GST

Dear Reader,

Kindly find below updates of the decisions taken on the 28^th meeting of the GST Council.

The meeting has considered the below main subjects for discussion:

 

1. Change in GST Rates for several Goods, services and for specified Handicraft items
2. Simplified Returns
3. Opening of Migration window
4. Other recommendations which requires approval of Parliament

 

The detailed analysis of each subject is as below:

1. Changes in GST Rates for several Goods, Services and for specified Handicraft Items:

 

Probably in every GST Council Meet, the Council recommends to lower the rate of GST on specified Goods or services.

As the GST Revenue gets higher number, the rates of GST are going down.

The main highlighted items or advertised items by Govt. for this reduction are:

• Sanitary Napkins:

It is indeed a good move to make this product as the Nil rated product i.e. 0% tax. It is very much required to lower the cost of Sanitary Napkins so that rural women in India can enjoy a hygienic life.

But your predecessor (Mr. Arun Jaitely who is presently a Minister without any Portfolio) said that by lowering the GST on Sanitary Napkins, there will be boost up of import of Sanitary Napkins from China.

So any counter measures taken up for this like increase the customs duty etc. And if not what’s the logic for counterfeiting your predecessor’s logic.

 

• Rakhi : [other than that of precious or semi-precious material of chapter 71]

Of course the Govt. should not collect the taxes from the festival of a relationship which indeed has all the relationships in it. i.e. Brother and Sister. Really a  good move.

For the rest of the goods, services whose rates have been brought down, the link for the notification is below for your ready reference.

http://www.pib.nic.in/PressReleseDetail.aspx?PRID=1539574

 

2.  Simplified Returns

 

In the 27^th GST Council meet, the basic concepts of simplification of GST Return design have been approved.

In this 28^th GST Council meet, the new return formats and associated changes in law have been approved.

The following is the outcome for the simplification of returns:

• Except Small Taxpayers, ISD etc, one monthly return filing will be enabled.
• The return will be simple with two main tables viz. One for reporting outward supplies and one for availing input tax credit based on invoices uploaded by the supplier.

A point here required to be noted is that the input tax credit will be available only for those invoices which were uploaded by the supplier. So, if your supplier is not uploading the invoices, you are not going to get any credit.

So, it would mean that there will not be one return. There will be two. First is a return where you are required to upload your invoices so that your customer can take the input tax credit – like present GSTR 1 and second will be the return where tax will be paid – like present GSTR 3B.

• For small taxpayers, option for filing quarterly return with monthly payment of tax in a simplified return format will be enabled.

I think this is what the current practice is. There is quarterly filing of return in GSTR 1 with monthly tax payment in GSTR 3B. So, there will be only change in return design format.

As explained in Sr. No. 2 that the input tax credit will be allowed only when the supplier will upload the invoices. So if a small taxpayer opting for quarterly return is selling goods to any registered person opting for monthly return, then how the input tax credit will be given to the recipient. This is because the small taxpayer will upload quarterly return but his customer is going to file monthly return. Confusion !!

• NIL return filers (no purchase and no sale) shall be given facility to file return by sending SMS.

I don’t why they use the term as purchase and sale because there is no concept of purchase and sale in the entire GST Regime. It is only outward supply and inward supply. I think we got familiar with GST terminologies but still they need time to get familiar with these terms.

• Small taxpayers have been defined as the taxpayers whose turnover is below Rs. 5 Cr. For them, the quarterly return filing system will be given as an optional facility.

But it will be available only for those small taxpayers – 1. Small traders making only B2C supplies and 2. Making B2B + B2C supplies. So, does it mean that the small taxpayers who are making only B2B supplies are not eligible for an option of quarterly returns.

• The simplified returns will be called as ‘Sahaj’ and ‘Sugam’. (Using the same terms of Income Tax)
• The new return design provides facility for amendment of invoice and also other details filed in the return. Amendment shall be carried out by filing of a return called amendment return. Payment would be allowed to be made through the amendment return as it will help save interest liability for the taxpayers

Much needed move.

• The Council claims that 93% of the taxpayers have a turnover of less than Rs 5 Cr and these taxpayers would benefit substantially from the simplification measures proposed improving their ease of doing business.
• The Council also claims that even the large taxpayers would find the design of new return quite user friendly.

