Summary of Changes proposed by CGST & IGST Amendment Act 2018

Sr. No.

Particulars

Relevant Section

Act

Details of Amendment

Nature of Amendment

Remarks

1

Exports of Services

Section 2 (6) (iv)

IGST Act, 2017

The said clause has been amendment to include the remittance received in Indian rupees wherever permitted by Reserve Bank of India to consider a transaction as export of services.

Prospective

The definition of export of services has been widen to include the payments received in INR for cases where the same is permitted by Reserve Bank of India.

2

Reverse Charge on Supplies from unregistered vendors

Section 5 (4)

IGST Act, 2017

Reverse charge on supply of goods or services or both, from unregistered suppliers shall only be applicable for the specified persons in case of specified supplies.

Prospective

The provisions related to reverse charge on procurement from unregistered vendors were earlier defferred till 30 September 2019. Post this amendment, said provisions would be applicable only for a specified class of persons in case of specified supplies as notified by Government. Corresponding amendments have been brought in CGST Act, 2017.

3

Place of Supply Transportation of Goods

New Proviso to Section 12 (8)

IGST Act, 2017

The proviso has been inserted to provide for the place of supply of services where transportation of goods is to a place outside India. In such cases, the place of supply shall be destination of such goods i.e. outside India.

Prospective

The place of supply for services of transportation of goods to a place outside India, where both supplier and recipient are in India, is proposed to be a place outside India. However, as per section 7(5), the transaction will be treated as inter-state supply (even though place of supply is outside India). This may not achieve the objective of providing level playing field to domestic transportation companies. Instead, the recipient may not be eligible to claim the credit of IGST charged to it.

4

Place of Supply Goods imported for repairs

2nd Proviso to Section 13 (3) (a)

IGST Act, 2017

Place of supply of services rendered with respect to goods temporarily imported in India for repairs including any other treatment or process and exported without being put to use shall be outside India.

Prospective

As mentioned in the proposal for amendments, said amendment has been made to not tax job work of any treatment or process done on goods temporarily imported into India (e.g. gold, diamonds) which are then exported.

5

Business Vertical

Section 2 (18)

CGST Act, 2017

The said clause has been omitted thereby deleting the concept of business vertical under GST.

Prospective

The definition of 'Business Vertical' has been omitted consequential to introduction of the option of separate registration for each place of business instead of business vertical wise registration.

6

Definition of Supply

Section 7

CGST Act, 2017

Schedule II has been brought out from the definition of supply.

Retrospective

The said amendment has been brought to remove the ambiguity in the definition of supply with respect to the activities mentioned in Schdeule II.

7

Reverse Charge on Supplies from unregistered vendors

Section 9 (4)

CGST Act, 2017

Reverse charge on supply of goods or services or both, from unregistered suppliers shall only be applicable for the specified persons in case of specified supplies.

Prospective

The said amendment is similar to the amendment in Section 5 (4) of IGST Act discussed above.

8

Value of exempt supplies

New Explanation under Section 17 (3)

CGST Act, 2017

The new explanation has been inserted to exclude the activities specified in Schedule III from the value of exempt supplies.

Prospective

The reversal of ITC is not required in case of activities specified under Schdeule III such as High Seas Sales, sales of warehoused goods to any person before clearance for home consumption etc.

9

Restricted Credits in certain cases

Section 17 (5)

CGST Act, 2017

The following amendments have been made in the said section:

- Credit shall be available in case of motor vehicles with seating capacity of more than 13 persons. Further, ITC against other related activities such as insurance, servicing, repair etc. of such motor vehicles are now allowed;

-  The ITC on certain supplies such as outdoor catering, leasing, hiring or renting of motor vehicle etc. is allowed in case where the same is obligatory for an employer to provide to its employees under any law for the time being in force.

Prospective

Earlier, under Section 17 (5), it was provided that the ITC on services such as outdoor catering, renting of motor vehicles etc. shall be available only in case the same are mandatory under any law and the Government specifically notifies the same under GST law as well.

However, post amendment, the proviso doesn't require specific notification under GST law. Accordingly, in case the supply of above mentioned services are mandatory in any law (even if the same are not notified under GST), credit would be available.

The said amendment would result in allowing of ITC in case of rent / hiring of motor vehicles for transportation of employees by the employer in certain states wherein there are specific local laws requiring provision of cab facilities to the female employees.

10

Registration requirement for Electronic Commerce Operator

Section 24 (x)

CGST Act, 2017

The electronic commerce operator shall be required to take registration under GST only when it is required to collect tax at source.

Prospective

Earlier every E-commerce operator was required to obtain registration under GST.

11

Separate registration for SEZ unit

New Explanation under Section 25 (1)

CGST Act, 2017

It has been specifically inserted in the CGST Act that a SEZ unit shall be required to have a separate registration under GST distinct from any other place of business located outside SEZ area.

