Overview of Changes in GST Rules
Top 12 Proposals of Changes in GST Rules, You must know before getting Finalize: The government has invited general public, experts, and taxpayers etc. to provide suggestions for making changes in GST Rules. If you have some innovative ideas regarding GST rules then you are welcome to suggest it here.
Please note that the last date to send your suggestions on GST Rules changes is 15th July 2018. Also, do not forget to read how to suggest/feedback on the draft. If you simply type your comment without following guideline, it may not be worth sending.
We have chosen these 12 top proposals for making changes in GST Rules. These changes are only for draft purpose and not finalized rules. Before finalizing these rules, it will go for discussion in assembly and thereafter it may come into implementation.
1. Input tax credit (ITC) on services provided to employee:
ITC was not available for services by employer to employee while he is on leave or vacation in previous rules. Therefore it is now as per latest draft, government has suggested to remove this and provide ITC in certain cases. Hence Employers may able to claim input tax credit on facilities like food, transport and insurance provided to employees under revised draft rules.
2. Modification of reverse charge mechanism: Secondly as per new draft suggestion has been put that only notified taxpayers will have to pay GST on reverse charge basis. As per Section 9(4), registered persons are liable to pay GST under reverse charge on purchases from unregistered supplier. This provision is not applicable till September 30, 2018. The motto of this step is to benefit the small and medium enterprises by removing this cascading rule.
3. Immediate Temporarily cancellation of GST registration:
As per current rules taxpayer has to apply for cancellation of GST Registration if wants to do so. After receipt of application proper tax officer has to verify his dues and liabilities in respect of tax paid. Also, to check whether he has filed his all due return on time. Therefore one type of assessment was taking place for such process.
Draft says, once a taxpayer has applied for cancellation of GST registration, the proper officer should temporarily suspend the registration till the procedural formalities for cancellation gets complete. This amendment would relieve the compliance burden of taxpayers.
4. Issuance of consolidated debit/credit notes covering multiple invoices:
At present, a credit or debit note can be issued only against the invoices raised. This system is little bit cumbersome to relate. Therefore it is proposed that both parties should be allowed to issue consolidated credit or debit note.
5. Composition scheme for small service providers:
At present, registered persons engaged in the supply of services (other than restaurant services) are not eligible for the composition scheme.
Thus, manufacturers or traders couldn’t opt for the scheme if they are in supply of allied services. Therefore, now the new proposal can allow even if proportion of ‘Service’ is up to 10% of total turnover in the preceding financial year or Rs. 5 lakhs, whichever is higher.
6. Negative list of input tax credit:
As per current law there are few services and supply of goods where in ITC is not allowable. The list containing these limitations is called negative list of input tax credit. Therefore Changes in negative list of input tax credit has been proposed. It is proposed that input tax credit should be allowed for the taxes paid on following goods and services:
a) Supply of food, transport and insurance provided to employees if it is obligatory for the employer.
b) Purchase of motor vehicle if it used for transportation of money for or by a banking company or a financial institution.
7. Exclusion of Compulsory Registration to E commerce operation:
It is proposed that an e-Commerce operator, who is not required to collect TCS, should be exempted from taking compulsory GST registration under new law. In that case, the registration should be obtained only if other conditions are fulfilled, inter-alia, turnover exceeding the threshold limit, inter-State supply, etc.
8. Revision of GST returns:
Under VAT system, commercial tax was allowing revising the vat /CST Return. But under Excise and service, Revision was not possible. Once return filed is filed. If any changes have to be done then it can be carried on in the next month.
Therefore now majority of taxpayers have that in mind that they should get to revise the return. Also taxpayer commits mistakes especially those who are completely new to GST. It has been seen that not only the citizens are making mistakes and errors in return but there are many Chartered accounts are bound to make mistakes while filing their client’s returns.
It is very difficult for the taxpayer who is new in GST, because from the point of Assessing the tax liability till filing the returns is completely new to him. Therefore proposal has been put to provide option for revising GST Returns. As per our opinion, revising option in return will make little messy on the GSTN Data, However, it will be very useful if GSTN can manage to do it successfully.
9. Exclusion of audit by Chartered or Cost Accountants:
As per the existing rules every registered taxpayers who crosses his turnover beyond the limit, which is currently 2 crores, shall get his records audited by chartered accounts and submit to the government. Now Ministry of Defence has represented that the annual accounts of Canteen Stores Department (CSD) is internally audited by the Controller of Defence Accounts (CDA). Therefore it need not require audit by a Chartered Accountant or a Cost Accountant.
Looking at this scenario, proposal has been put that any department of the Central or State Government / local authority which is subject to audit by CAG need not get their books of account audited by any Chartered Accountant
Cost Accountant.
10. Multiple GST registration in same state or union Territory:
As per the current provisions, a person seeking registration shall be granted a single registration in a State or Union territory.
However, if he has multiple business verticals in a State or Union territory, he may obtain separate registration for each business vertical. Let us clarify this little bit.
Item A is completely different i.e. its raw material, processing activity etc., Then only you get separate registration. If your items are similar to A, B and C then GST rules does not allow you to get separate registration in same state regardless of your branches.
Just imagine if you have 3 types of products manufacturing whose processing is similar. Also, you have different branches at different locations but you could not get separate registration. There may be number of reasons for having separate registration.
Therefore, now proposal has been put, that such persons should be allowed to obtain separate registration for his each place of business in a State or Union territory. It should not matter whether he has different business verticals or not.
11. Import of goods and SEZ:
In case of import of goods, by virtue of Circular No. 3/1/2018-IGST, Dated May 25, 2018, IGST would be payable only at the time of clearance of goods from Custom bond-ed warehouse for home consumption. This deferment of levy of GST is done so as to avoid the double taxation. Proposal has been put, that such situations should be mentioned as ‘No Supply’ in Schedule III of the CGST Act, 2017 itself. Also, the said changes should be applicable to SEZ units.
12. More authority to GST Practitioners:
Presently GST practitioners can only furnish the details of outward and inward supplies and various returns on behalf of a registered person.
Draft Proposal may allow the GST practitioner to perform other functions like filing refund claim, filing application for cancellation of registration etc. on behalf of his clients.