Some Important Changes in GST By CA Ashish Agrawal


The GST Council in the 32nd meeting, held on 10th January, 2019, had taken various key decisions which would have the impact of reducing the compliance burden of small taxpayers and which would bring certainty in various ambiguous matters. Some of these decisions have been made effective from April 1, 2019. In respect of certain controversial matters, the CBIC has issued various clarifications which would bring clarity to the taxpayers. Here is an insight of notifications and circulars recently issued by the CBIC in the year 2019. These changes are seen as a welcoming move as the same would provide relief to the small taxpayers as the level of compliance for small taxpayers would substantially reduce.

1. Benefit of composition scheme has been extended to service providers

Currently, the privilege of composition scheme is available only to the suppliers who are into the business of supply of goods. The composition scheme was not available to the service providers except for the restaurant and catering services.

With effect from April 1, 2019 the service providers can also avail the composition scheme. This scheme shall be available subject to some conditions such as supplier is engaged in the supply of goods or services within same state and the aggregate turnover of supplier does not exceed Rs. 50 lakhs during the financial year. This has been made effective vide Notification No. 02/2019 - Central Tax (Rate) dated March 7, 2019.

The benefit of this scheme shall not be available to service providers who are rendering services in multiples states or through e-commerce websites.

2. Threshold Limit for composition scheme has been increased to Rs. 1.5 crores

The existing threshold limit on a gross turnover in the previous financial year to avail of the composition scheme has been increased from Rs. 1 crore to Rs. 1. 5 crores. In respect of special category states (North-Eastern States), the threshold limit has been increased from Rs. 50 lakhs to Rs. 75 lakhs. Consequently, the taxable persons can substantially reduce their compliance burden as they would be required to file GST returns on a quarterly basis instead of monthly. This benefit has been extended vide Notification No. 14/2019 - Central Tax dated March 7, 2019.
 
Turnover Limits applicable in various states for opting for composition can be summarized as under:

Sr. No. State Aggregate Turnover in the preceding FY to Opt for Composition Net Impact
Before 1 April 2019 After 1 April 2019  
1 All states other than specified below 1 Crore 1.5 Crore Increase
2 Assam 75 Lakh 1.5 Crore Increase
3 Himachal Pradesh 75 Lakh 1.5 Crore Increase
4 Uttarakhand 1 Crore 75 Lakh Decrease
5 Jammu and Kashmir 1 Crore 1.5 Crore Increase
6 Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura 75 Lakh 75 Lakh No Change

3. Threshold limit to take registration has been increased to Rs. 40 lakhs

As per Section 23 of CGST Act, every person is required to obtain the GST registration if his turnover from the supply of goods or services exceeds Rs. 20 lakhs. This threshold limit has been increased to Rs. 40 lakhs if the supplier is engaged in the supply of goods. In other words, any person who is engaged in the supply of goods and his total turnover in the current financial year does not exceed Rs. 40 lakhs, he is not required to take registration under GST. This exemption from GST registration is subject to various conditions, inter-alia, he is not making any inter-state supply, he is not a non-resident taxable person, etc. This has been made applicable by Notification No. 10/2019 - Central Tax dated March 7, 2019.

Further exemption limit of non-specified state has only been Increased.

Any person, who is engaged in the exclusive supply of goods and whose aggregate turnover in the financial year does not exceed forty lakh rupees, except, –

(i) persons required to take compulsory registration under section 24 of the said Act;

(ii) persons engaged in making supplies of the goods, the description of which is specified in column (3) of the Table below and falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Table;

(iii) persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand; and

(iv) persons exercising an option under the provisions of sub-section (3) of section 25, or such registered persons who intend to continue with their registration under the said Act.
 
The Aggregate Turnover shall be calculated as under:

  1. Value of All Taxable Supplies, exempt supplies, export of goods or services or both and inter-state supplies.
  2. Turnover of all the entities of a person under the same PAN on All India basis,
  3. Aggregate Turnover shall not include any central tax, state tax, union territory tax, and integrated tax and cess.
  4. Aggregate turnover shall not include the value of inward supplies on which tax is liable to be paid on Reverse Charge Basis.
The effect of all changes in the threshold limit for GST registration and composition scheme has been enumerated in the below table.

