GST Amendment Act, 2018 & Its Impact: 20 Major Changes

Table of Content

THE CENTRAL GOODS AND SERVICE TAX (AMENDMENT) ACT, 2018

With the approval from the GST council in the meeting held on January 10 2019, the changes made by the CGST (Amendment) Act, 2018, IGST (Amendment) Act, 2018, UTGST (Amendment) Act, 2018 and GST (Compensation to States) Amendment Act, 2018 along with the corresponding changes in SGST Acts will be applicable from 1sr February 2019.

Keeping in view the implementation of the amendments made in the GST taking place from 1st Feb 2019, it is highly recommended that you must be aware of the changes that have been made in order to understand how they could affect your business.

While some of the amendments provide ease to businessmen, on the other hand, there are some that may be a cause of concern for certain businesses. It is highly recommended to go through some information in order to work accordingly from February 2019 onwards. Here’s an insight into the most important changes that have been made. In order to make it more understandable, we have provided explanations of all the points in a simplified manner.

Changes have been made in relation to various areas including the reverse charge in case of procurement from unregistered persons, eligibility for composition scheme, ITC on motor vehicles, deals involving import and export of goods and services and many more.

From eligibility of registration of e-commerce operators, multiple registrations within the same place, furnishing of returns, recovery of taxes from 2 different persons to the procedure of cancellation of GST registration, a lot has been amended and you must be aware of the new version of the GST that has been rolled out.

Here’s an article that includes the 20 most important amendment which one must read and will clarify all your queries about the changes that have been made in the respective section.

1. Reverse charge in case of procurement from unregistered persons Sec 9(4) of CGST Act 2018

Initially as per section 9(4) of CGST Act 2018, supply of goods or services, from unregistered person to registered person, were covered under reverse charge basis.

Later on vide notification no. 8/2017-Central Tax (Rate) dated 28th June2017 such reverse charge only applicable in case supply of goods and services received from unregistered person is greater than Rs. 5000 per day which again amended by notification no. 38/2017-Central Tax (Rate) dated 13th October 2017, the intra-state supplies of goods or services or both received by a registered person from unregistered person has been postponed from the central tax completely.

The said provision has been extended till 30th September, 2019, vide notification no. 22/2018 – Central Tax (Rate) dated 6th August, 2018.

However, with effect from 1st Feb 2019, Section 9(4) has been completely amended. Now the registered person is liable to pay tax on reverse charge basis only if following two conditions are satisfied –

  • Registered person is covered within the notified class; and
  • Registered person has received specified goods or service from the unregistered person.

With the amendment, the coverage of tax payable under reverse charge basis would be restricted.

It must be noted that the notified class of registered person and the specified categories of goods and services are yet to be notified by the Government and the same would be intimated as and when notified.

2. Composition dealer allowed to supply services

There are two major amendment in GST amendment act 2018 with respect to composition scheme, Earlier the threshold limit of turnover for the taxpayer to be eligible for the composition scheme is INR 1 Crore.

However, after amendment with effect from 01st Feb 2019 registered person having turnover up to INR 1.5 crore can opt for composition scheme.

Before 1st February 2019, Persons engaged in supply of services (other than restaurant service) are not eligible for the composition scheme or in other words person opted for composition scheme was not allowed to make supply of services.

With effect from 1st February 2019, Person opting for composition scheme is allowed to supply services other than services referred in para 6 (b) of schedule II. i.e. Restaurant services.

Total value of supply of services should not exceed higher of the following –

  • 10% of the turnover in the preceding financial year; or
  • INR 5 Lakhs
  • Rate of tax on services by composition dealer- .5% and .5%- SGST and CGST as per notification 8/2017 amended through notification 3/2019

The same can be understood with the help of following table

Nature of business Before 1st Feb 2019 With effect from 1st Feb 2019
Person engaged in supply of goods Threshold limit of turnover was 1 crore Threshold limit of turnover increased to 1.5 crore
Person engaged in supply of services Not eligible for composition scheme other than restaurant services Service provider are eligible for composition scheme subject to certain conditions

3. No reversal of common ITC for activities covered under Schedule III

Schedule III contain list of services which will be treated neither as a supply of goods nor a supply of services. Earlier activities covered under this schedule treated as part of exempted supply and reversal of common ITC was to be made.

