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GST UPDATES

GST UPDATES. By CA Umesh Sharma. Agenda. Retrospective Amendments i.e. w.e.f . 01.07.2017 Amendments effective from 01.02.2019 Notifications Circulars Expected Changes after 01.04.2019. Retrospective Amendments i.e . w.e.f . 01.07.2017. Section 7 – Scope of Supply. Section 7(3).

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GST UPDATES

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  1. GST UPDATES By CA Umesh Sharma

  2. Agenda • Retrospective Amendments i.e. w.e.f. 01.07.2017 • Amendments effective from 01.02.2019 • Notifications • Circulars • Expected Changes after 01.04.2019

  3. Retrospective Amendments i.e. w.e.f. 01.07.2017

  4. Section 7 – Scope of Supply

  5. Section 7(3) • Old: Subject to the provisions of subsections (1) and (2),the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as— (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. • New: Subject to the provisions of subsections (1) and (2), sub-sections (1), (1A) and (2),the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of good

  6. Section 140 (1)- Transitional arrangements for Input Tax Credit • Old : A registered person, other than a person opting to pay tax under section 10,shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed • New : A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit of eligible duties carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed

  7. Section 140- Explanation 1 • Old: For the purposes of sub-sections (3), (4)and (6), the expression― eligible duties means • New : For the purposes of sub-sections (3), sub-sections (1), (3),(4)and (6), the expression― eligible duties means

  8. Section 140 - Explanation 1 of clause(iv) • Old :the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978; • New : This clause has been omitted.

  9. Section 140- Explanation 2 • Old : For the purposes of sub-section (5),the expression ―eligible duties and taxes means–– • New :For the purposes of sub-section (5), sub-section (1) and (5),the expression ―eligible duties and taxes means––

  10. Section 140 - Explanation 2 of clause(iv) • Old : the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978; • New : This clause has been omitted

  11. Section 140 - Explanation 3 • New Insertion • For removal of doubts, it is hereby clarified that the expression ―eligible duties and taxes excludes any cess which has not been specified in Explanation 1 or Explanation 2 and any cess which is collected as additional duty of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975.

  12. Schedule 2 - Heading • Old :Activities to be treated as supply of goods or supply of service • New :Activities or transactions to be treated as supply of goods or supply of services

  13. Amendments effective from 01.02.2019

  14. Section 2(4)- Definition of Adjudicating Authority • Old : ―adjudicating authority means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority and the Appellate Tribunal; • New : adjudicating authority means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171”

  15. Section 2(17) (h)- Business • Old : services provided by a race club by way of totalisator or a licence to bookmaker in such club; and • New : activities of a race club including by way of totalisator or a license to bookmaker or activities of a licensed bookmaker in such club;

  16. Section 2(18)- Definition of Business vertical • Old :―Business vertical means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of the other business vertical • New : The whole definition is omitted

  17. Section 2(35)- Definition of Cost Accountant • Old : ―cost accountant means a cost accountant as defined in clause (c) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959. • New :Cost accountant means a cost accountant as defined in clause (c) clause (b)of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959.

  18. Section 2(69) (f)- Definition Local Authority • Old : A Development Board constituted under article 371 of the Constitution; • New : A Development Board constituted under article 371 and article 371Jof the Constitution;

  19. Section 2(102) - Definition of Services- Explanation inserted • New Insertion • Explanation.– For the removal of doubts, it is hereby clarified that the Expression ―services includes facilitating or arranging transactions in securities;

  20. Section 9(4)-Levy and collection • Old : The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient 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. • New : The Government may, on the recommendations of the Council, by notification, Specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of 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 such supply of goods or services or both

  21. Section 10(1)-Composition levy • Old : Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not exceeding, • New : Notwithstanding anything to the contrary contained in this Act but subject to the provisions of subsections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, , in lieu of the tax payable by him, an amount calculated at such rate in lieu of the tax payable by him under sub-section (1) of Section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding,

  22. Proviso to Sec 10(1) • Old : Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not exceeding one crore rupees, as may be recommended by The Council. • New : Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not exceeding one crore rupees one crore and fifty lakh rupees, as may be recommended by the Council. • After the proviso • Provided further that a person who opts to pay tax under clause (a) or clause (b) or clause (c) may supply services (other than those referred to in clause (b) of paragraph 6 of Schedule II), of value not exceeding ten percent of turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher. • Inserted

  23. Section 10(2)(a) • Old : he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II; • Substitution : save as provided in sub-section (1), he is not engaged in the supply of services;

  24. Section 12(2)(a)-Time of supply of goods • Old : the date of issue of invoice by the supplier or the last date on which he is required, under subsection (1)of section 31, to issue the invoice with respect to the supply; or • New : the date of issue of invoice by the supplier or the last date on which he is required, under sub-section (1) section 31, to issue the invoice with respect to the supply; or

  25. Section 13(2)(a)-Time of supply of Services • Old : the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2)of section 31 or the date of receipt of payment, whichever is earlier; or • New : the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) section 31or the date of receipt of payment, whichever is earlier; or

  26. Section 13(2)(b) • Old : the date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or • New : the date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) section 31or the date of receipt of payment, whichever is earlier; or

  27. Section 16(b)- ExplanationEligibility and conditions for taking input tax credit • Old : For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; • Substitution :For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services– • (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; • (ii) Where the services are provided by the supplier to any person on the direction of and on account of such registered person.;

  28. Section 17(3) ExplanationApportionment of credit and blocked credit • New Insertion :For the purposes of this subsection, the expression value of exempt supply ‘‘shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule.”