Prospective

The said amendment is clarificatory in nature as earlier also separate registration was required for SEZ unit.

12

Suspension of Registration

Section 29

CGST Act, 2017

The new provision for suspension of registration has been inserted. Now, during pendency of the proceedings relating to

cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed.

Prospective

This measure would relieve the taxpayer of continued compliance burden under the law till such time as the process of allowing cancellation of registration is completed.

13

Single credit note / debit note for multiple invoices

Section 34 (1) and 34 (3)

CGST Act, 2017

Post this amendment, single credit note can also be issued with respect to the multiple invoices.

Prospective

The said amendment would also require changes in GST portal wherein presently, against one credit note, details of only invoice can be entered.

14

New mechanism for returns and procedure of credit matching under new mechanism

Section 39 and new Section 43A

CGST Act, 2017

Amendments have been incorporated to enable the new process of returns under GST.

Prospective

Post this amendment, revision of returns would also be allowed as per the prescribed procedure.

15

Mechanism for utilization of credit

New Sections 49A and Section 49B

CGST Act, 2017

Mechanism for utlization of credit has been provided vide the said sections. It specifies that initially credit of IGST shall be completely utilized and afterwards CGST and SGST should be utilized against outward tax liability.

Prospective

-

16

Refund under GST

Section 54 (8) (a)

CGST Act, 2017

The word 'zero rated supplies' has been substituted with 'export' and 'exports'.

Prospective

Presently, the refund was available towards tax charged on outward supplies in case of zero rated supplies (which includes both exports and supplies made to SEZ units).

Now, post the said amendment, tax paid supplies made to SEZ units are excluded for the purpose of refunds. Therefore, in case supplies are made to SEZ units with payment of tax then refund shall not be allowed. In such cases, SEZ units shall avail credit and apply for refund for accumulated ITC.

The above amendment seems to be in line with the rationale provided by the Government at the time of introducing draft amendments in public domain. It specifies that the SEZ unit would be eligible for credits and claim refund.

17

Relevant date in case of refund on account of inverted duty structure

Explanation to Section 54

CGST Act, 2017

The relevant date has been changed from 'end of financial year' to 'due date of furnishing return for the said period' in which such refund claim arises.

Prospective

-

18

Recovery of Tax under GST

New Explanation to Section 79

CGST Act, 2017

Explanation has been inserted to include 'distinct persons' under the word 'persons'.

Prospective

Due to the said amendment, now department can initiate recovery from any other branch in other state of a person.

19

Pre-Deposit for Appeals

Section 107 (6) (b) and Section 112 (8) (b)

CGST Act, 2017

Amount of pre-deposit payable for filing of appeal before the Appellate Authority and the Appellate Tribunal has been capped at INR. 25 Crores and INR 50 Crores, respectively.

Prospective

-

20

Goods Seizure

Section 129 (6)

CGST Act, 2017

Time limit for payment of tax and penalty in case of detention and seizure of goods has been increased from seven days to fourteen days.

Prospective

-

21

Amendment in Transitional Provisions

Section 140 (1)

CGST Act, 2017

Following the word 'Cenvat credit', the words 'of eligible duties' has been inserted.

Retrospective

The same would result in restriction on transitioning the closing balance of credit pertaining to EC, SHEC or KKC etc. under GST.

Further, as per the amendment, CENVAT credit of eligible duties will be allowed to be transitioned to GST. Explanation 1 which provides list of eligible duties does not provide for Service Tax. Hence, this seem to have  created an ambiguity on transition of CENVAT credit of Service Tax.

However, this does not seem to be intention as  Explanation 2 which provides list of eligible duties and taxes includes Service tax and in this Explanation, reference is also given to sub-section 1 (which provides for transition of CENVAT credit balance).

22

Time limit for return of input/capital goods sent to Job-worker

New Proviso to Section 143 (1) (b)

CGST Act, 2017

Time limit for return of inputs/ capital goods sent to job worker i.e., one year and 3 years respectively, might be further extended for additional one year and two years, as the case may be, on approval from Commissioner

Prospective

-

23

Import of Services from related persons

Entry 4 in Schedule I

CGST Act, 2017

Import of services from a related person by both taxable and non-taxable person, whether or not made with consideration, shall be deemed to be considered as Supply.

Prospective

-

24

Activities which shall not be treated as supply

New entries in Schedule III

CGST Act, 2017

Following activities have been added in the Schedule III to CGST Act, in order to put them outside the ambit of Supply:

Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India; Supply of warehoused goods to any person before clearance for home consumption; and Supply of goods in case of high sea sales

Prospective

The corresponding amendments in credit provisions results in non-reversal of credit on such transactions along with other transactions under Schedule III.