However, with effect from 1st Feb 2019, new explanation has been inserted mentioning that the term ‘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.

Meaning thereby that 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 (other than those specified in paragraph 5).

4. Availability of ITC on purchase, leasing, renting or hiring of Motor Vehicles, Air craft and vessels

Earlier ITC on all type of motor vehicle was restricted however with effect from 1st Feb 2019, Input tax credit shall only be restricted in case of motor vehicle for transportation of persons having approved seating capacity up to 13 persons (including driver).

However, such motor vehicle when put to use for following purposes, ITC would be allowed even if there seating capacity is equal to or less than 13 people.

  • Further supply of such motor vehicles
  • Transportation of passengers
  • Imparting training on driving, such motor vehicle.

In other words, for all the motor vehicles with approved seating capacity of more than 13 people, ITC would be allowed.

In case of vessels and aircrafts, input tax credit shall be available only when vessels and aircrafts are used for following–

  • Further supply of such vessels or aircrafts;
  • Transportation of passengers;
  • Imparting training on navigating such vessels;
  • Imparting training on flying such aircrafts;
  • For transportation of goods.

5. Inputs tax credit on services of general insurance, servicing, repair and maintenance related to motor vehicle, aircraft and vessels

From 1st February, 2019, Services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft

  • If ITC of Such Motor Vehicle , Vessel or Aircraft is allowed
  • To manufacture of such motor vehicles, vessels or aircraft
  • To supplier of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him

6. ITC on food and Beverages, Outdoor catering, Beauty treatment etc.

From 1st February 2019, ITC on food and beverages, outdoor catering, beauty treatment etc. would be allowed in following circumstances

  • Only to those who provide same line of activities
  • If obligatory in nature to employee under any law

7. Compulsory registration for electronic commerce operator who are required to collect tax at source under section 52

Earlier Every electronic commerce operator were compulsory required to obtain registration however with effect from 1st Feb 2019 only those electronic commerce operator who are required to collect tax at source under section 52 are compulsory required to obtain registration.

Section 52 of the CGST Act mandates all the e-commerce operator to collect tax at source in respect of all the taxable supplies made through it by other suppliers, wherein, the consideration in respect of all such supplies is collected by it. Which means only those ecommerce operators who works under marketplace model, compulsory registration will be applicable such as amazon, flipkart etc.

8. Multiple registration with in same state for same business.

Earlier person is not allowed to take multiple registration with in same state for same business vertical. Only different verticals will be allowed to take separate registration.

Now registration can be taken based on place of business. multiple registration with in same state allowed for each place of business.

However, where multiple registration will be taken with in same state, each such registration shall be considered as distinct person and taxability will be applicable accordingly.

9. Suspension of GST registration until cancelled

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.

10. Issue Consolidate Debit note in place of invoice wise debit note–

Earlier as per the provision of section 34 Debit and Credit Note, single debit note or credit note is issued against each invoices.

With effect from 1st Feb 2019, the registered person is allowed to issue a consolidated debit / credit note in respect of the multiple invoices issued in a financial year. One to one correlation is not required.

11. Procedure for Furnishing Return and availing Input Tax Credit

Section 43A has been newly inserted. This section contain provision with respect to procedure for following –

  • The registered person can verify, validate, modify or delete the details of supplies furnished by the supplier in the returns furnished under section 39(1).
  • Procedure for availing input tax credit by the recipient and procedure for furnishing the details of outward supplies by the supplier for the purpose of availing input tax credit by the recipient shall be prescribed.
  • The amount of tax on details of outward supplies which has been declared by the supplier will be deemed to be payable by the supplier.
  • The supplier and the recipient are jointly 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.
  • Amendment in return shall be available in new return forms and not for existing returns.

12. Revised settlement system of Input Tax credit

Earlier The credit of SGST / UTGST can be utilized first towards payment of SGST / UTGST and second towards payment of IGST.

NEW SECTION 49A INSERTED –
As per the newly inserted section, input tax credit of IGST needs to be first utilized fully towards payment of IGST, CGST, SGST/UTGST.

Once the input tax credit of IGST is utilized, the input tax credit of CGST, SGST / UTGST can be utilized for payment of IGST, CGST, SGST/UTGST.

