By Mayank Agarwal (firstname.lastname@example.org)
The 25th meeting of the GST Council held on 18th January, 2018 has shown that the Government has not turned a blind eye to the pleas of the industry and is willing to cooperate with them to make GST a more simplified and business-compliant structure of the Indirect Taxation System.
The amount of GST revenue for the month of December reflected a reversal in trend for the first time since its inception, recording an increase in the revenue generated. However, there were still widespread concerns about the alarmingly low collection under the Composition Scheme. Hence, amendments to the Composition Scheme structure and the guidelines relating to the implementation of E-Way Bill took the centre stage during the meeting.
Listed below are the some of the significant amendments announced during the meeting:
DEFINITION OF “EXEMPT SUPPLIES” IN CASE OF REVERSAL OF ITC
The decision to bring clarity to the term “exempt supplies” when considering the same for reversal of Input Tax Credit (ITC) has great implications on the operations of various companies. The GST Council has now notified that definition of exempt supplies for the purpose of Rule 42 and 43 (Dealing with reversal of ITC) shall no longer include the value of deposits, loans or advances from which interest or discount is being earned. This however is not applicable for banking and non-banking companies, for whom lending and accepting deposit is the primary business.
The amendment to this rule has great implications in the operations of various smaller companies, who were, before this amendment, required to reverse ITC to the tune of such interest component given the fact that they formed a part of exempt supplies.
This was a cumbersome task given the fact that the interest component may be an insignificant part of total revenue. Despite this, they had to identify the amount of inputs associated with such supplies and reverse the same.
Now, however, the same has been done away with and companies will no longer have to identify inputs for the purpose of ITC reversal as interest is longer a part of exempt supply when it comes to reversal of ITC, thus reducing a compliance burden on part of these companies.
The GST Council has now extended the date for filing of FORM GST-ITC-03 from 90 days to 180 days from the date of registration under Composition Levy. This comes as a relief to taxpayers registered under this Scheme and is expected to increase the GST revenue.
REGISTRATION UNDER GST
Persons that are voluntarily registered under GST can now apply for cancellation of registration at any point of time, unlike the previous lock-in period of one year. Also, persons registered under the previous indirect tax regime but not liable to be registered under GST can now apply for cancellation until 31st March, 2018. The earlier time limit till 31st December, 2017 now stands extended.
The E-Way billing system, commencing from 1st February, 2018 is aimed at ensuring seamless trade across states throughout the Country. The government has set up a dedicated website (www.ewaybillgst.gov.in) for the purpose of furnishing the same.
The aforesaid amendments to the law, along with reduction in rates of goods and services and reduction in penalty in case of late filing of forms are in line with the theme of making GST a smooth and simpler structure and is sure to make payment of tax an easier process for smaller businesses.
The notification for amendment to CGST Rules can be found here- http://www.cbec.gov.in/resources//htdocs-cbec/gst/Notification-3-2018-central_tax-English_New.pdf;jsessionid=2AAA1021F6CE12BBE08A0DC0367CBD11