The Lok Sabha on Thursday passed four bills amending laws relating to the Goods and Services Tax (GST). The move aims at plugging loopholes in existing laws and reducing the compliance burden for taxpayers. The Central GST (Amendment) Bill, 2018, Integrated GST (Amendment) Bill, 2018, The Union Territory GST (Amendment) Bill, 2018 and the GST (Compensation to States) Amendment Bill, 2018 got the Lower House’s nod.
The provisions will allow taxpayers to amend their tax returns in order to rectify errors. They also widen the scope for availing input tax credit.
However, in a move that will have a retrospective impact, transitional credit cannot be claimed for taxes levied in a pre-GST era.
The amendments propose to facilitate the introduction of new tax return forms approved by the GST Council, and allow firms to get multiple registration in the same state for different business verticals. Taxpayers will not have to pay interests in case of delayed payments to suppliers. Also, to lessen the compliance burden, consolidated credit/debit notes can now be issued by companies, instead one for every invoice. Further, only e-commerce operators who need to collect tax at source need to register under GST. No GST will be levied on job works on items imported into India, including gold and diamonds, and then exported.
The provisions related to reverse charge mechanism — entities registered under GST that purchase goods from small unregistered dealers have to pay a tax on behalf of the latter — has been done away with. However, the Centre has been empowered to bring in certain taxpayers under the reverse charge mechanism through a notification subject to the approval of the GST Council.
The proposed changes will also widen the ambit of the Composition Scheme for small traders. In line with the decision of the GST Council, the threshold for availing the Composition Scheme has been raised to ₹1.5 crore from ₹1 crore. Besides, manufacturers and traders supplying services will now be able to opt for the scheme if they supply services of value not exceeding 10% of the turnover or ₹5 lakh, whichever is higher. This is expected to benefit small taxpayers. Under the Composition Scheme, taxpayers can pay a fixed low rate of tax, and avoid the onerous compliance requirements.
M S Mani, partner, Deloitte India, welcomed the passage of the amendments and said the GST Council should continue making changes to enable easier compliance. “It is now essential to start considering common registration for pan-India businesses.”
The amendments also propose to allow input tax credit for food and beverages, health services, and travel benefits to employees, which have to be mandatorily provided by employees under existing laws. Credit can also be availed of in case of motor vehicles with approved capacity of not more than 13 persons (including the driver), thereby extending the credit facility to rental cabs as well. However, no input tax credit can be levied on general insurance, servicing, repair and maintenance of those motor vehicles.