The GST Council, in its 22nd Meeting which was held on 06-10-2017 in the national capital under Chairmanship of the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley has recommended several structural changes in GST Law to proactively resolve the problems faced by the Industry and Registered Taxpayers with a special focus to ease the burden of compliance on small and medium businesses. We are giving below an Analysis of the Major Proposals of Structural Changes announced by GST Council for ready reference by our Clients:-
(A) SUSPENSION OF REVERSE CHARGE MECHANISM (RCM) TILL 31-03-2018 ON PURCHASE FROM UNREGISTERED PERSONS
Decision Taken by the GST Council:-
The Reverse Charge Mechanism under sub-section (4) of section 9 of the CGST Act, 2017 and sub-section (4) of section 5 of the IGST Act, 2017 shall be suspended till 31-03-2018. Therefore purchases of taxable goods and services by a registered dealer from an unregistered dealer shall not be liable for GST under the RCM.
Earlier Position:-
A registered taxpayer was permitted to purchase upto Rs. 5000/- per day of taxable supplies from an Unregistered Person without applicability of RCM. Any purchase in excess of the aforesaid limit of Rs. 5000/- from an unregistered person was liable for GST under the Reverse Charge Mechanism (RCM), where the GST on such supplies had to be paid by the BUYER of such taxable goods and services.
Effective Date of Change:-
The government has issued notification no. 38/2017 dated 13-10-2017 and further by a tweet on the official handle of the GST Council, it has been clarified that the aforesaid amendment is applicable from 13-10-2017. Therefore, till 12-10-2017, every registered dealer is required to comply with the Reverse Charge Liability u/s 9 (4) of the GST Act.
(B) E-WAY BILL TO BE INTRODUCED IN STAGGERED MANNER
Decision Taken by the GST Council:-
The e-way bill system shall be introduced in a staggered manner with effect from 01-01-2018 and shall be rolled out nationwide with effect from 01-04-2018.
Earlier Position:-
After the implementation of GST, the GST Council has postponed a centralized E-Way Bill system but had permitted the States to frame their own state specific procedures and laws for E-Way Bill. Few states like UP, Karnataka etc. have already implemented their State Specific E-Way bill procedure.
Way Forward:-
The GST Council will expand the scope of E-Way Bill in few states for testing the procedure with effect from 01-01-2018 and after 3 months of testing, the same will be replicated across India. However, currently there is no guidance of any change in the E-Way bill procedure implemented after GST by few states like UP and Karnataka, therefore they will continue till further notification.
(C) TDS/ TCS PROVISIONS UNDER GST POSTPONED TILL 31-03-2018
Decision Taken by the GST Council:-
The Registration and Operationalization of the TDS/ TCS provisions applicable on Government Departments and E-Commerce Operators has been postponed till 31-03-2018
Earlier Position:-
At present the TDS/ TCS provisions under GST were already on Hold and there is no change in position.
Way Forward:-
The TDS/ TCS under GST provisions are expected to be applicable from 31-03-2018.
(D) RELAXATION IN PAYMENT OF GST & FILLING OF RETURNS BY SMALL & MEDIUM BUSINESSES
Decision Taken by the GST Council:-
For Small & Medium businesses with aggregate turnover of upto Rs. 1.5 Crores, it has been decided that such taxpayers shall be required to file quarterly returns in Form GSTR 1, 2 and 3 and pay taxes only on quarterly basis.
Earlier Position:-
At present all assesses (other than those under composition scheme) were required to pay their taxes and file their returns on monthly basis.
Way Forward:-
1. For July, Aug & Sep, 2017 : GSTR 3B and GSTR 1, 2 & 3 are required to be filled as per the existing procedure on a monthly basis;
2. From Oct to Dec, 2017 : GSTR 3B will be required to be filled on Monthly basis whereas GSTR 1, 2 and 3 will be filled on a quarterly basis. Since payment of Tax, is a pre requisite for GSTR 3B, hence the tax will also be required to be paid on a monthly basis;
3. From Jan, 2018 onwards, Tax will be payable on a quarterly basis and only Form GSTR 1, 2 and 3 will be required to be filled on quarterly basis.
(E) RELAXATION FROM REGISTRATION TO SMALL SUPLIERS OF SERVICES PROVIDING INTER-STATE SUPPLIES
Decision Taken by the GST Council:-
It has been decided to exempt those service providers whose annual aggregate turnover is less than Rs. 20 Lakhs (Rs. 10 Lakhs in special category states except J&K) from obtaining GST Registration even if they are making inter-state taxable supply of services.
Earlier Position:-
Anyone making inter-state taxable supplies, except inter-state job worker, is compulsorily required to be registered under GST irrespective of his annual aggregate turnover.
Way Forward:-
Small service providers will not be required to take GST registration for providing their services outside their home state.
CAUTION : This change is applicable only on Service Providers and not on supplier of Goods.
(F) EXTENSION OF COMPOSITION SCHEME FOR NEW TAXPAYERS
Decision Taken by the GST Council:-
1. GST Composition Scheme will be extended for Taxpayers having annual aggregate turnover of up to Rs. 1 Crores (Rs. 75 Lakhs in special category states except J&K and Uttarakhand);
2. Person Providing Exempted services (such as extending deposits to bank for which interest is received) were being considered as ineligible for composition scheme earlier. Now it has been decided to make them eligible;
3. The last date for filling of return in Form GSTR 4 by a taxpayer for July-Sep, 2017 quarter has been extended to 15-11-2017.
Earlier Position:-
GST Composition Scheme was previously available for Taxpayers having annual aggregate turnover of up to Rs. 75 Crores (Rs. 50 Lakhs in special category states except J&K and Uttarakhand)
Way Forward:-
1. Both Migrated & New Taxpayers can avail the benefit of Composition Scheme;
2. Option can be given any time before 31-03-2018;
3. Option once exercised will be applicable from 1st day of the month immediately succeeding the month in which option is exercised.
(G) RELIEF FROM GST ON ADVANCE RECEIVED BY SMALL DEALERS & MANUFACTURERS
Decision Taken by the GST Council:-
It has been decided that taxpayers having annual aggregate turnover up to Rs. 1.50 Crores shall not be required to pay GST at the time of receipt of advance on account of supply of goods. The GST on such supplies shall be payable only when the supply of goods is made.
Earlier Position:-
All taxpayers were required to make payment of GST at the time of receipt of advance or supply of goods/ services which ever was earlier.
Effective Date of Change:-
The press release has not specified the date from which GST on advance has been removed. Unless a separate notification is issued in this matter, it may presumed that this provision is applicable prospectively after the date of Press Release.
(H) Service provided by a Goods Transport Agency (GTA) to an unregistered dealer have been exempted from GST.