10 Changes in GST law by GST (Amendment) Act 2018

he Provisions of GST (Amendment) Act 2018 have been made applicable from 1st February 2019. Below is the gist of the amendments made thereon :

1. Definitions

i. Central Board of Excise & Customs (CBEC) has been substituted with Central Board of Indirect Taxes & Customs (CBIC)

ii. Following has been included in the definition of business : Activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club

iii. Definition of Business vertical has been removed

iv. It has been clarified that – “services” includes facilitating or arranging transactions in securities

2. Reverse Charge for supplies from unregistered to registered persons

Now only the goods or services, which will be notified by government, will be taxable under reverse charge, if supplied from unregistered person to the notified registered persons. Accordingly, coverage of this section is restricted now.

3. Composition Scheme:

1. Limit for composition scheme has been increased from Rs. 1 crores to Rs. 1.5 Crores

2. Composition dealers may now supply services of value not exceeding- 10% of turnover in a State or Union territory in the preceding financial year or 5 Lakhs, whichever is higher

3. Rate of tax on services by composition dealer- 0.5% and 0.5%- SGST and CGST

4. Inadmissible Input Tax Credits (ITC) under GST- Section 17(5) of CGST Act 2017

Following are amendments in regards to the same:

1. Earlier the ITC on all types of motor vehicles was restricted, however, the same has not been restricted only to motor vehicles having approved seating capacity up to 13 persons (including driver). However, it shall be allowed, If input service used for following taxable supplies:

a) further supply of such vehicles or conveyances

b) transportation of passengers

c) imparting training on such motor vehicles

2. ITC is not available on Vessels. However, it shall be allowed, if input service used for following taxable supplies:

a) further supply of such vessels & aircrafts

b) transportation of passengers

c) imparting training on navigating such vessels or flying aircrafts

d) transportation of goods

3. ITC has been blocked on Services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft, as specified in clause (a) and (b) above

4. Restriction of ITC in following cases:

ITC not available on	Exceptions
Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft as referred in clause (a) & (aa) above, except when used for the purposes specified therein, life insurance and health insurance	When used in supply of similar nature of business
Membership of a club, health and fitness centre	NO EXCLUSION
Travel benefits extended to employees on vacation such as leave or home travel concession	If input service used for: a) employees, if made obligatory by government under any law

5. GST Registration –

1. Earlier every Electronic commerce operator was liable to mandatorily get registered under GST, however, such has now been made mandatory, only if he is liable to collect tax at source.

2. Earlier a person was not allowed to take multiple registrations within same state for same business vertical. Only different verticals were allowed to take separate registration. However, now multiple registrations can be taken within same state for same business & each of them shall be treated as distinct person.

3. During the ongoing process of cancellation of registration, there would be temporary suspension of registration. This would result into releasing the compliance burden while the cancellation of registration is under process.

6. Invoicing

Now consolidated debit notes / credit notes can be issued for more than one number of original invoices.

7. GST Audit

 The same is not applicable now to any Government Department, whose accounts are audited by Comptroller & Auditor General (C&AG) of India.

8. Place of Supply

1. New proviso has been inserted in Section 12 of IGST Act 2017, which states that the place of supply in case of transportation of goods to a place outside India shall be place of destination of such goods, i.e. place outside India. Accordingly, transportation of goods is not liable to GST when goods transported outside India from a place in India

2. As per the earlier provision of Section 13 of IGST Act 2017, tax exemption was available in case of job work services supplied in respect of goods which are temporarily imported into India only for the purpose of repairs and the said goods are exported back after such repairs.

However, amendment with effect from 1st Feb 2019 has been made to extent the tax exemption benefit in case of job work services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and the said goods are exported back after such repairs or treatment or process.
Accordingly, now the scope of exemption has been extended and covered all the process and treatment done on goods imported temporarily

9. Returns

It has been mentioned that Government may notify certain classes of registered persons who shall pay the tax due or part thereof as per the return on or before the last date on which he is required to furnish such return.

10. Input Tax Credit (ITC):

1. No reversal of common input tax credit is required on activities or transactions specified in schedule III other than sales of land and sale of building

2. New Section 43A has been introduced, which mentions to prescribe the procedure for furnishing return & availment of Input Tax Credit. It mentions that new rules may include that maximum ITC that can be utilized in that period shall not exceed 20% of ITC available.

3. The supplier and the recipient shall be jointly held liable for payment of tax or payment of input tax credit availed in relation to the outward supplies for which details have been furnished but the return has not been furnished.

