Welcome Amendments in GST


Last week saw many amendments in the GST laws with a hint that more will follow as GST council was to meet on 22/07/2018 to propose many further amendments or tweaks major being rates relaxation in many items.We will update you about the tweaks as and when done.Right now let us look at the amendments brought in as of now.

Amendment in sec 2(102) definition of services

 ‘securities’ is outside the ambit of GST since it do not falls under the definition of ‘goods’ and ‘services’ , but facilitating or arranging transactions in securities is liable to GST so in order to remove any doubts

For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or arranging transactions in securities

Schedule -III is for enlisting those activities or transactions which shall be treated neither as a supply of goods nor a supply of services 

Out of scope/ Out and Out Supplies:
Following items added in the list

Supply of goods from a place in the non-taxable territory to another place in the nontaxable territory without such goods entering the taxable territory

Supply of warehoused goods to any person before clearance for home consumption.

 Supply of goods as high seas sales

Schedule -II is for enlisting those activities to be treated as supply of goods or supply of services

Following items added to this list through an amendment in sec 7 by introducing a new sub clause (1A) to section 7 of CGST Act

Certain activities or transactions, when constituting a supply in accordance with the provisions of sub-section (1), shall be treated either as supply of goods or supply of services as referred to in Schedule II.

Earlier an activity listed in Schedule II would be deemed to be a supply even if it does not constitute a supply as per section 7 (1) (a) or (b) or (c)

Supply by Unregistered Person

Scope reduced by removing sec 9(4) and introducing new section as follows

“The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of taxable goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.”

Tweaks in Composition scheme:

The limit is being raised from Rs. 1 crore to Rs. 1.5 crore

At present manufacturers and traders supplying services are unable to opt for the scheme even if its percentage is very small as compared to the supplies of goods. Therefore, a new proviso is being added in order to allow them to be eligible for the scheme even if they supply services of value not exceeding 10% of the turnover in the preceding financial year in a State/Union territory or Rs. 5 lakhs, whichever is higher.

Amendment in sec 16(2)(b) :ITC

There was a deeming fiction which says that if goods are delivered to a third person on the instructions of registered person by the supplier then the dealer can avail ITC.No such fiction was there for “services” .Now it is being introduced.

Payment of Interest by the buyer in case of non payment to supplier beyond 180 days:

Now no interest will have to be paid by the buyer.

Sec 17(3) :

This section says no Input tax credit can be availed on exempt services and services scheduled in Schedule III .Now it is proposed to exclude these services from out of exempt services for the purpose of ITC

Sec 17(5):

Input tax credit would now be available in respect of dumpers, work-trucks, fork-lift trucks and other special purpose motor vehicles.

Input tax credit would be denied only in respect of motor vehicles for transport of persons having approved seating capacity of not more than 13 persons (including the driver), vessels and aircraft when these are used for personal purposes.

ITC will not be denied in respect of motor vehicles if they are used for transportation of money for or by a banking company or a financial institution.

ITC in respect of services of general insurance, servicing, repair and maintenance in respect of those motor vehicles, vessels and aircraft on which ITC was not available under clause (a) of Section 17(5)

Following sub-clause to be inserted

(aa) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels and aircraft for which the credit is not available in accordance with the provisions of clause (a)

Section 17(5)(b) : Provision of facilities to employee No ITC up till now was creating a problem for employers and was a stopper now no longer the case:

In those cases where the provision of food and beverages, health services ,travel benefit to employees etc is obligatory for an employer to provide under any law now ITC will be allowed to employer

Sec 17(5)(a) provides that no ITC to be claimed in respect of following

(i) when they are used for making following taxable supply

(a) motor vehicles and other conveyances except when they are used––

(A) for further supply of such vehicles or conveyances

or (B) for transportation of passengers

or (C)for imparting training on driving, flying, navigating such vehicles or conveyances

(ii) for transportation of goods

Now a new clause 17(5)(aa) is introduced that says that no ITC on services of general insurance, servicing, repair and maintenance in reference of above supplies will be admissible.

Sec 34 (1) & 34 (3)- Credit/Debit Notes:

At present credit/Debit Invoices are to be issued only in reference to individual invoice which creates problems while filing returns or otherwise in reconciliations.Now a dealer can issue consolidated credit / debit notes in respect of multiple invoices issued in a Financial Year without linking the same to individual invoices


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