Saturday, 14 October 2017

GST News, Notifications, and Announcements

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Latest Update:

As per 22nd GST Council meeting of 6th October 2017

Lesser burden of compliance for small businesses
  • The government has recognised hardship faced by small businesses with turnover of within Rs 1.5cr, by delaying their return filing compliance to once a quarter from once a month. Taxes will be paid quarterly.
  • Small businesses will also have to file monthly returns for three months – July, August, and September – and the switchover to quarterly filing will happen from the cycle starting October 1.

Relief for Service Providers
  • Exemption from Registration for a service provider if the aggregate turnover is less than Rs. 20Lacs (10 Lacs in special category state except for J&K) even if they are making inter-state supplies of services.
  • Services provided by a GTA to an Unregistered person shall be exempted from GST.
  • TDS/TCS provisions shall be postponed till 31.03.2018.
  • Small businesses will also have to file monthly returns for three months – July, August, and September – and the switchover to quarterly filing will happen from the cycle starting October 1.

Relief for Exporters
  • Refund cheques for July exports will be processed by Oct 10 and refund cheques for August exports will be processed by Oct 18.
  • Every exporter will now get an e-wallet. In the e-wallet, there would be a notional amount for credit. The refund they will eventually get will be offset from that amount. The e-wallet will be introduced from April next year.
  • Merchant exporters will pay a nominal 0.1% GST applicable on exports to enable their suppliers to claim ITC.

Composition Scheme changes
  • Person otherwise eligible for availing the composition scheme and are providing any exempt services shall now be eligible for the composition scheme.
  • Eligibility of composition scheme raised to Rs 1 crore.
  • Traders will pay 1%, manufacturers 2% and restaurants 5% under the composition scheme.
  • Due date of FORM GSTR-4 for the quarter July-September, 2017 is extended to 15th November 2017

 RCM postponed
RCM applicable for the purchases from the unregistered dealer shall be suspended till 31.03.2018.

No GST on advance receipts for businesses with turnover under Rs 1.5cr
Taxpayers having annual turnover upto 1.5 Crore shall not be required to pay GST at the time of receipt of advances on account of supply of goods.

Significant rate changes
  • GST on unbranded Ayurvedic medicines has been reduced from 12% to 5%.
  • Tax rate for man-made yarn has been reduced to 12% from 18%. The decision will have an effect on textiles.
  • GST rate on many job work items reduced from 12% to 5%. GST rate on some stationery items, diesel engine parts also reduced to 18% from the earlier 28%.
  • GST on khakra and unbranded namkeen has been reduced from 12% to 5%. Tax on zari work has been reduced from  12% to 5%.
  • 35% abatement on old leasing contract of vehicle
  • Printing Job work rate revised from 12% to 5%

  • E-way bill has been deferred to 1st April 2018
  • Relief for jewellers as no need to furnish PAN card on jewellery purchase of more than Rs 50,000. The amount of jewellery purchase for which KYC will be required will be determined later.
  • 35% abatement on old leasing contract of vehicle
  • Due date of GSTR-6 (filed by an input service distributor) for the months of July, August and September 2017 has been extended to 15.11.2017

Under consideration 
  • Finance Minister Arun Jaitley announced that a group of ministers will relook tax on AC restaurants. GST for AC restaurants may become cheaper from 18% to 12%. A group of ministers has been formed to devise the mechanism. The GoM will submit its report in 14 days.
  • GoM will also make the composition scheme more attractive
Next meeting of the council will take place in Guwahati on 9-10 November.

Central Tax Notifications

Composition Scheme- Notification 3 & 8/2017
Composition scheme threshold has been notified to be 75 lakhs . This will be beneficial to small businesses.
Notification 3 contains the composition scheme rules which had been issued ealrier on 17th May.

