GST Amendments effective from 1-Feb-2019

February 5, 2019
3 mins read

[By Shaleen Shah (Partner), VNCA]

Gist of amendments effected through CGST (Amendment) Act, 2018 and Rules thereto effective from 1-Feb-2019.

1) It is clarified that though GST is not applicable on transactions in ‘securities’, any fees or charges in relation to transactions in securities would be a consideration for provision of service and chargeable to GST.

2) Retrospective amendment w.e.f. 1-7-2017 is made such that to attract GST, activities/ transactions have to first fall within the meaning of `supply’. Activities/transactions that are merely covered under Schedule II, but otherwise do not constitute a ‘supply’ shall not be taxable.

3) Schedule III which lists transactions that do not constitute `supply’ has been amended to further include certain types of transactions in non taxable territory/beyond customs station.

4) Composition suppliers will be allowed to supply services of value not exceeding 10% of the turnover in a State/Union territory in the preceding FY or Rs. 5 lakhs, whichever is higher.

5) The meaning of ‘exempt supply’ for the purpose of reversal of common ITC is amended.

6) ITC on passenger vehicles having seating capacity of more than 13 persons (including driver) is eligible. Passenger vehicles of lesser seating capacity will be eligible only if used for specified purposes. Similarly, ITC on vessels and aircrafts will be available only when used for specified purposes. ITC will be available on goods transport vehicles.

7) ITC will not be available for services of general insurance, servicing, repair and maintenance, leasing, renting or hiring in so far as they relate to motor vehicles, vessels and aircraft for which the credit is not available.

8) ITC in respect of food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, life insurance and health insurance, membership of a club, health and fitness centre, travel benefits to employees, etc., can be availed where the provision of such goods or services is obligatory for an employer to provide to its employees under any law for time being in force.

9) Transitional Credit / carry forward of eligible duties in TRAN-1: The meaning of `eligible duties & taxes’ is restricted to exclude c/f of certain cesses.

10) Separate registration for multiple places of business within a State or Union territory is now allowed subject to conditions. Concept of `business vertical’ is deleted.

11) 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.

12) E-Commerce Operator (as defined) are mandatorily required to obtain registration only when they are required to collect at source.

13) A consolidated debit or credit note in relation to multiple invoices issued in a financial year is now permissible. Reference to the corresponding invoices is still required.

14) Utilisation of input tax credits will be in following sequence: (1) IGST = IGST > CGST > SGST; (2) CGST = CGST > IGST; (3) SGST = SGST > IGST.

15) Services shall qualify as exports even if the payment for the services supplied is received in Indian rupees if permitted by RBI.

16) `Bill to-Ship to’ extended to services also. Until now, if the goods are supplied by the supplier to the recipient on the direction of a third person, it will be deemed that the third person has received the goods, and the place of supply will be the principal place of business of such third person. This deeming fiction has been extended to services as well.

17) In case of service of transportation of goods outside India including through mail & courier, the place of supply will be the destination of goods. Consequently whether such services will be exempt or IGST be payable needs clarification.

18) Where services are supplied in respect of goods which are required to be made physically available, the performance based rule is applicable to determine the place of supply of services which means the place of supply of such services will be where the services are actually performed. This rule will not apply to services in respect of goods which are temporarily imported into India for repairs or any other treatment/process and re-exported without being put to use in India.

19) In case of supply of goods or services to SEZ unit/developer, refund shall not be allowed in case tax has been collected from such SEZ unit/developer.

20) Refund of accumulated input tax credit on account of inverted duty structure can be claimed within two years from the due date of furnishing the return for the period.

21) Authorities are now empowered to initiate recovery proceedings on `distinct persons’ i.e. other registered establishments in other States/UTs.

22) For inputs/capital goods sent to jobworker, there is a time limit of one year/three years for bringing back or further supplying such inputs/capital goods. On application, the Commissioner can extend this time limit by a further period of one year/two years respectively.

23) Provisions related to payment of GST on Reverse Charge Mechanism (RCM) basis on goods/services procured from unregistered persons have been amended. Further notification in this regard is not yet issued.

24) Amendments have been made pertaining to ceiling for pre-deposit of amount payable for filing appeals.

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