goods or as a supply of services’ (except para 5 of the schedule) not to be treated as exempt supply.

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

• Motor Vehicles for transportation of persons having a seating capacity of not more than thirteen (including the 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 a seating capacity of not more than thirteen (including the driver), vessels and aircraft on which credit is not available.
• Credits on General Insurance, servicing, repairs and maintenance shall be available.
• Motor vehicles, vessels or aircraft for making specified taxable supplies.
• A taxable person engaged in Manufacture of motor vehicles, vessels or aircraft 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.

20. (Section 54) Refund of Tax –

• Unjust enhancement principle to apply in case of refund claim arising out of supplies made to Special Economic Zone (SEZ) developer/unit.
• For allowing the receipt of payment in Indian rupees, where permitted by the Reserve Bank of India in special cases of export of services.

B. Key Highlights of IGST Amendment Bill – 2018

1. {Section 2 (6)} Export of Services – Supply of services to qualify as an export even where payment is received in Indian rupees, wherever permitted by RBI.
2. (Section 12) Location of the supply of services where the location of the supplier and the recipient is in India itself –

• Provided where the supply of service is towards transportation of goods and where the transportation is to a place outside of 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. (Section 13) Location of the supply of services where the location of the supplier or the recipient is outside of India – Provided, where the goods are temporarily imported inside India for job work and then exported without putting them into any use in here (in India) – Place of supply shall be deemed to be outside India.

Conclusion:

This Amendment Bill has been carved with extreme care for the benefit of both the seller as well as the consumer. Thus, it will remove the confusion and complications too.