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Key changes in GST Law w.e.f. 01.04.2019 and 01.02.2019

Key changes in GST Law w.e.f. 01.04.2019

S.No.

Amendment

1.

Introduction of New return from 1st April, 2019

An option to file quarterly GST return in a simplified format for small taxpayers— "Sahaj", "Sugam"

Regular taxpayers with a turnover of up to Rs. 5 crore can now file GST return on a quarterly basis against the earlier limit of Rs. 1.5 crores, either in Sahaj or Sugam.

Sahaj— Small taxpayers making only B2C supplies can file Sahaj returns.

Sugam— Taxpayers making B2B supplies or making B2C and B2B supplies, but having turnover of Rs. 5 crore or less, have been an option to file Sugam return on quarterly basis.

The quarterly returns will be mostly be similar to the monthly returns, but require lesser information to be filled as compared to the regular returns. The taxes have to be self-assessed and paid on a monthly basis even for small taxpayers opting for the quarterly returns scheme.

Taxpayers without any purchase or sale in a period can file NIL returns through an SMS. The new returns also provide taxpayers the facility to amend their invoice and other details filed in a return by filing an amended return. taxpayers can also make payment through amended returns and save on their interest liability.

2.

Higher exemption threshold limit of GST registration for supplier of goods:

Exempts persons from obtaining registration and payment of tax who is engaged in exclusive supply of goods and whose aggregate turnover in financial year does not exceed 40 lakh rupees.

This benefit will not applicable to a person—

a) required to take compulsory registration,

b) persons engaged in making supplies of goods such as ice cream and other edible ice, pan masala, tobacco and manufactured tobacco substitutes
c) persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand; and

d) persons obtaining voluntary registration under section 25(3).

3.

Threshold Limit for the composition scheme enhanced to

  • Rs. 1.5 crore, for all States except
  • Rs. 75 lakh for (i) Arunachal Pradesh, (ii) Manipur, (iii) Meghalaya, (iv) Mizoram, (v) Nagaland, (vi) Sikkim, (vii) Tripura, (viii) Uttarakhand

 Composition dealer may also provide other services upto 10% of their total turnover or Rs. 5 Lakh whichever is higher.

4.

Composition Scheme for Services

Rate of tax— 6% (3% CGST and 3% SGST)

Description of supply—First supplies of goods or services or both up to an aggregate turnover of fifty lakh rupees made on or after the 1st day of April in any financial year, by a registered person.

Conditions:

  • whose aggregate turnover in the preceding financial year was fifty lakh rupees or below
  • who is not eligible to pay tax under sub-section (1) of section 10 of the said Act
  • Not engaged in making any supply which is not leviable to tax under the CGST Act
  • Not engaged in making any inter-State outward supply.
  • Neither a casual taxable person nor a non-resident taxable person
  • Not engaged in making any supply through an electronic commerce operator who is required to collect tax at source under section 52
  • who is not engaged in making supplies of the Ice cream and other edible ice, whether or not containing cocoa, Pan masala, Tobacco and manufactured tobacco substitutes

Shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit of input tax.

Shall issue, instead of tax invoice, a bill of supply as referred to in clause (c) of sub-section (3) of section 31(3)(c) of the CGST Act with particulars as prescribed in rule 49 of CGST Rules.

shall mention the following words at the top of the bill of supply, namely: - ‘taxable person paying tax in terms of notification No. 2/2019-Central Tax (Rate) dated 07.03.2019, not eligible to collect tax on supplies’.

Shall be liable to pay central tax on inward supplies on which he is liable to pay tax under Section 9(3) or 9(4) of CGST Act at the applicable rates.

5.

Section 49A (utilization of input tax credit subject to certain conditions) 

Notwithstanding anything contained in section 49, 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.

Analysis— input tax credit of IGST needs to be fully utilized first. Only after fully utilization of input tax credit of IGST, input tax credit of CGST, SGST / UTGST can be utilized towards payment of IGST, CGST, SGST or UTGST.

Therefore, there is a change in the priority of set-off of ITC as per CGST Amendment Act, 2018 as follows—

For CGST Output- First set off thru ITC of IGST, then CGST (earlier the priority was, First set off thru ITC of CGST, then IGST) 
For SGST Output – First set off thru ITC of IGST, then SGST (earlier the priority was, First set off thru ITC of SGST, then IGST
For IGST Output – First set off thru ITC of IGST, then CGST & then SGST

6.

Concept of business vertical has been omitted  (Section 2(18) of CGST Act)

The concept of obtaining separate registration for a different business vertical within the same state or UT has been omitted. Therefore, more than one registration may be obtained in the same state or UT for different places of business, whether or not these places of business are engaged in supplying  different set of goods or services.

7.