Reverse Charge- Notification 5/2017
The persons who only supply goods/services on which reverse charge applies are exempted from registering under GST registration.
For example, For example, Ola Cabs enlist drivers to ply their cars. Drivers are providing chauffeur/driving services to Ola and Ola is the service receiver.
Ola pays GST on the drivers’ services on reverse charge basis. Drivers are not required to register under GST thus removing the burden of tax compliance for individuals with limited resources (drivers) to large companies (Ola) with enough resources.
Sections coming into force-Notification 1 & 9/2017
With the Notification of 19th June and 28th June, most of the CGST Act is now in force. Only sections 51 & 52 (TDS & TCS respectively) are not applicable as the government has relaxed TDS & TCS provisions for the time being to give more time to the e-commerce sellers.
Sections 42(9) & 43(9) are not applicable.
These clauses say that if the output tax liability is reduced (or input tax credit is increased) due to a debit note (or a credit note) [mismatch of invoices reconciliation] then such amount shall be refunded by crediting electronic ledger. This is not applicable right now as there will not be any reconciliation for 2 months.
Rules-Notification 10/2017
CBEC has issued the rules on valutation, transisition, refunds etc. in a 247 page document.

HSN Codes-Notification 12/2017
Every registered person with turnover more than 1.5 crores must mention the HSN Codes in each and every invoice.
However, the numbers of digits to be mentioned in the Invoice depends on the annual turnover in the preceding financial year.
Turnover in previous FYNo. of digits
Upto Rs. 1.50 CrNIL
More than Rs. 1.50 Cr. & upto Rs. 5 Cr2 digits
More than Rs. 5 Cr4 digits
This is effective from 1st July, i.e., all invoices from 1st July must be GST compliant and have details of HSN codes.
The same notifications have also been made under IGST (notification 5).
Rates of interest-Notification 13/2017
The rates of interest are same as mentioned in the Act. The notification ratifies the rates.
This notification shall come into force from the 1st day of July, 2017
SectionsInterest p.a.
Sec 50(1)- Failure to pay tax18%
Sec 50(3)- Less tax paid/ excess ITC availed24%
Sec 54(12)- Interest on refunds withheld in an appeal later given6%
Sec 56- Interest on delayed refunds6%
Proviso to 56- Interest on refunds ordered in an appeal9%
The same notification has also been made under IGST (notification 6).
Common Portal- Notification 4 /2017
It is notified that the GST website of the Common Portal is managed by  Goods and Services Tax Network.
Modes of verification-Notification 6 & 11/2017
The modes of verification are-
  • Aadhaar based Electronic Verification Code (EVC)
  • Electronic verification code generated through net banking login on the common portal
  • Electronic verification code generated on the common portal
[Points ii & iii replacing the earlier Bank account based OTP as per earlier notification]

Central Tax Rate Notification (28.06.2017)

  1. Most of the goods are kept at the same rates as announced by the GST council earlier but rough or non industrial unworked diamond or precious stones will be charged CGST at the rate of 0.125%.
  2. List of goods exempt from CGST. No change in the list.
  3. Oil, gas, coal and petroleum licenses and sub-contract licenses and leases will be charged GST at the rate of 2.5%.
  4. The person liable to deduct TDS as per the GST law supplying intrastate goods or services to an unregistered person would be exempt from CGST.
  5. Cashew nuts, not shelled or peeled, Bidi wrapper leaves (tendu), Tobacco leaves, silk yarn, Supply of lottery would have reverse charge applicable under GST.
  6. Refund of the unutilized ITC would not be provided in the case of the tax on output being lower than the tax on inputs for certain goods mainly related to the textile and railways.
  7. The supply of goods by CSD to unit run canteens and authorized customers and supply of goods by the unit run canteens to the authorized customers.
  8. 50% of the tax paid on inward supplies of goods by the CSD for further supply to unit run canteens or authorized customers can be claimed as refund under GST.
  9. Person liable to deduct TDS as per the GST law supplying intra goods or services to an unregistered person would be exempt from CGST.
  10. Intrastate supply of second hand goods by a registered person who deals in selling second hand goods to an unregistered person would be exempt from CGST.

