HIGHLIGHTS OF CGST BILL

[Monarch Bhatt]

1. Levy & collection of CGST – The clause has been added in the levy section which is making room for the government to impose CGST on petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel at a later stage based on the recommendation of the council. Of course, procedure needs to be followed for amendment in constitution as well before introducing it under GST regime.

2. Composition Levy – The changes has been for the rates provided under the composition scheme. The revised rates are as follows:

1. Manufacturers are liable for the payment of CGST @ 1%, opting for the composition scheme.
2. The person providing services alongwith supply of goods being food or any other article for human consumption or any drink excluding alcoholic liquor for human consumption are liable for the payment of CGST @ 2.5% under composition scheme. This will be beneficial for the small restaurants and banquet service providers. 
3. Other suppliers opting to follow composition scheme are liable for the payment of CGST @ 0.5%.

3. Schedule I – The amendment has been made in schedule I, which provides for the activities to be treated as supply even if it has been made without consideration.

The proviso has been added under clause (2) stating that gifts upto the value of INR 50,000/- by an employer to employee in a financial year shall not be treated as supply of goods or services or both. Hence, any type of gifts by an employer to employee above the value of INR 50,000/- in a financial year will be liable for the payment of CGST.

4. Schedule II – It provides for the activities to be treated as supply of Goods or Supply of Services.

The clause 7 of the schedule provides that “supply of goods” by unincorporated association or body of persons to a member thereof for consideration to be treated as supply of goods. However, there is no similar provision has been provided for supply of services by unincorporated association or body of persons to their member. Hence, services provided by clubs and society to their members will not be liable for the payment of CGST and it will cut down long pending battle under service tax from continuing under CGST regime.

5. Schedule III – The amendment has been made in Schedule III which provides for the activities neither to be treated as service nor to be treated as goods.

Clause 6 has been added which states that actionable claim other than lottery, betting and gambling neither to be treated as supply of Goods nor as Supply of Services. It is to be noted that definition of “goods” includes actionable claim and therefore without this entry actionable claim over meal voucher and shopping voucher itself was getting covered under GST regime as per model GST law. Illustration: If Sodexo issuing voucher of 5000/- and charging 500/- as processing fee or transaction fees, CGST was payable on both i.e. 5000/- received towards voucher value and on 500/- received towards processing fee or transaction fees.

Now with the insertion of clause 6, such meal voucher itself will not attract CGST. However, processing fee or transaction fees will be liable for the CGST, which was the intention from beginning and the same has been achieved with this amendment while introducing CGST Bill. Hence, in the above illustration CGST will be payable on 500/- received towards the processing fees or transaction fees.

6. Value of Taxable Supply – No amendment has been made in valuation provision. Only change is with respect to the term “related persons”, which was earlier provided under the definitions. Now in the bill, it has been added as explanation to the valuation section itself. This is more appropriate as it relates to the valuation provisions.

7. Input Tax credit – The amendment has been made with respect to the availment of credit on the input services wherein, it was provided that credit of input services can be availed by the supplier only if payment for such input services alongwith tax has been paid by the supplier to the provider of service within a period of 3 months. If payment has not been made by the receiver of service to the supplier of service, it will get added to the liability of receiver of such input service receiver, which will be recovered alongwith interest.

This provision has been changed completely, while introducing CGST bill.  As per the CGST bill, provision is applicable on the credit availed by the receiver on supply of services as well as on supply of goods or both other than credit availed of tax paid on reverse charge basis and time period has been increased from 3 months to 180 days. Therefore, if credit has been availed on services, or goods or of both (other than reverse charge credit) payment for the value as well as for the taxes must be made within a period of 180 days, otherwise it will get added to the liability of the receiver which will be recovered with interest.

Further, another proviso has been also added wherein, as per the proviso such reversed credit will be eligible to the receiver, once value has been paid along with the taxes to supplier of service or goods or both. Such provision was missing in the model law.      

8. Registration – No significant changes are made as far as registration provisions are concerned. Since it has been introduced as bill, previously which was provided in the schedule under model law has been incorporated in section itself and many provisions which were provided in the form of rules are incorporated under the act. Hence, overall it remains same.

No clarification has been provided with respect to the phrase used in the registration provision “from where he makes a taxable supply of goods or services or both”. This was indeed required as it is becoming interpretational issue as which place shall be considered as place for registration for a person providing services from more than one location having control at one place and even accounting at one place? Further, no provision has been provided for centralised registration or for obtaining more than one registration in a state having same pan number and providing similar nature of services.

9. Transitional Provisions – All provisions are incorporated in four sections running from 139 to 142 and more or less it remains same.

10. Anti profiteering measure – The provision for anti profiteering measures are provided in the chapter of miscellaneous provisions under section 171. The provision for formation of authority or to empower any existing authority to look into it has been incorporated which was missing in the model law.

Apart from above, many other technically changes are made in the bill. This is just quick highlights of the CGST bill.