Draft of changes proposed by GST council; employers may get to claim ITC on food, transport

Draft of changes proposed by GST council; employers may get to claim ITC on food, transport: The government has proposed as many as 46 amendments to the Goods and Services Tax (GST) laws Central GST, State GST, Integrated GST and Compensation of Sates Act. Employers will soon be able claim inputtaxcredit on facilities like food, transport and insurance provided to employees under any law, once the proposed amendments to theGSTAct are approved by Parliament and the state legislatures. The government has proposed as many as 46 amendments to theGoods and Services Tax(GST) laws Central GST, State GST,IntegratedGST and Compensation of Sates Act.

Followning are few important draft of changes out of 46 changes as proposed by GST Council which will be discussed in the upcoming GST council meeting.

1. The demand of industry for allowing cess credit has been turned down.
2. In a significant easing of compliance norms, it is proposed that businesses will be allowed to amend GST returns.
3. Aimed at benefitting smaller businesses, the turnover threshold for composition dealers is proposed to be raised to Rs 1.5 Crores.
4. GST liability under reverse charge basis on procurement from unregistered vendors is proposed to be restricted to specified classes of registered persons.
5. It is proposed that e-commerce companies with a turnover of less than Rs 20 lakh and not liable to deduct tax at source will not be required to register with the tax authorities.
6. The provision barring input tax credit for food and beverages, health services and travel benefits provided to employees is poposed to be amended to allow the tax benefit where it is obligatory for entities to provide such goods and services under any law.
   • This would mean banks can now get input tax credit on the life insurance premium paid for security guards, hospitals for medical insurance premium paid for nurses and companies for canteen fees charged to labourers. In places where the state law mandates that women employees be dropped home at night, the facility would count for input tax credit.
7. Passenger vehicles with a seating capacity of over 13 will be eligible for input tax credit, resulting in vehicles such as dumpers, trucks, fork lifts becoming eligible to claim credit for tax paid on inputs.
8. Such amendments and clarification will be made so that Goods stored in warehouses will face tax only once and not twice.
9. It is proposed 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. Since upon payment of the due amount to the supplier, the recipient shall be eligible to avail ITC of the said amount, it is believed that liability to pay interest is too onerous and should be removed.
10. The State of Assam has requested that the threshold exemption for registration in their State should be raised from Rs.10 lakhs to Rs.20 lakhs
11. The amendment seeks to permit a registered person to issue consolidated credit / debit notes in respect of multiple invoices issued in a Financial Year without linking the same to individual invoices.
12. A new section is being introduced in order to enable the new return filing procedure as proposed by the Returns Committee and approved by GST Council.

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