Nature of supply Turnover or Receipts Registration Composition scheme Rate of tax
Goods Up to 40 Lakhs - - -
More than 40 Lakhs but up to 1.5 crore 1% of the turnover
More than 1.5 crore - Normal rates
Restaurant Services Up to 20 Lakhs - - -
More than 20 Lakhs but up to 1.5 crore 5% of the turnover
More than 1.5 crore - Normal rates
Other services Up to 20 Lakhs - - -
More than 20 Lakhs but up to 50 Lakhs 6% of the turnover
More than 50 Lakhs - Normal rates
 
4. Due date for filing of GSTR-1 and GSTR-3B for has been announced

The due dates for filing of GSTR-1 and GSTR-3B for the months of April, May, and June of 2019 has been notified, which shall be as follows:

Type of return April, 2019 May, 2019 June, 2019
       
GSTR-1(Turnover more than 1.5 crore) May 11, 2019 June 11, 2019 July 11, 2019
GSTR-1(Turnover up to 1.5 crore) July 31, 2019
GSTR-3B May 20, 2019 June 20, 2019 July 20, 2019

Turnover limit of the current or previous financial year shall be considered to determine the eligibility of the supplier for the filing of monthly or quarterly GST return.

This has been made effective by Notification No. 11/2019, Notification No. 12/2019, and Notification No. 13/2019- Central Tax dated March 7, 2019.

5. Clarification issued for levy of GST on various sales promotional schemes.

The CBIC has issued clarifications on chargeability of GST, valuation of goods and reversal of ITC in respect of free samples and promotional goods distributed by a taxable person. This clarification has been issued in Circular No. 92/11/2019-GST.

CBIC has issued a clarification on the aforesaid issues related to the treatment of sales promotion schemes –

A. Free Samples and gifts:

it is clarified that samples which are supplied free of cost, without any consideration, do not qualify as “supply” under GST, except where the activity falls within the ambit of Schedule I of the said Act.
ITC shall not be available on Inputs, Input Services and Capital Goods in respect of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. ITC so availed shall have to be reversed as per Sec 17(5)(h) of the CGST Act, 2017
Where the activity of distribution of gifts or free samples falls within the scope of “supply” as per Schedule I of the Act, the supplier would be eligible to avail of the ITC.
 
B. Buy one get one free offer:

It is prevalent in FMCG, Pharma and some industry to offer such schemes of providing free quantities along with taxable supplies. Many companies offer either Buy one, Get one Free offer or provide free item along with the product.

CBIC has clarified that in the aforesaid cases, the items are not offered free of cost but single price is charged for all the goods.

Such supplies may not be treated as an individual supply of free goods but a case of two or more individual supplies where a single price is being charged for the entire supply.

Taxability of such supply will be dependent upon as to whether the supply is a composite supply or a mixed supply. In case of composite supply, same shall be taxed at the rate charged for principal supply. However, in case of mixed supply, all the goods shall be taxed at the rate of the product which attracts highest rate of tax.

ITC shall be available on inputs, input services and capital goods to the supplier for such offers.

C. Discounts including ‘Buy more, save more’ offers:

It is Industry practice to offer more discount with the increase as volume, sometimes termed as “Quantity discount”, “Volume Discount” or “Lifting Discount”, etc. Such discounts are passed on by the supplier through credit notes.

Such discounts offered by the suppliers to customers (including staggered discount under “Buy more, save more” scheme and post supply / volume discounts established before or at the time of supply) shall be excluded to determine the value of supply provided that conditions as laid down in Section 15(3) of the CGST Act, 2017 is satisfied including reversal of ITC by the recipient.

D. Secondary Discounts
:

In some cases, discounts are not known at the time of supply or are offered post such supply is over.
Further, it is clarified that such secondary discounts shall not be excluded while determining the value of supply as such discounts are not known at the time of supply.
This shall not impact any input tax credit availability in the hands of supplier provided conditions laid down in Section 15(3) (b) of the CGST Act, 2017

6. No GST to be levied on TCS component collected by suppliers.

Valuation Rules specify that value of supply shall include any taxes, duties, cesses, fees and charges levied under any law for the time being in force except GST. Thus, CBIC has clarified that if supplier collects TCS form the buyer on sale of a product then GST shall not be charged on the TCS component collected by the supplier. This has been clarified in Corrigendum to Circular No. 76/50/2018-GST dated December 31, 2018.

7. GST Annual Return Forms GSTR-9 and 9A are now live on portal

Annual return in Form GSTR-9 and 9A are now live on portal. The last date for filing of Annual Return for the Financial Year 2017-18 is June 30, 2019.Annual Return once filed cannot be revised. Hence, check the details before filing Annual return. Reconcile your ITC with Auto-populated details through GSTR 2A. The current Annual return template captures ITC for GSTR 1 filed by suppliers. For any missing credits contact your vendors to file their GSTR 1 . System shall restrict ITC to lower of the following – ITC claimed as per 3B or auto populated as per GSTR 2A.