No ITC of GST paid on motor vehicle (Section 17(5) of CGST Act)

Input tax credit shall not be available for the GST paid in respect of passenger motor vehicle, with approved seating capacity up to 13 persons including driver. however the input tax credit shall be allowed if motor vehicle is used for further supply of such motor vehicles or transportation of passengers or imparting training to drive such motor vehicles.

Further the Input tax credit shall not be available for the GST paid in respect of general insurance, servicing, repair and maintenance of such motor vehicles, vessel or aircraft.

8.

GST Audit (Section 35)

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  an auditor 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

9.

Reverse charge in case of supply received from unregistered persons
(Section 9(4) of CGST Act)

Old provision—9(4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient 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."

New provision—9(4)The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of 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 such supply of goods or services or both.

The charging provisions of section 9(4) has been amended and Government has been empowered to notify specific classes of registered person who shall be liable to pay tax under reverse charge on supply of specified goods and services. 

10.

Amendment in Schedule III (ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES) of the principal Act, —
(i) after paragraph 6, the following paragraphs shall be inserted, namely:
“7. 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. (High sea sale)

8. (a) Supply of warehoused goods to any person before clearance for home consumption;

(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption

11.

Amendment in Schedule I (ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION)

Old provision—Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business.

New provision— Import of services by a person 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.

12.

Separate registration for SEZ unit in same state (Section 25)

A person having a unit, as defined in the Special Economic Zones Act, 2005, in a Special Economic Zone or being a Special Economic Zone developer shall have to apply for a separate registration, as distinct from his place of business located outside the Special Economic Zone in the same State or Union territory

13.

Single credit note can be issued for multiple invoices (Section 34 of CGST Act)

Earlier, the tax supplier was required to raise separate credit note for each invoice, which was very inconvenient and cumbersome. Now, the supplier have been allowed to issue consolidated credit note and debit note in respect of multiple invoices issued in the same financial year.   

14.

Condition for claiming Input tax credit in case of supply of service (Section 16 of CGST Act)

It shall be deemed that the registered person has received the services, where the services are provided by the supplier to any person on the direction of and on account of such registered person. (Like Bill —to— ship— to model in case of goods)

15.

Job work procedure (Section 143 of CGST Act)

Period (time limit for bringing back inputs and capital goods from the place of job worker) of one year and three years may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding one year and two years respectively

 

Tax rate on real estate projects (Building, Flats etc.) w.e.f. 01.04.2019

S.No.

Period

particulars

Output tax arte

1.

Before 01.04.2019

Affordable housing segment

8%  after 1/3rd  abatement of value of land with ITC

2.

Before 01.04.2019

Other residential segment

12% after 1/3rd abatement of value of land with ITC

3.

w.e.f. 01.04.2019

Affordable housing segment

New rate of 1% without ITC provided fulfillment of condition specified

4.

w.e.f. 01.04.2019

Other residential segment

New rate of 5% without ITC provided fulfillment of condition specified

5.

Ongoing projects on  01.04.2019

affordable and other than affordable housing segment (ongoing)
on satisfaction of following condition—
(1) Construction of building must have started before  01.04.2019.
(2) Actual booking for the project must have started before 01.04.2019
(3) Option must be exercised within prescribed time frame.

 Option 1
Old tax rates  (8% or 12%) with ITC

Option 2
Ne tax rate (1% or 5%)   without ITC

6.

w.e.f. 01.04.2019

Mixed project
If carpet area of commercial unit is not more than 15% of total carpet area, entire project will be treated as residential project.

New rate of 5% without input tax credit

Affordable house— all houses which meet the definition of affordable houses as decided by GSTC (area 60 sqm in metros / 90 sqm in non- metros and value upto RS. 45 lakh)

Conditions for the new tax rates:

The new tax rates of 1% (on construction of affordable) and 5% (on other than affordable houses) shall be available subject to following conditions,-

(a) Input tax credit shall not be available,

(b) 80% of inputs and input services (other than capital goods, TDR/ JDA, FSI, long term lease (premiums)) shall be purchased from registered persons. On shortfall of purchases from 80%, tax shall be paid by the builder @ 18% on RCM basis. However, Tax on cement purchased from unregistered person shall be paid @ 28% under RCM, and on capital goods under RCM at applicable rates.

New rate of 5% without input tax credit shall be applicable on construction of

(a) all houses other than affordable houses in ongoing projects whether booked prior to or after 01.04.2019. In case of houses booked prior to 01.04.2019, new rate shall be available on installments payable on or after 01.04.2019.

(b) all houses other than affordable houses in new projects.

(c) commercial apartments such as shops, offices etc. in a residential real estate project (RREP) in which the carpet area of commercial apartments is not more than 15% of total carpet area of all apartments.