Let’s see. Why are you predicting now that it will be quite user friendly. Let the users to judge it. Earlier return designs also, you felt as quite user friendly. And if you feel that new return designs are quite user friendly, it means you are agreeing that present return design system is not. So any compensation !!

So, let’s wait for the analysis done by the Group of Ministers.

 

3. Opening of Migration window

 

The taxpayers who filed Part A of FORM GST REG-26, but not Part B of the said FORM are requested to approach the jurisdictional Central Tax/State Tax nodal officers with the necessary details on or before 31^stAugust, 2018.

The nodal officer would then forward the details to GSTN for enabling migration of such taxpayers.

It has also been decided to waive the late fee payable for delayed filing of return in such cases.

However, such taxpayers are required to first file the returns on payment of late fees, and the waiver will be effected by way of reversal of the amount paid as late fees in the cash ledger under the tax head.

First payment and then reversal of waiver of late fees – why you want to block the working capital of a taxpayer or you want assurance by this that the taxpayer will then do the business and will pay the tax.

 

4. Other recommendations which requires approval of Parliament / Legislature of State and Union Terretories:

 

Below are the recommendations which require the approval of Parliament because for implementing these recommendations, the respective GST law is required to be amended.

So, these recommendations can be made applicable only after approval of Parliament.

1. Upper limit of turnover for opting for composition scheme to be raised from Rs. 1 crore to Rs. 1.5 crore. Present limit of turnover can now be raised on the recommendations of the Council.

2. Composition dealers to be allowed to supply services (other than restaurant services), for upto a value not exceeding 10% of turnover in the preceding financial year, or Rs. 5 lakhs, whichever is higher.

3. Levy of GST on reverse charge mechanism on receipt of supplies from unregistered suppliers, to be applicable to only specified goods in case of certain notified classes of registered persons, on the recommendations of the GST Council.

4. The threshold exemption limit for registration in the States of Assam, Arunachal Pradesh, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand to be increased to Rs. 20 Lakhs from Rs. 10 Lakhs.

5. Taxpayers may opt for multiple registrations within a State/Union territory in respect of multiple places of business located within the same State/Union territory.

6. Mandatory registration is required for only those e-commerce operators who are required to collect tax at source.

7. Registration to remain temporarily suspended while cancellation of registration is under process, so that the taxpayer is relieved of continued compliance under the law.

8. The following transactions to be treated as no supply (no tax payable) under Schedule III:

a) 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;

b) Supply of warehoused goods to any person before clearance for home consumption; and

c) Supply of goods in case of high sea sales.

9. Scope of input tax credit is being widened, and it would now be made available in respect of the following:

a) Most of the activities or transactions specified in Schedule III;

b) Motor vehicles for transportation of persons having seating capacity of more than thirteen (including driver), vessels and aircraft; .

c) Motor vehicles for transportation of money for or by a banking company or financial institution;

d) Services of general insurance, repair and maintenance in respect of motor vehicles, vessels and aircraft on which credit is available; and

e) Goods or services which are obligatory for an employer to provide to its employees, under any law for the time being in force.

10. In case the recipient fails to pay the due amount to the supplier within 180 days from the date of issue of invoice, the input tax credit availed by the recipient will be reversed, but liability to pay interest is being done away with.

11. Registered persons may issue consolidated credit/debit notes in respect of multiple invoices issued in a Financial Year.

12. Amount of pre-deposit payable for filing of appeal before the Appellate Authority and the Appellate Tribunal to be capped at Rs. 25 Crores and Rs. 50 Crores, respectively.

13. Commissioner to be empowered to extend the time limit for return of inputs and capital sent on job work, upto a period of one year and two years, respectively.

14. Supply of services to qualify as exports, even if payment is received in Indian Rupees, where permitted by the RBI.

15. Place of supply in case of job work of any treatment or process done on goods temporarily imported into India and then exported without putting them to any other use in India, to be outside India.

16. Recovery can be made from distinct persons, even if present in different State/Union territories.

17. The order of cross-utilisation of input tax credit is being rationalized.