Annexure 12: Important Changes in GST Laws and Rates during 2017-18 & 2018-19 - Model All India GST Audit Manual 2023 [CBIC] - GST

Annexure 12: Important Changes in GST Laws and Rates during 2017-18 2018-19 Changes in Reverse Charge Mechanism (RCM) Reverse charge is a mechanism under which the recipient of the goods or services is liable to pay the tax instead of the provider of the goods and services. Under the normal taxation regime, the supplier collects the tax from the buyer and deposits the same after adjusting the output tax liability with the input tax credit available. But under reverse charge mechanism (RCM), liability to pay tax shifts from supplier to recipient. In respect of RCM u/s 9(3) of the SGST/ CGST Acts, 2017 , the CGST Notification no. 04/2017-CT(Rate), dt. 28.06.2017 and CGST Notification no. 13/2017-CT (Rate), dt. 28.06.2017 notify certain specified Goods and Services for the supply of which tax is payable under RCM. In respect of section 9(4) of CGST /SGST Act and section 5(4) of IGST Act the original provision has been amended as follows: If the amount of inward supplies of goods or services or both, received in a day by a registered person from all unregistered suppliers, does not exceed Rs.5000/-, no tax is payable on RCM under section 9(4) by a registered recipient. If a registered person receives inward supplies of goods or services or both exceeding Rs. 5000/- in a day from all unregistered suppliers, he is liable to pay tax on RCM basis on entire amount of such supplies received by him. From 13.10.2017 the provisions of section 9(4) of SGST/CGST Act and section 5(4) of IGST Act have been kept suspended. Finally, the provision has been amended w.e.f. 01.02.2019 as below: Govt. may specify by notification a class of Registered recipients who shall pay tax on RCM on supply received from an unregistered supplier. It may be noted that, w.e.f. 01.04.2019 CGST Notification no. 03/2019 CTR dt. 29.03.2019 have been issued on certain specific conditions and situations of Construction Services where tax is to be paid under reverse charge mechanism. Composition levy Threshold limit for opting Composition Levy was 75 lakh rupees at the advent of GST. Said threshold has been extended to 1 Crore rupees. [CGST Notification No. 46/2017-CT, dated 13.10.17 ] Option for Composition Levy in the middle of 2017-18 has been allowed by inserting sub-rule (3A) to rule 3. [CGST (Ninth Amendment) Rules, 2017 issued vide Notification No. 45/2017-CT, dated 13.10.17 ] Restaurants, eateries etc. shall not be barred from Composition Levy even if it supplies any exempt services including services by way of extending deposits, loans or advances [RoD Order issued vide CGST Order No. 01/2017-CT, dated 13.10.17 ] Rate Reduction with effect from 01.01.2018: Rate of Composition Levy for manufacturers has been reduced from one (01) per cent. of turnover in the State to half (0.5) per cent. of turnover in the State. Rate of Composition Levy for traders has been reduced from half (0.5) per cent. on turnover in the State to half (0.5) per cent. of the turnover of taxable supplies of goods in the State [CGST (1st Amendment) rules, 2018 issued vide 1 [ notification No. 03/2018-CT, dated 24.01.2018 ] ] Tax on Advance received Section 12(2) of the SGST/ CGST Act : The time of supply of goods shall be the earlier of the following dates, namely: (a) the date of issue of invoice by the supplier or the last date on which he is required, under section 31, to issue the invoice with respect to the supply; or (b) the date on which the supplier receives the payment with respect to the supply: So, in terms of the above provisions, tax is payable when advance payment is received for supply of both goods or services. But taxpayers having aggregate turnover in the preceding financial year upto 1.5 crore are exempted from payment of tax on Advance received in case of supply of goods with effect from 13.10.2017 [CGST Notification No. 40/2017-CT, dated 13.10.17 ] The above benefit has been extended to all taxpayers from 15.11.2017. [CGST Notification No. 66/2017-CT, dated 15.11.17 ] Changes in SGST/CGST Act relevant for 2017-18 2018-19 Import of services without consideration by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business has been treated a supply as per para. 4 of Schedule I. Such provision is amended so that it will be applicable not only to a taxable person, but to any person. [w.e.f. 01.07.17] Scope of No supply extended w.e.f. 01.02.2019 by amending Schedule III: Supply of goods from non-taxable territory to another non-taxable territory without entering into India. (Para. 7) Supply of warehoused goods to any person before clearance for home consumption; and 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. [In common parlance HIGH SEAS SALE] (Para. 8) Input Tax Credit: Where the services are provided by the supplier to any person on the direction and on account of a registered person, for the purpose of entitlement of input tax credit it shall be deemed that the said registered person has received services [Explanation to Sec. 16(2)(b) of SGST/CGST Act amended w.e.f. 01.02.2019] Subject to conditions, Input tax credit in respect of invoices or invoice relating to such debit notes for supplies made during 2017-18 can be availed till the due date of furnishing return ( GSTR-3B ) for the month of March, 2019 i.e. 23.04.2019 (as extended by Notification No. 09/2019 C.T./GST dated 22.04.2019 ) Condition: Details of such invoices or debit notes are uploaded by the supplier in GSTR-1 till the due date for furnishing GSTR-1 for the month of March, 2019. [Proviso added to section 16(4) by ROD Order No. 2/2018 dated 31.12.2018 ] ITC can be transferred on obtaining separate registration for multiple places of business within the State w.e.f. 01.02.2019 [rule 41A inserted, dated 29.01.2019] Order of utilisation of ITC changed: Existing provision (from 01.07.17 to 31.01.19): For payment of State tax/central tax, ITC of State tax/central tax has to be debited first, then ITC of integrated tax can be debited New provision: ITC of State tax/central tax shall be utilised for payment of integrated tax or State tax/central tax, only after the ITC of integrated tax has first been utilized fully towards such payment. [New section 49A inserted w.e.f. 01.02.2019. Important Changes in the IGST Act in relation to export of services and place of supply made by IGST (Amendment) Act, 2018 Export of services [sec. 2(6)(iv)]: Original provision [01.07.17 to 31.01.19]: One of the condition to be satisfied for export of services is that the payment has to be received in convertible foreign currency Changed provision from 01.02.19: Now even if payment is received in Indian rupees wherever permitted by the RBI, if other conditions are satisfied such supply would be treated as export of services Place of supply: Original provision [01.07.17 to 31.01.19]: POS of services by way of transportation of goods to a registered person, shall be the location of such person, and that to an unregistered person, shall be the location at which such goods are handed over for their transportation. [ section 12(8) of the IGST Act ] Changed provision from 01.02.2019: Where the transportation of goods is to a place outside India, POS shall be the place of destination of such goods [proviso added to section 12(8) ] Original provision [01.07.17 to 31.01.19]: Subject to other conditions, POS of services supplied in respect of goods temporarily imported into India for repairs is the location of the recipient Changed provision from 01.02.2019: Now, POS of services supplied in respect of goods temporarily imported into India for repairs or for any other process or treatment also is the location of the recipient [Second proviso to section 13(3)(a) substituted]. ****************** NOTES:- 1 . The correct reference is CGST Notification No. 03/2018, dated 23rd January 2018 .