Integrated Tax

Sections in force-Notification No. 3/2017
The Central Government has notified that provisions of sections 4 to 13, 16 to 19, 21, 23 to 25 of The Integrated Goods and Service Tax Act, 2017 shall come into force from 1st July 2017.
Provisions of CGST will also apply for IGST- Notification No. 4/2017
The Integrated Goods and Services Tax Rules, 2017 have been notified and are deemed to have come into force retrospectively from 22nd June  2017.
The Central Goods and Services Tax Rules, 2017, for carrying out the provisions specified in section 20 of the Integrated Goods and Services Tax Act, 2017 shall, so far as may be, apply in relation to integrated tax as they apply in relation to central tax. Section 20 mentions the CGST provisions that will apply mutatis mutandis for IGST.

GST News -Integrated Tax (Rates) Notifications

Cases where the e-commerce operator will pay IGST- Notification No. 14/2017
E-commerce operator will pay the IGST in the following services-
  • Transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle (Eg. Ola outstation from Bangalore to Chennai)
  • Providing accommodation in hotels, inns and other commercial places meant for residential or lodging purposes. For example, a small hotel registered on Oyo rooms. Oyo rooms will pay IGST However, if the person (hotel) supplying such service through e-commerce is liable for registration under GST then that person will pay. Eg, Ibis Hotel is a large multi-chain hotel also registered on Oyo rooms. Then Ibis Hotel will pay.

It will come into force with effect from the 1st July 2017.
Goods on which reverse charge applies-Notification No.4/2017
A list of goods on which reverse charge applies is issued by CBEC. When the supply is made by the specified person, then IGST will be payable on reverse charge basis by the recipient of the intra-state supply of such goods. All the provisions of will apply to such recipient.
No ITC for Construction- Notification No. 12/2017
No refund of unutilized ITC will be allowed input tax credit shall be allowed for IGST in construction of a complex, building etc. (works contract). Except in cases where the entire consideration has been received after issuance of completion certificate or after its first occupation, whichever is earlier.

This is in keeping with the provision of not allowing ITC.
This will come into force with effect from the 1st day of July 2017.
Reverse Charge- Notification No. 10/2017
List of services on which reverse charge is applicable is issued. It is the same as issued under CGST Act.
Army Canteens- Notification No. 6 & 7/2017
In the public interest exempts, the following are exempted from IGST (& also CGST)-
  • The supply of goods by the Canteen Stores Department (CSD) to the Unit Run Canteens or
  • The supply of goods by the CSD/Unit Run Canteens to the authorized customers
The CSD can claim a refund of 50% on IGST of all input goods received by it for subsequent supply of such goods to the Unit Run Canteens or to the authorized customers of the CSD.
This notification shall come into force with effect from the 1st July 2017.
Inverted Rate Structure- Tax On Inputs>Tax On Outputs- Notification No.5/2017
Refund of unutilised ITC will NOT be allowed, when the ITC is accumulated due to rate of tax on inputs being higher than the rate of tax on the output goods (except nil rated or fully exempted goods).
High tax on the imported raw materials compels manufacturers to raise the price. On the other hand, foreign finished goods have lower tax rate. In conclusion, manufactured goods by the domestic industry become uncompetitive against imported finished goods.
List of goods on which this notification applies.
For UIN & Diplomats Notification No. 13/2017
This notification specifies the conditions applicable –
  • UN or specified international organisations and
  • Foreign diplomats in India
Panchayat services- Notification No. 11/2017
Constitutional services of the Panchayat are not covered under GST.

News on GST Act

The entire framework of GST is based on GST Act. It was devised by the GST Council, which is a committee consisting of the Union Finance Minister (Chairperson), the Union Minister of State, the minister in-charge of finance or taxation or any other minister nominated by each State Government.

GST News – Rule Changes

The GST is a constitutional amendment, and any change in the law will also affect the rules therein. Rules for invoicing, rules for penalty, rules defining the point of taxation – these are just some of the examples of any rule change in the model law.

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