4. The criteria for setting off of Input Tax Credit (ITC) has been changed by introduction of Section 49A & 49B

As per old rules, following was the priority of set-off of ITC was as below:

• For CGST Output – First set off thru ITC of CGST, then IGST
• For SGST Output – First set off thru ITC of SGST, then IGST
• For IGST Output – First set off thru ITC of IGST, then CGST & then SGST

As per CGST (Amendment) Act 2018, the priority of set-off of ITC is as below:

• For CGST Output- First set off thru ITC of IGST, then CGST
• For SGST Output – First set off thru ITC of IGST, then SGST
• For IGST Output – First set off thru ITC of IGST, then CGST & then SGST

Let us understand the same with help of an example:

Head	Output Liability	Input Tax Credit available (ITC)	As per old Set-off rules		As per revised Set-off rules (applicable from 1st Feb 2019)
			Paid thru ITC	Paid thru Cash	Paid thru ITC	Paid thru Cash
CGST	800	500	CGST- 500 IGST- 300	0	IGST- 800	0
SGST	400	200	SGST-200 IGST-200	0	SGST- 200	200
IGST	0	800	–	0	–

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Due date to file Form GSTR-7 for January extended to 28.02.2019

CBIC extends the time limit for furnishing the FORM GSTR-7 return by a registered person required to deduct tax at source under GST Law for the month of January, 2019 till the 28th day of February, 2019.

Ministry Of Finance
(Department Of Revenue)
(Central Board Of Indirect Taxes And Customs)
New Delhi

Notification No. 8/2019–Central Tax

Dated: 8th February, 2019

No.

G.S.R. 101(E).—In exercise of the powers conferred by sub-section (6) of section 39 read with section 168 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act), the Commissioner hereby extends the time limit for furnishing the return by a registered person required to deduct tax at source under the provisions of section 51 of the said Act in FORM GSTR-7 of the Central Goods and Services Tax Rules, 2017 under sub-section (3) of section 39 of the said Act read with rule 66 of the Central Goods and Services Tax Rules, 2017 for the month of January, 2019 till the 28th day of February, 2019.

[F. No. 20/06/17/2018-GST (Pt. I)]

Dr. SREEPARVATHY S. L., Under Secy.

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Registration and cancellation of GST

Today we are again discussing about some advance provision of GST Registration and about cancellation of GST

Issue of Registration certificate.

A certificate of registration in FORM GST REG-06 showing the principal place of business and additional place or places of business shall be made available to the applicant on the common portal

A Goods and Services Tax Identification Number shall be assigned subject to the following characters, namely:-

(a) Two characters for the State code;

(b) Ten characters for the Permanent Account Number or the Tax Deduction and Collection Account Number;

(c) Two characters for the entity code; and

(d) One checksum character.

Date of registration

Date which show on the GST certificate

The registration shall be effective from the date on which the person becomes liable to registration where the application for registration has been submitted within a period of thirty days from such date.

Where an application for registration has been submitted by the applicant after the expiry of thirty days from the date of his becoming liable to registration, the effective date 7 of registration shall be the date of the grant of registration under sub-rule (1) or sub-rule (3) or sub-rule (5) of rule 9.

Separate registration for multiple business verticals within a State

If a person have multiple business verticals within a State or a Union territory than he will be need a separate registration.

(1) Any person having multiple business verticals within a State or a Union territory, requiring a separate registration for any of its business verticals under sub-section (2) of section 25 shall be granted separate registration in respect of each of the verticals subject to the following conditions, namely:-

(a) Such person has more than one business vertical as defined in clause (18) of section 2;

 (b) The business vertical of a taxable person shall not be granted registration to pay tax under section 10 if any one of the other business verticals of the same person is paying tax under section 9;

(c) All separately registered business verticals of such person shall pay tax under the Act on supply of goods or services or both made to another registered business vertical of such person and issue a tax invoice for such supply.

Explanation.- For the purposes of clause (b), it is hereby clarified that where any business vertical of a registered person that has been granted a separate registration becomes ineligible to pay tax under section 10, all other business verticals of the said person shall become ineligible to pay tax under the said section.

(2) A registered person eligible to obtain separate registration for business verticals may submit a separate application in FORM GST REG-01 in respect of each such vertical.

(3) The provisions of rule 9 and rule 10 relating to the verification and the grant of registration shall, mutatis mutandis, apply to an application submitted under this rule.

Application for cancellation of registration.-

a person to whom a registration has been granted under rule 12 or a person to whom a Unique Identity Number has been granted under rule 17, seeking cancellation of his registration under sub-section (1) of section 29 shall electronically submit an application in FORM GST REG-16,

attached some details of input held in stock or inputs contained in semi-finished or finished goods held in stock and of capital goods held in stock on the date from which the cancellation of registration is sought, liability thereon, the details of the payment

including therein the details of inputs held in stock or inputs contained in semi-finished or finished goods held in stock and of capital goods held in stock on the date from which the cancellation of registration is sought, liability thereon, the details of the payment,

Provided that no application for the cancellation of registration shall be considered in case of a taxable person, who has registered voluntarily, before the expiry of a period of one year from the effective date of registration.

