23 July 2018

CGST and IGST provisions set to be amended

Goods and Services Tax Council has, on 21-7-2018, in its 28th meeting approved draft amendments to CGST Act, IGST Act and GST (Compensation to States) Act. These amendments need to be passed by Parliament and State legislatures. Some of the amendments recommended by GST Council are:


High sea sales and sale of warehoused goods:

Supply of warehoused goods to any person before clearance for home consumption, has been proposed to be covered under Schedule III of the CGST Act, providing for activities which are to be treated neither as supply of goods nor as supply of services. Further, supply of goods by consignee to any other person, by endorsement of documents of title, after the goods have been dispatched from a port outside India but before clearance for home consumption (high sea sales), would also be not liable to GST.


‘Supply’ provisions under GST:

Omission of clause (d) of Section 7(1) and insertion of sub-section 7(1A) have also been proposed to clear the ambiguity of deeming as supply, certain activities listed in Schedule II even if they do not constitute supply as per other provisions of the said section. Further, supply of goods from a place in non-taxable territory to another place in non-taxable territory without the goods entering into taxable territory, would not be treated as ‘supply’.


Import of service by non-taxable person:

Sl. No. 4 of Schedule I to the CGST Act is also proposed to be amended to tax the import of services by entities which are not registered under GST but are otherwise engaged in business activities. These services received without payment of any consideration, from a related person or from any of their establishments outside India would be liable to GST if the proposals are accepted and the CGST law is amended by the Parliament.


Reverse Charge Mechanism set to be diluted:

Section 9(4) of Central GST Act which mandates all registered persons to pay GST on reverse charge basis on purchases made from unregistered persons, has also been proposed to be omitted. It may be noted that said provisions are presently under suspension till 30-9-2018. Instead, the Central Government is proposed to be empowered to specify class of registered persons who shall on receipt of goods and/or services from unregistered persons, pay GST as if they are liable.


Input Tax credit – Bill-to-ship-to provision for services:

Section 16(2)(b) is proposed to be amended to provide for Bill-to-ship-to provisions for availing ITC. Accordingly, where the services are provided by the supplier to any person on the direction and account of a registered person, such registered person would be deemed to have received the services.


ITC provisions proposed to be relaxed:

Provisions relating to input tax credit are being amended whereby ITC will be available on motor vehicles for transportation of persons having seating capacity of more than 13 persons, vessels and aircraft and motor vehicles used by bank or financial institution for transportation of money. Condition as to reversal of ITC with interest if supplier is not paid within 180 days is being amended to remove the interest liability in such cases.


Multiple registration for multiple business premises in same State:

Section 25(2) is proposed to be amended to enable a taxpayer to obtain multiple registration for various business premises within the same State. However, such facility will be available subject to conditions that may be prescribed.



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