  29. Section 17(5) • Note - [Clause (a) and (b) replaced with (a), (aa), (ab) and (b)] • (a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:— (A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles; • (aa) vessels and aircraft except when they are used–– (i) for making the following taxable supplies, namely:— (A) further supply of such vessels or aircraft; or (B) transportation of passengers; or (C) imparting training on navigating such vessels; or (D) imparting training on flying such aircraft; (ii) for transportation of goods; • (ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa): • Provided that the input tax credit in respect of such services shall be available— (i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein;

  30. (ii) where received by a taxable person engaged— (I) In the manufacture of such motor vehicles, vessels or aircraft; or (II) In the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him; • (b) the following supply of goods or services or both— (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance: • Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; • (ii) membership of a club, health and fitness centre; and (iii) travel benefits extended to employees on vacation such as leave or home travel concession: • Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.

  31. Section 20 Explanation in clause (c)Manner of distribution of credit by Input Service Distributor • Old : the term turnover‘‘, in relation to any registered person engaged in the supply of taxable goods as well as goods not taxable under this Act, means the value of turnover, reduced by the amount of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the Constitution and entries 51 and 54 of List II of the said Schedule • New : the term turnover‘‘, in relation to any registered person engaged in the supply of taxable goods as well as goods not taxable under this Act, means the value of turnover, reduced by the amount of any duty or tax levied under entries 84 and 92A of List I of the Seventh Schedule to the Constitution and entries 51 and 54 of List II of the said Schedule

  32. Section 22(1)-Persons liable for registration • After the Proviso, • Provided further that the Government may, at the request of a special category State and on the recommendations of the Council, enhance the aggregate turnover referred to in the first proviso from ten lakh rupees to such amount, not exceeding twenty lakh rupees and subject to such conditions and limitations, as may be so notified."; • Inserted

  33. Section 22(iii) • Explanation to clause (iii) inserted • States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.

  34. Section 24 (x)- Compulsory registration in certain cases • Old : every electronic commerce operator • New : Every electronic commerce operator who is required to collect tax at source under section 52

  35. Section 25 (1)Procedure for registration • After the proviso • Provided further that a person having a unit, as defined in the Special Economic Zones Act, 2005, in a Special Economic Zone or being a Special Economic Zone developer shall have to apply for a separate registration, as distinct from his place of business located outside the Special Economic Zone in the same State or Union territory."; • Inserted

  36. Section 25(2) • Old : Provided that a person having multiple business verticals in a State or Union territory may be granted a separate registration for each business vertical, subject to such conditions as may be prescribed. • Substitution: Provided that a person having multiple places of business in a State or Union territory may be granted a separate registration for each such place of business, subject to such conditions as may be prescribed.

  37. Section 29- The marginal heading is changed • Old : Cancellation Of registration • New : Cancellation or suspension Of registration

  38. Section 29 (1)(c) • Proviso inserted ― • Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.

  39. Section 29(2) • After the proviso • Provided further that during pendency of the proceedings relating to Cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed. • Inserted

  40. Section 34(1)- Credit and Debit notes • Old : Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient a credit note containing such particulars as may be prescribed. • New :Where a tax invoice has Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient acredit note one or more credit notes for supplies made in a financial year containing such particulars as may be prescribed.

  41. Section 34(3) • Old : Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient a debit note containing such particulars as may be prescribed. • New :Where a tax invoice has Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient a debit note one or more debit notes for supplies made in a financial year containing such particulars as may be prescribed.

  42. Section 35(5)- Accounts and other records • Proviso inserted • Provided that nothing contained in this sub-section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.

  43. Section 48(2)Goods and services tax practitioners • Old : A registered person may authorise an approved goods and services tax practitioner to furnish the details of outward supplies under section 37, the details of inward supplies under section 38 and the return under section 39 or section 44 or section 45in such manner as may be prescribed. • New : A registered person may authorise an approved goods and services tax practitioner to furnish the details of outward supplies under section 37, the details of inward supplies under section 38 and the return under section 39 or section 44 section 45 and to perform such other functions in such manner as may be prescribed

  44. Section 49(5)(c)- Payment of tax, interest, penalty and other amounts • proviso inserted • Provided that the input tax credit on account of State tax shall be utilised towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax;

  45. Section 49(5)(d) • proviso inserted • ―Provided that the input tax credit on account of Union territory tax shall be utilised towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax;

  46. Section 49A • New Insertion • Notwithstanding anything contained in section 49, the input tax credit on account of Central tax, State tax or Union territory tax shall be utilised towards payment of Integrated tax, Central tax, State tax or Union territory tax, as the case may be, only after the input tax credit available on account of Integrated tax has first been utilised fully towards such payment.

  47. Section 49B • New Insertion • Notwithstanding anything contained in this Chapter and subject to the provisions of clause (e) and clause (f) of sub-section (5) of section 49, the Government may, on the recommendations of the Council, prescribe the order and manner of utilisation of the input tax credit on account of Integrated tax, Central tax, State tax or Union territory tax, as the case may be, towards payment of any such tax.

  48. Section 52(9)-Collection of tax at source • Old : Where the details of outward supplies furnished by the operator under sub-section (4) do not match with the corresponding details furnished by the supplier undersection 37, the discrepancy shall be communicated to both persons in such manner and within such time as may be prescribed. • New : Where the details of outward supplies furnished by the operator under sub-section (4) do not match with the corresponding details furnished by the supplier under section 37 or section 39, the discrepancy shall be communicated to both persons in such manner and within such time as may be prescribed.

  49. Section 54(8)(a)- Refund of tax: NON APPLICABILITY OF UNJUST ENRICHMENT • Old : refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies; • New : refund of tax paid on zero- rated supplies export of goods or services or both or on inputs or input services used in making such exports;

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