Before 1st Feb 2019, the ITC tax settlement was as per below table:

Settlement IGST Liabilities CGST Liabilities SGST Liabilities
First IGST CGST SGST
Second CGST IGST IGST
Third SGST

With effect from 1st Feb 2019, the ITC tax settlement will be as per below table:

Settlement IGST Liabilities CGST Liabilities SGST Liabilities
First IGST IGST IGST
Second CGST CGST SGST
Third SGST

Important conditions for utilization of input tax credit

  • Credit of IGST should be utilized fully. Once credit of IGST is utilized only then the credit of CGST and SGST can be used.
  • Credit of SGST can be utilized for payment of IGST only when balance of input tax credit on account of CGST is not available for payment of IGST.

13. Receipt of payment in Indian rupees permitted for refund of ITC under GST

As per the earlier provision in case of export of services, receipt has to be received in foreign convertible exchange only then such export of services will be qualified for refund of IGTS.

However with effect from 1st Feb 2019, In case of services exported out of India, the receipt of payment in Indian rupees which is permitted by the RBI, qualifies as export.

14. Recovery of tax from two distinct person

Explanation has been inserted which says that the word person shall include ‘distinct person’. Meaning thereby that recovery of tax can be made from distinct person present in different states / UTs.

15. Detention, Seizure and Release of goods and conveyances in transit

Earlier In case the person fails to pay the tax amount and penalty as provided under section 129(1) within 7 days of detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130.

From 1st Feb 2019 onwards, time limit of payment of tax amount and penalty has been increased from 7 days to 14 days. Which means that the proceedings in accordance with section 130 shall be initiated in case of non-payment within a period of 14 days of detention or seizure.

16. Transitional Arrangement of Input Tax Credit

The amendment is in the form of clarification and the same is having a retrospective effect from 1st July, 2017. The clarification is as follows –

  • Transitional credit of only the eligible duties can be carried forward in the returns.
  • The term ‘eligible duty’ and the term ‘eligible duties and taxes’, provided at explanation 1 and explanation 2, does not include the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978.
  • The term ‘eligible duties and taxes’ does not include any cess which has not been specified in explanation 1 and explanation 2 and any cess which is collected as additional duty of customs under section 3 (1) of the Customs Tariff Act, 1975. Which means transitional credit of any type of cess is not available under GST.

It is re-mentioned here that all the above points are in the form of clarification and the same are effective retrospectively from 1st July, 2017.

17. Extension in JOB WORK period

EARLIER POSITION –
A registered person can send inputs / capital goods to a job worker for job work purpose without payment of tax.
It is mandatory that the inputs need to be brought back within a period of one year and capital goods needs to be brought back within a period of three years.

AMENDMENT IN THE PROVISION –
The commissioner can extend the above referred period of one year (in case of inputs) and three years (in case of capital goods) for further period not exceeding one year (in case of inputs) and two years (in case of capital goods). However, it is mandatory to provide sufficient cause for the extension.

OUTCOME OF THE AMENDMENT –

Type of goods Time period within which the goods needs to be brought back Maximum further extension available on sufficient cause being shown
Inputs 1 year 1 year
Capital Goods 2 year 2 year

18. Place of supply will be outside India when goods transported outside India from a place in India

New proviso has been inserted which states that the place of supply in case of transportation of goods to a place outside India shall be the place of destination of such goods i.e. place outside India.

Earlier CGST and SGST was getting charged by courier companies in such cases, however after this amendment IGST would be charged by courier company even if service recipient and service provider both are in same state.

19. No GST on job work services of any treatment or processes on goods imported for job work in India.

As per the earlier provision, 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.

Now the scope of exemption has been extended and covered all the process and treatment done good imported temporarily.

20. Ceiling on limit of amount to be deposited before filling Appeal to Appellate Authority and Appellate Tribunal

Amendment has been made and ceiling on limit of amount to be deposited before filling appeal to appellate authority and appellate tribunal has been provided.

The same can be understood with the help following table.

Appellate Authority u/s 107 (6) 10% of the disputed tax amount subject to maximum limit of INR 25 crores.
Appellate Tribunal u/s 112(8) 20% of the disputed tax amount along with the amount deposited u/s 107(6) subject to maximum of INR 50 crores

Conclusion
Having listed the most important points from the amendments made, we hope we could help you understand them and their applicability in the future.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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