8. New GST return forms- Sahaj ,Sugam

As after implementation of GST on 1st July 2017 there have been complications for the taxpayer  in filling return the late fees implied and various changes in day to day notification issued by  goverment as due to this the small taxpayer who are around 93% whose turnover are less than Rs. 5 Crore face major issue for compliance and the cost for compliance. For relief for such small taxpayer the goverment has simplified the Compliance for Returns in GST by implementing the New returns from 01.04.2019 on voluntary basis and from 01.07.2019 it will be mandatory.

As there have been announced in 28th GST COUNCIL held on 21st july 2018 in New Delhi. The Council also introduced an option to file quarterly GST returns in a simplified format for small taxpayers. GST will have Sahaj and Sugam forms. Regular taxpayers with a turnover of up to Rs 5 crores can now file GST returnson a quarterly basis against the earlier limit of Rs 1.5 crores, either in ‘SAHAJ’ or ‘SUGAM’.As 93% of the Taxpayer has turnover less than Rs. 5 Crores. It is proposed to file quarterly return till turnover of Rs 5 crore in preceding financial year

  1. Periodicity of filing return will be deemed to be monthly for all taxpayers unless quarterly filing of the return is opted for.
  2. For newly registered taxpayers, turnover will be considered as zero and hence they will have the option to file monthly, Sahaj, Sugam or Quarterly (Normal) return.
  3. Change in periodicity of the return filing (from quarterly to monthly and vice versa) would be allowed only once at the time of filing the first return by a taxpayer.
  4. The periodicity of the return filing will remain unchanged during the next financial year unless changed before filing the first return of that year.
  5. The taxpayers opting to file quarterly return can choose to file any of the quarterly return namely – Sahaj, Sugam or Quarterly (Normal).
  6. Taxpayers filing return as Quarterly (Normal) can switch over to Sugam or Sahaj return and taxpayers filing return as Sugam can switch over to Sahaj return only once in a financial year at the beginning of any quarter.
  7. Taxpayers filing return as Sahaj can switch over to Sugam or Quarterly (Normal) return and taxpayers filing return as Sugam can switch over to Quarterly (Normal) return more than once in a financial year at the beginning of any quarter.
  8. Taxpayers opting to file quarterly return as ‘Sahaj’ shall be allowed to declare outward supply under B2C category and inward supplies attracting reverse charge only. Such taxpayers cannot make supplies through e-commerce operators on which tax is required to be collected under section 52. Such tax payers shall not take credit on missing invoices and shall not be allowed to make any other type of inward or outward supplies. However, such taxpayers may make Nil rated, exempted or Non-GST supplies which need not be declared in the said return.
  9. Taxpayers opting to file quarterly return as ‘Sugam’ shall be allowed to declare outward supply under B2C and B2B category and inward supplies attracting reverse charge only. Such taxpayers cannot make supplies through e-commerce operators on which tax is required to be collected under section 52. Such tax payers shall not take credit on missing invoices and shall not be allowed to make any other type of inward or outward supplies. However, such taxpayers may make Nil rated, exempted or Non-GST supplies which need not be declared in said return.
Taxpayers opting to file monthly return or Quarterly (Normal) return shall be able to declare all types of outward supplies, inward supplies and take credit on missing invoices.

9. Points to watch for

As we know 30.06.2018 is the last date for GST Audit Report filing form for F Y 2017-2018 having turnover more than 2 cr. But March'2019 is last Month  for

1) Correction in GSTR 3B/ GSTR1
2) ITC Credit which is not taken
3) RCM liability not paid
4) Job work Return not filed

CBIC mandates the reporting of all inter-State supplies made to unregistered persons in Table 3.2 of FORM GSTR-3B and Table 7B of FORM GSTR-1
 
The Central Board of Indirect Taxes & Customs ('CBIC') vide its Circular No. 89/08/2019-GST dated February 18, 2019 which clarify that the registered persons making inter-State supplies to unregistered persons, composition taxable persons and UIN holders shall report the details of such supplies along with the place of supply in Table 3.2 of FORM GSTR-3B and the details of all inter-State supplies made to unregistered persons where the invoice value is up to Rs 2.5 lakhs (rate-wise) are required to be reported in Table 7B of FORM GSTR-1 as mandated by the law. Contravention of any of the provisions of the Act or the rules made thereunder attracts penal action under the provisions of section 125 of the CGST Act. The non-mentioning of the said information results in – (i) non-apportionment of the due amount of IGST to the State where such a supply takes place; and (ii) a mismatch in the quantum of goods or services or both actually supplied in a State and the amount of integrated tax apportioned between the Centre and that State, and consequent non-compliance of Sub-section (2) of section 17 of the Integrated Goods and Services Tax Act, 2017.
 
