Amendments in Goods and Services Tax- Legislative Background & Tracking

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1 Amendments in Goods and Services Tax- Legislative Background & Tracking

2 Contents Amendments to Goods and Services Tax: Constitutional Powers Summary of GST Amendments since implementation Tracking of Amendments in GST

3 Amendments to Goods and Services Tax: Constitutional Powers 3

4 Framework of Indirect Taxes (Excise, Service Tax, Value Added Taxes) Pre-GST regime- Legislative Background Act Levy/ Incidence, deemed supply, negative list, valuation, adjudication and appeal, offences, penalties and interest, Powers provided to Central Government to prescribe Rules Rules Procedures & Conditions related to valuation, payment of taxes, filing of return, availment and utiilsation of credits, point of taxation, place of supply, settlement, etc. Notifications Tariff: Rates, Exemptions, Concessions; Non- Tariff: Conditions, Safeguards, Procedures & Amendments to Rules and Notifications Circulars Clarificatio ns, Explanatio ns Orders & Notices Exemptio ns, Strictures, facilitation under power assigned to authorities Finance Bills New Levy, Amendm ent to Act (Annual event to bring legal enforcem ent and constitutio nality to changes as per Parliamen tary rights) 4

5 Introduction of GST The Constitution (101 st Amendment) Act, (12A) What is GST? Goods and Service Tax means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption 246A (2) Powers to make Union law? Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-state trade or commerce 246A (1) Powers to make State/ UT Law? Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State 279A(1) What is GST Council? The president shall, within 60days form the date of commencement of the constitution (One Hundred and Twenty-Second Amendment) Act, 2014, by order, constitute a Council to be called the Goods and Service Council. 279A(2) What does GST Council comprise of? The Goods and Services Tax Council shall consist of The Union Finance Minister, The union Minister of state in charge of Revenue or Finance, The minister in charge of finance or taxation or any other Minister nominated by each State Government 5

6 Powers with respect to GST Roles and Responsibilities of GST Council The GST Council is empowered to make recommendations to the Union and the States on: a) The taxes, cesses and surcharge levied by the union, the States and the local bodies which may be subsumed in the goods and service tax; b) The goods and services that may be subjected to, or exempted from the goods and service tax; c) Model goods and service tax Law, principles of levy, appointment of integrated goods and service tax (IGST) and the govern the place of supply; d) The threshold limit of turnover below which goods services may be exempted from goods and service tax; e) The rate including floor rate with bands of Goods and Service tax; f) Any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster; g) Special provisions with respect to the states Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and h) Any other matter relating to goods and service tax, as council may decide. Every decision of the GST Council shall be taken at a meeting, by a majority as may be prescribed 6

7 GST Framework Deviations from the pre-gst regime GST Act Administration Levy & Collection Time & Value of Supply Input Tax Credit Registration Returns Refunds Assessments Appeals Offences & Penalties Key additions to the Act (which are introduced under Parliamentary Powers) + Place of Supply Principles + Zero rating of SEZ and Export Supplies + Export of service related conditions + Taxation of Inter-State Supplies to include a. transactions till they cross custom frontier, b. SEZ supplies, c. supply where place of supply is outside India, service provider in India and transaction does not qualify as exports + Time of Supply of goods and services + Conditions for availing credit, Exempted supplies for the purpose of credit reversal + Conditions for issuance of credit notes + Job Work and ISD provisions GST Rules Registration Value of Supply Input Tax Credit Tax Invoice, Credit Note, etc. Accounts & Records Returns Payment of Taxes Assessments Appeals Offences & Penalties Changes to the above can now be done only through a Finance Bill under Parliamentary Powers (based on GST Council s recommendations) 7

8 Amendments under GST Potential Issues under GST Amendments in CGST without corresponding in SGST from the same date o Many State legislations are issuing Notifications at a later date with a previous effective date thereby leading to anomaly and uncertainty Ultravires status of some amendments which may not be supported by Act Introduction of certain amendments vide Notifications not supported by Act 8

9 GST Amendments till date 9

10 GST Amendments till date Summary of Key Changes- Tariff Rate and exemption related amendments Prescription of reverse charge on prescribed supplies and exemption from reverse charge on certain supplies Restriction on Input Tax Credit on certain products Special Procedures for payment of tax to specified class (e.g. builder & transferor of development rights) Notifying supplies not eligible for refund of unutilized ITC under CGST Act 10

11 GST Amendments till date Summary of Key Changes- Non Tariff Exemption from registration to persons only making exempt supplies, to suppliers making supply through ECO Extension of timelines for filing various returns, effective date of e-way bills; Waiver of late fee for filing of delayed returns Amendment to CGST and IGST Rules Amendments to conditions, safeguards for furnishing LUT in place of Bond for export without payment of integrated tax Exemption from payment of tax on advance for goods 11

12 GST Amendments till date Indicative list of amendments in GST Rules Rate of Exchange for Value of Supply Endorsement for zero rated supplies Prescription of filing of GSTR 3B as per Commissioners Order Facility for revision in filing of GST- TRANS1 introduced Amendments to threshold and taxation for composition dealers Manual Refund Claim filing related forms and process Deemed Export Status and Statements for SEZ/ export supply related refunds Refund Computing Mechanism E-Way Bill related regulations 12

13 Tracking of Amendments in GST 13

14 Tracking of GST Amendments Tariff Changes (illustration) Services: Notification No. 11/2017 Central Tax (Rates) dt 28 June 2017 Goods: CGST Rate Schedule Notification No. 1/2017 Central Tax (Rates) dt 28 June 2017 Tracking rate of supply of goods/ services Tracking of General Exemption to supply of goods/ services Services: Notification No. 12/2017 Central Tax (Rates) dt 28 June 2017 Goods: Notification No. 02/2017 Central Tax (Rates) dt/ 28 June 2017 Goods: e.g. CGST rate on scientific and technical equipment supplied to public funded research institutions, heavy water and nuclear fuels by Department of Atomic Energy to the NPCIL Tracking of specific exemption to goods/ services based on end use 14

15 Tracking of GST Amendments Non-Tariff Changes (illustration) Central/ Integrated GST Rules as introduced on 1 July 2017; Notifications issued under the powers provided in Act/ Rules (on exemptions from requirements, on conditions and safeguards, prescription of procedures) Amendment Rules introduced from time to time; Superseding/ Amending Notifications issued from time to time 15