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Highlights of the CGST, IGST & UTGST Amendment Act, 2018

Date of Applicability/Enforcement: 1st Feb, 2019

1.National Anti-Profiteering authority has been excluded from the Definition of Adjudicating Authority.

2. A modification has been made to Section 2 (17) (h), definition of business-to include all the activities of a race club or activities of a licensed book maker in such club& therefore, scope of activities of race club has been broadened.

3. The definition of Cost Accountant has been changed to rectify the incorrect reference to clause of the Cost and Works Accountants Act, 1959. So, the drafting error is rectified.

4.TheArticle 371J has been included in the definition of local authority. It grants special status to 6 backward districts of Karnataka & Hyderabad. As per this Article the president is empowered to establish a separate Board, which will ensure equitable distribution of funds in the State’s Budget for the developmental needs of the region.

5. The definition of Business Vertical has been omitted. The Law now permits a separate registration for each place of Business in respect of a Person’s having multiple place of business in a State. Earlier, multiple registrations were allowed only in cases of Separate Business Vertical.

6. An Explanation has been added to the definition of services as a clarification. As per the explanation, “services” include facilitation or arranging transactions and securities. Therefore, any amount collected, for facilitating or arranging transaction in securities, in the form of service charges, documentation fees or brokerage or any other charges will be chargeable to GST.

7. The definition of “Supply” has been retrospectively amended- The clause “d” of the said definition has been omitted. The said clause referred to Schedule II. The schedule does not decide whether a transaction is supply or not, rather it decides whether a supply is in nature of supply of goods or supply of services. The drafting error is rectified.

8. Earlier, only taxable person was required to pay taxes on Import of services from a related person or from any of his other establishments outside India, in the course or furtherance of business. Now, import of services even by a non-taxable person (LIKE PERSON ENGAGED IN PURELY EXEMPETD SUPPLIES)made without consideration from related party for business purpose is taxable under GST.

9. Merchant trade transactions (i.e. supply of goods from NTT to another NTT), high sea sales (Sales of good after dispatch from port of origin but before clearance for home consumption) and supply of warehoused goods before clearance for home consumptions not to be treated as supplies

10. RCM provision on supplies from unregistered person is restricted to some specific class of registered person and for specific category of goods or services. The list is yet to be notified.

11. The Government has enhanced its power to increase the composition limit. The upper limit has been raised to 1.5 Cr from current 1 Cr.

Rationalization of Reverse Charge Provisions (sub-sections (3) and (4) of section 9 will be applicable to composition dealer in the similar manner as the normal taxpayer).

An allowance of provision of services (other than Restaurant Services) for composition dealers has been given. A person who opts to pay tax under the Composition Scheme may supply services of value not exceeding ten percent of turnover in the preceding financial year in a State or Union territory or five lakh rupees, whichever is higher.

12. Rationalization of time of supply provisions for goods and services-

Earlier, for determining the time of supply of goods & services, sub-section 1 & 2 of section 31 was referred to. It did not cover special cases like supply of goods &services on continuous basis, cessation of supply of service before the completion of supply of goods & services & goods taken on approval for sale or return basis. Now the reference is made to the entire Section 31 to cover all the special cases. The drafting error has been rectified.

13. ITC will also be available to the person on whose direction the services have been provided to the third person. Bill to Ship model has been approved for services also. Earlier, only goods were covered.

14. Earlier the condition for availing tax credit on payment of the tax by the Supplier has been made subjected to the procedure in the new return filling mechanism. Hence the new mechanism may allow the ITC credit in certain situation &subject to certain conditions even if the tax is not paid by the supplier.

15. ITC availability on Schedule III items- The Value of exempt supplies for the purpose of Section 17(2) which was provided by Section 17(3), now excludes from its scope the activities & transaction covered in Schedule III except those specified in paragraph 5 of the said Schedule. Hence ITC will be available on the said activities & transaction.

16. Expansion of Scope of availability of ITC on motor vehicles-

a. ITC on Motor Vehicles and other conveyances like vessels and aircrafts is already allowed for following purposes:

  • used for making further taxable supply as such
  • used for transportation of goods. Even if for In-house purpose or even if outward transportation supply is not taxable.
  • If it is used for transportation of passengers. (Only Taxable Supplies)
  • If it is used for imparting training on driving, flying or navigating purposes. (Only Taxable Supplies)

Earlier ITC on all OTHER Motor Vehicles and Conveyances were restricted, but now out of these restricted Motor Vehicles and Conveyances: ITC on only those Motor Vehicles (i.e. not other conveyances) which are having approved seating capacity of up to 13 persons (Including Driver) which are used for transportation of personsis RESTRICTED.

In other words, not only, ITC on Motor vehicles which are not meant to carry persons (like dumpers, fork lift trucks, work trucks etc.) is now allowed but those motor vehicles which are meant to carry persons and their approved seating is more than 13 persons (Including Driver), ITC on them is now also allowed.

b. ITC on services of general insurance, servicing, repair and maintenance will not be available in respect of those Motor vehicles, vessels and aircraft on which ITC is not available.

17.  Scope of ITC available expanded:

a .for travel benefits extended to employees on vacation such as leave or home travel concession where the government notifiessuch services as obligatory for an employer to provide to its employees under any law for the time being in force.

18. Insertion of Entry 92A in the exclusions from turnover for distribution of credit.

19. The threshold exemption limit can be increased from Rs.10 lacs to such higher amount as may be prescribed not exceeding Rs.20 lac for Special Category states upon such request. Uttarakhand has been excluded from the definition of Special category State.

