The Minister of Finance, Govt of India, Mr. Piyush Goyal introduced The Central Goods and Services Tax (Amendment) Bill, 2018 in the Lok Sabha on August 7, 2018. The Bill brought about some amendments to the Central Goods and Services Tax Act, 2017.
The Act mentions in full detail the framework of how the central government would implement and also collect the GST on the supply of goods and/or services between states. Most of the provisions are in force from February 1, 2019; and they are applicable from July 1, 2017 – with retrospective effect. Now we will take a look at some of the main amendments:
- Central Board of Indirect Taxes and Customs (CBIC) has replaced the Central Board of Excise & Customs (CBEC).
- The Amendment has removed the definition of Business Vertical
- The Amendment brings the activities of a race club within the purview of business. These activities can be the use of a totalizator (a device which details the number and amount of bets made, and subsequently facilitates the division of the total bet money among the winners), or the activities of a licensed bookmaker within such a club.
- The Amendment has also clarified that “services” will also mean the facilitation of transactions in securities.
Under the previous CGST Act, 2017, taxpayers who had a yearly turnover of up to Rs 1 crore, need to pay GST on the turnover, instead of the value of the goods and services. But under the provisions of the GST Amendment, the government has raised the ceiling on this amount. The increased limit is Rs 1.5 crore.
Suppliers of Services – Eligibility
Under the existing Act, only the restaurant service suppliers (among service suppliers) could come under the Composition Scheme. But this GST Amendment has made other service suppliers eligible as well; subject to the condition that the worth of these services will be less than or equal to 10% of their turnover in the previous financial year, and that too within the state; or Rs 5 lakhs – whichever is lower.
It might happen that an unregistered (under GST) person supplies goods or services to a registered person. In such a case, the goods and services will be taxable under Reverse Charge, but the charge will be applicable only on those goods and services which the government will notify. Thus, the coverage of this section after the GST Amendment is low.
Under the CGST Act 2017, a person could not take multiple registrations for the same business vertical within the same state. He/she could do so only if there were different business verticals. But under this GST Amendment, businesspersons can opt for multiple registrations for the same business within the same state. Each such registration will be considered a separate person. Also, if someone has a business unit in an SEZ (Special Economic Zone), then the businessperson needs to register separately for this particular unit.
Under the existing Act, it was mandatory for e-commerce businesses to register under GST. After the Amendment, however, it is mandatory only for those who collect payment and additional tax at source (which is <= 1% of value).
The Act requires any businessperson, whose turnover exceeds Rs 40 lakhs per annum, to register under its provisions if he/she supplies goods, or Rs 20 lakhs if he/she supplies services. The threshold, however, was Rs 10 lakhs for states coming under a special category, except Jammu & Kashmir. But with the GST Amendment, this limit has gone up to Rs 20 lakhs for Arunachal Pradesh, Himachal Pradesh, Meghalaya, Assam, Sikkim & Uttarakhand. The Amendment also has a provision, whereby the GST council can raise the ceiling to Rs 20 lakhs for the remaining states under a special category.
Input Tax Credit – Scope
Under the existing Act, Input Tax Credit (ITC) was applicable to motor vehicles and other modes of conveyances – provided, they were being used for specific objectives, including goods transportation. The Amendment, however, makes a clear distinction between motor vehicles (who can seat a maximum of 13 people) and vessels & aircraft.
The Amendment mentions that only vessels & aircraft can avail of ITC for transporting goods. It also specifies that employees who get travel benefits like concessions on leave or on home travel, can’t avail of ITC – unless the employer is mandated by law to offer these benefits.
The Amendment has introduced a new provision. Under this, persons registered under GST, can validate, edit or even delete the details of supplies registered by registered suppliers, in their returns. Also, certain categories of registered persons can go for a quarterly return filing system.
Under the existing Act, in the event of receipt of excess tax, or return of supplied goods or services, a registered supplier had to separate debit or credit notes to the recipient for every single invoice. But under the GST Amendment, a supplier can issue a consolidated note for more than one invoice.
Place Of Supply
If the businessperson transports goods to a place outside of India, then the Act considers the place of supply to be the final destination of the goods. Hence, such goods didn’t come under the purview of GST. Also, under Section 13 of the existing Act, there was a provision – whereby, if goods were temporarily imported to India for carrying out repairs and the businessperson would export the goods back after completing the repairs, then the job work services on these goods don’t attract GST.
However, as per the Amendment, any kind of treatment or processing of such goods (not limited to only repairs) will enjoy the same tax exemption benefit. Thus, the GST Amendment has widened the exemption net.
To conclude, the whole intention of introducing GST was to simplify the tax procedure & minimize evasions. The concept is continuously being fine-tuned to make it more business-friendly. This Amendment is another step towards that goal.