Govt plans 46 changes in, explanations to, GST laws

Shishir Sinha New Delhi | Updated on July 09, 2018 Published on July 09, 2018

Rejig Some changes are in response to earlier decisions taken by the GST Council, while a few have been proposed on the basis of representations made by trade and industry   -  shylendrahoode

Proposals include redefining reverse-charge mechanism, changes in input tax credit norms

A year after the introduction of GST, the government has proposed major changes in GST laws. The proposed changes include newer version of the Reverse Charge Mechanism, no transitional credit for cess, definition of services for composition scheme and input tax credit, among others.

It proposes 38 changes in CGST Act 2017, six changes and explanations in IGST Act 2017 and two in GST (Compensation to States) Act. Some of these changes are in response to earlier decisions taken by the GST Council, while a few have been proposed on the basis of representations made by trade and industry. The government has invited comments from stakeholders by July 15.

The Finance Ministry has already indicated that it will table the amendments during the forthcoming session of Parliament scheduled from July 18.

Abhishek Jain, Tax Partner at EY India, said, “Amendments like deletion of general reverse charge provisions on procurements from unregistered dealers, enabling provisions for new GST return filing process, allowing single debit/credit note for multiple invoices, etc, would aid in bringing quite an ease to businesses from a GST perspective.”

Reverse Charge Mechanism

Taking note of the recommendation of the Group of States’ Finance Ministers on RCM, it has now proposed to delete the present Section 9 (4) and introduce a new Section 9 (4), which will permit the government, on the recommendations of the GST Council, to notify a specific class of registered persons and goods that would be covered under the RCM provision.

While welcoming the change, Anita Rastogi, Indirect Tax Partner at PwC, said till the time GST law gets settled, this provision should not be brought into force. “There are still many areas which need to be addressed for ensuring a smooth GST compliance. We are yet still from it,” Rastogi said.

Any manufacturer or trader can opt for the composition scheme, provided his/her turnover is up to ₹1 crore. Also, barring restaurants, no services can be part of the composition scheme. Now based on decision by the GST Council, there is a proposal to raise the threshold to ₹1.5 crore.

Also, the demand of industry has been accepted in the proposed amendment where a manufacturer or trader can opt for composition scheme even if they supply services. But there is a condition prescribed that supply of services should not be more that 10 per cent of the total turnover or ₹5 lakh , whichever is lower in the previous financial years.

Input tax credit

The government proposes five changes and one explanation here. One such proposal talks about providing deeming provision for both goods and services. Deeming provision means the registered person is deemed to have received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of the said registered person. This definition will be applicable to services.

Another amendment proposed is to remove the liability to pay interest in case where the recipient has been made liable to pay an amount equal to the ITC availed in case he fails to pay to the supplier of goods or services or both the amount towards the value of supply along with tax payable thereon within a period of 180 days from the date of issue of invoice by the supplier.

MS Mani, Partner at Deloitte India, said, “The expansion of the input tax credit provisions and the beneficial changes in compliance provisions such as issue of consolidated debit/ credit notes, the proposed new return filing process, extension of the bill to ship to concept for goods to cover cases where the recipient of service is different from the payer etc would benefit all businesses”.

Despite the changes proposed, experts feel more needs to be done. “Transactions like denial of credit on repair and maintenance, general insurance, etc for motor vehicles, transition of cess credits, and some more may need a revisiting of tax position adopted by some businesses. Also, specific denial of transition of credit of cesses like education cess etc would be against the tax position that some tax payers had taken,” EY India’s Jain said.

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Published on July 09, 2018
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