20. The compulsory registration is applicable only to those e-commerce operators who are required to collect TCS.

21. Multiple registrations for each place of business and separate registration for SEZ

22. 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 by the proper officer.

23. The Supplier can issue a consolidated credit note for multiple Invoices in a financial year.

24. The Supplier can issue a consolidated debit note for multiple Invoices in a financial year.

25.  Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant.

Every department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or anauditor appointed for auditing the accounts of local authorities under any law for the time being in force is not required to file audit report, form GSTR-9C.

26. The periodicity and time for filing of return is now allowed to be prescribed through rules. Further the Government may notify certain category of tax payers who will be allowed to file a return on quarterly basis.

27. Payment of tax on a monthly frequency for quarterly taxpayers.

28. The correction of mistakes will be notified by rules by way of alternate mechanism. Earlier, omissions or errors could be corrected in the month in which such mistakes/omissionswere noticed.

29. Section 43A of the CGST Act, 2017 has been amended to provide for new Procedure for furnishing return and availing ITC in the new return filing mechanism

30. Provisions to expand the working areas of GST Practitioners to also include - filling of refund claims, application for cancellation of registration etc.

31. ITC on account of SGST/UTGST shall be utilized towards payment of IGST only where the balance of ITC on account of central tax is not available for payment of IGST. Example: -

IGST Liability: 12,000
CGST Input: 11,000
SGST Input: 5,000

Set Off: -

CGST: 11,000
SGST: 1,000

New Provision: Section 49A

The input tax credit on account of central tax, State tax or Union territory tax shall be utilized towards payment of integrated tax, central tax, State tax or Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilized fully towards such payment.


Sequence of Utilization ITC:

2. Intra Head
3. Inter-Head as per section 49

The sequence may be changed any time by the government.

32. The concept of matching & informing discrepancies between GSTR8 & GSTR3 /GSTR 3B is now in place for e-com transactions (earlier, GSTR8 was only matched with GSTR 1)

33.  Modification to relevant date in case of refund of unutilized credit-

The Relevant date in the case of refund of unutilized input tax credit under clause (ii) of the first proviso to sub- section (3) will be the due date for furnishing of return under section 39 for the period in which such claim for refund arises.

34. The principle of Unjust enrichment will be applicable in case where supplies are made to SEZ developer/unit & the tax is recovered by the DTA & at the same time a refund is also claimed by the DTA.  The refund will be available to the SEZ only.

35. Amendment has been made to receive receipts in respect of export of services wherever permitted by RBI. In case of export of services, receipt in foreign currency is a pre-condition to claim refund. There has been some relief to this condition.

36. Person to include distinct person (Person with the same PAN) for the purpose of speedy recovery and definition of collector specified.Now recovery can be made from distinct person also. i.e. in case of default recover can be made from any registered dealer across India registered with same PAN.

37. Amount of pre-deposit for disputed demands in case of filing appeals to appellate authority, restricted to a maximum of twenty-five crore rupees.

38. Amount of pre-deposit for disputed demands in case of filing appeals to appellate tribunal, restricted to a maximum of fifty crore rupees.

39. The time limit for payment of tax or penalty for goods detained or seized has been increased from 7 days to 14 days.

40. Retrospective amendment in the transitional credits allowed- Transactional credit will only be allowed on eligible duties which excludes Additional Duties of Excise (Textile and Textile Articles) Act, 1978 also it excludes transactional credit on Cess like Krishi KalyanCess, Education Cess etc.

41. Time limit for receipt of goods sent on job-work basis extended- The period of one year or three years, as the case may be, may, on showing of sufficient cause can be extended by the Commissioner for a further period not exceeding one year and two years respectively

42. Retrospective insertion of the term ‘Transactions’ in the heading of Schedule II- Some items in the form of transaction rather than Activities will be more clearly covered through this amendment.

43. Definition of export of services to allow receipt in INR if permitted by RBI

44. Modification in the definition of Governmental Authority- reference to panchayat under Article 234 G has been included in the definition which was not included earlier.

Panchayats also included in the meaning of government authority for the purpose of determination of non-taxable online recipient.

45. The Government will now notify the class of registered person on whom Section 5(4) of the IGST Act will be applicable i.e. IGST to be paid on Reverse charge in respect of taxable goods or services or both received from an unregistered supplier.

46. Omission of term business vertical in the deeming fiction for distinct persons. Clause 4 of the IGST Act omitted.

47. If the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods even though the Supplier & Recipient are located in India.

48. Place of supply will be outside India where goods temporarily imported into India & then exported without being put to use after any treatment or process carried out on it

49. The IGST credit which does not get apportioned under 17(2) of the IGST Act, will be apportioned to the Central Government & State Government on an adhoc basis in the ratio of 50% for the time being, this unportioned amount shall then be adjusted against amount adjusted under clause (a) to (f) of Section 17(2)

50. The Ceiling limit for filling an appeal to the Appellate Authority or the Appellate Tribunal shall be fifty crore rupees and one hundred crore rupees respectively.

51. Modification to the name of CBEC to CBIT

52.Distribution of Unutilized Cess in the fund on adhoc basis among the Centre & the State on the recommendations of the Council.

53. Manner and order of utilization of UTGST credit- UTGST will be used for the payment of the IGST only when IGST credit has been exhausted.

54. ITC on leasing / hiring of motor vehicles and other conveyances have been allowed only where ITC on principal supply is allowed. In case of leasing / hiring of motor vehicles and other conveyances where ITC on principal supply is NOT allowed, then also one may avail such ITC if he enters into same category of business transactions i.e. of leasing and hiring of such assets.


Published by

Sandip Agarwal
(Chartered Accountant)
Category GST   Report

8 Likes   5 Shares   14901 Views


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