The government has changed the GST Set off Rules by inserting section 49A in CGST Act w.e.f. 01.02.2019. Now IGST Credit is required to be set off fully before taking any set off from CGST/SGST credit. Which means earlier CGST/SGST credit was first used to be set-off with CGST/SGST liability respectively and thereafter only, IGST credit was used against CGST/SGST liability. But now IGST Credit has to be first utilised against IGST/CGST/SGST liability, even before utilisation of CGST/SGST credit.
 
GST Portal With New Features
 
TDS/TCS Credit available for utilisation.
 
A new window has been enabled for claiming TDS/TCS credits. The taxpayer has the option of accepting or rejecting the TDS/TCS credits available and filing their return, after which the credits get transferred to the cash ledger and can be used for making GST payments.
 
This facility helps taxpayers easily identify such credits and take action accordingly.
 
E-way bill data can be imported for GSTR-1.
 
The E-way bill (EWB) and the GST portal has now been integrated. The same gets automatically imported for the B2B and B2C (large) invoices sections as well as the HSN-wise-summary of outward supplies section. Users only need to verify the data and proceed.

This has definitely saved both time and effort for a business person, as it avoids unnecessary data-entry. However, many businesses were performing this sort of reconciliation themselves using smart tools to ensure accuracy of data.
 
List of preferred banks available for making payments.
 
A taxpayer can choose from a list of 6 preferred banks that will be auto-saved at the time of making payments. If he makes payment through a 7th bank account, the same will get added, and the least used bank account will get removed. He has the option to delete the bank accounts at any point in time.
 
With this feature in place, the taxpayer need not enter bank details every time, as he can simply select a bank with the click of a button and proceed to make payment.
 
Refund applications can be filed monthly for quarterly filers.
 
There is good news for taxpayers opting to make payments on a quarterly basis. They now do not have to wait for the quarterly filing of refund applications, as the same can be done monthly. However, a prerequisite for the same would be to ensure that GSTR-1 for the quarter has been filed.
 
This will definitely help mobilise the working capital flows of a business as there is no longer a need to wait till the end of a quarter to apply for a refund.

Appeals can be filed online and system-generated acknowledgements will be issued.
 
A taxpayer can file an appeal against an order passed by an appellate authority, or against an advanced ruling by an appellate authority on the GST portal. He even has the option to file an application with the appellate authority in the case of rectification of a mistake in order passed.
 
In the event of an appellate authority failing to issue a final acknowledgement within the stipulated time, then a system generated final acknowledgement will be issued with the remark “subject to validation of certified copies”. This has simplified the process of filing appeals and also helps tracking the status of the same.

Composition taxpayers can reply to SCN online for compulsory withdrawal.
 
For composition taxpayers, there is a simpler way to reply to show cause notices(SCN) now. This is in the case of a show cause notice being issued for compulsory withdrawal from the composition scheme, and if proceedings are initiated against the composition taxpayer, he now has the option to reply to show cause notices on the portal.
 
Bank account details not mandatory at the time of registration.
 
Declaring bank account details are now optional at the time of registration for Normal, OIDAR and NRTP taxpayers. Previously, this was a mandatory requirement. The bank account details can be updated at a later date, which will be at the time of the first login.
 
Hence, a GST registration number can be obtained without the same. New businesses who are in the process of obtaining bank accounts can simultaneously proceed with GST registration, thus saving time.
 
Claiming of ITC and amendment of B2B invoices of 17-18 are re-opened up till March 2019.
 
Users can now amend B2B invoices of FY 2017-18. The facility to amend the GSTR-1 details of FY 17-18 was closed on filing the September 2018 return. The same has been made available while filing returns for the months of January to March 2019. Input tax credit of FY 2017-18 that was omitted and hence unclaimed up till September 2018 can be claimed now up to March 2019 as well. This was a much-needed remedy for taxpayers who made errors reporting any invoice in the past, or previously missed out claiming genuine credit.
 
While there are updates being rolled out from time-to-time, users are still hoping to see a smooth system that is completely online and indefectible. In the future, users can look forward to more new updates that would familiarise taxpayers with the new return system that is likely to be introduced by July 2019.
 
 
The GST e-way bill system is likely to be integrated with NHAI's FASTag mechanism from April to help track movement of goods and check GST evasion. The revenue department has set up an officers committee to integrate e-way bill, FASTag and DMIC's Logistics Data Bank (LDB) services, after consultation with transporters. Integration of e-way bill with FASTag will help revenue authorities track the movement of vehicles and ensure that they are travelling to the same destination as the transporter or the trader had specified while generating the e-way bill. It will also help the suppliers locate the goods through the e-way bill system. Transporters, too, would be able to track their vehicles through SMS alerts that would be generated at each toll plaza. The integrated system on an all-India basis is planned to be rolled out from April 2019.

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