Registration to be cancelled in certain cases.-

 The registration granted to a person is liable to be cancelled, if the said person,-

(a) If the registration person does not conduct any business from the declared place of business;

(b) Issues invoice or bill without supply of goods or services in violation of the provisions of this Act, or the rules made thereunder; or

 (c) Violates the provisions of section 171 of the Act or the rules made thereunder.

Cancellation of registration.-

(1)    Where the proper officer has reasons to believe that the registration of a person is liable to be cancelled under section 29, he shall issue a notice to such person in FORM GST REG-17,

 Requiring him to show cause, within a period of seven working days from the date of the service of such notice, as to why his registration shall not be cancelled.

(2)    The reply to the show cause notice issued under sub-rule (1) shall be furnished in FORM REG–18 within the period specified in the said sub-rule.

(3)    Where the reply furnished under sub-rule (2) is found to be satisfactory, the proper officer shall drop the proceedings and pass an order in FORM GST REG –20.

(4)    The provisions of sub-rule (3) shall, mutatis mutandis, apply to the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself.

if a person shall applied for cancellation than he is liable for return or not

Where a person who has submitted an application for cancellation of his registration is no longer liable to be registered or his registration is liable to be cancelled, the proper officer shall issue an order in FORM GST REG-19, within a period of thirty days from the date of application submitted under sub-rule (1) of rule 20 or, as the case may be, the date of the reply to the show cause issued under sub-rule (1), cancel the registration, with effect from a date to be determined by him and notify the taxable person, directing him to pay arrears of any tax, interest or penalty including the amount liable to be paid under subsection (5) of section 29.

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Input Service Distributor

  What is ISD (Input Service Distributor)?

Input Service Distributor (ISD) means an office of the supplier of goods or services or both which receives tax invoices towards receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax (CGST), State tax (SGST)/ Union territory tax (UTGST) or integrated tax (IGST) paid on the said services to a supplier of taxable goods or services or both having same PAN as that of the ISD.

What is the registration process under GST for ISD?,

An ISD will have to compulsorily take a separate registration as such ISD and apply for the same in form GST REG-1. There is no threshold limit for registration for an ISD. The other locations may be registered separately. The concept of ISD under GST is a legacy carried over from the Service Tax Regime. All the existing ISDs will be required to obtain fresh registration under new regime in case they want to operate as an ISD.

Situations where ISD is not applicable

ISD cannot distribute the input tax credit:

Paid on Inputs e.g Raw materials and capital goods e.g Machine purchased

To outsourced manufacturers or service providers.

 Is the ISD required to file return?

Yes, ISD is required to file monthly return by 13th of the following month in form GSTR-6.

Annual return & reverse charge mechanism is required for ISD?

An ISD shall not be required to file Annual return. An ISD cannot accept any invoices on which tax is to be discharged under reverse charge mechanism. This is because the ISD mechanism is only to facilitate distribution of credit of taxes paid.

Concept of distribution of Tax credit by ISD

Let’s take an example to understand this

 The Corporate office of ABC Ltd., is at Bangalore, with its business locations of selling and servicing of goods at Bangalore, Chennai, Mumbai and Kolkata. Software license and maintenance is used at all the locations, but invoice for these services (indicating CGST and SGST) are received at Corporate Office. Since the software is used at all the four locations, the input tax credit of entire services cannot be claimed at Bangalore. The same has to be distributed to all the four locations. For that reason, the Bangalore Corporate office has to act as ISD to distribute the credit.

Whether the excess credit distributed could be recovered from ISD by the department?

No. Excess credit distributed can be recovered along with interest only from the recipient and not ISD. The provisions of section 73 or 74 would be applicable for the recovery of credit.

What are the consequences of credit distributed in contravention of the provisions of the Act?

The credit distributed in contravention of provisions of Act could be recovered from the recipient to which it is distributed along with interest.

 Comprehension between the GST and the earlier tax structure

Point of Difference	Earlier Regime	GST Regime
1.  Who can be Input service distributor?	An office of the manufacturer or producer of final products or provider of output service	An office of the supplier of goods and/or services
2.  Document based on which credit can be distributed	Receives invoices issued under rule 4A of Service Tax Rules, 1994 towards purchase of input services	Receives tax invoices issued by supplier towards receipt of input services
3. How to distribute credit?	By issuing invoice, bill or challan for the purposes of distributing to such manufacturer or producer or provider.	By issuing an ISD invoice  for the purposes of distributing to a supplier of taxable goods and/or services having the same PAN as that of the office referred to above
4. Type of tax credit that can be distributed	The credit of service tax paid on the said services	The credit of CGST (SGST in State Acts) and/or IGST paid on the said services
5. To whom can it be distributed?	To its units and outsourced manufacturers	To supplier having the same PAN. i.e credit cannot be distributed to outsourced manufacturers or service providers.