GST Amendment

GST Amendment

Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based tax that is levied on every value addition in India. It is a significant reform in the Indian taxation system, unifying multiple taxes into a single system. However, since its introduction in 2017, the GST law has undergone various amendments to simplify its implementation and address the challenges faced by taxpayers and businesses.

The GST Amendments aim to improve the tax administration, compliance, and ease of doing business, while addressing new issues and introducing necessary changes in the system. These amendments are made through notifications, circulars, and changes in the GST Act by the government.

Key Amendments to GST

Increase in the Turnover Limit for GST Registration:

• The government has increased the threshold limit for GST registration for small businesses and service providers. This amendment has been introduced to ease the burden on small businesses and increase the reach of GST.
• For example, the threshold for registration in the case of goods suppliers was increased from Rs. 20 Lakhs to Rs. 40 Lakhs for certain businesses, and for service providers, it was raised to Rs. 20 Lakhs from Rs. 10 Lakhs.

Simplified GST Returns:

• The government introduced a simplified GST return filing system for small taxpayers. This allows businesses with an annual turnover of less than Rs. 5 Crores to file quarterly returns instead of monthly returns.
• The introduction of the GST ANX-1 and GST ANX-2 forms simplified the filing process, allowing businesses to directly upload their invoices, which are then auto-populated in the returns.

Tax on E-Commerce Platforms and Aggregators:

• Amendments were introduced to include tax collection at source (TCS) for e-commerce operators. E-commerce platforms like Amazon, Flipkart, etc., are now required to collect GST from the sellers who use their platform for the sale of goods and services.
• The amendment ensures that GST is levied on transactions facilitated by e-commerce operators, making them responsible for tax collection and filing.

Changes in GST for Exporters:

• In the case of exports, the GST laws have been amended to allow zero-rated supply, which means exporters will not have to pay GST on exported goods, but they can claim a refund for the taxes paid on inputs.
• This helps to reduce the tax burden on exporters, and they are now eligible for an Input Tax Credit (ITC) on the input taxes paid on goods and services used for export purposes.

GST on Reverse Charge Mechanism (RCM):

• The Reverse Charge Mechanism (RCM) has been amended to include certain services where the recipient of the service, rather than the provider, is liable to pay the GST. This applies to transactions like legal services, supply of services from an unregistered person to a registered person, and others.
• The government also amended the provisions for certain goods and services that were previously under RCM, thus reducing compliance burdens for certain sectors.

Increase in GST Rate on Certain Goods and Services:

• The government periodically reviews and amends the GST rates for various goods and services. For instance, the rate for certain luxury items, mobile phones, and automobiles has been revised.
• GST rate changes may involve an increase or decrease in the rate based on the market and economic needs.

GST on Construction and Real Estate Sector:

• The GST law was amended to include changes in the taxation of the real estate and construction sector. The government has simplified the tax rate structure for residential and commercial properties.
• GST on under-construction properties was clarified to ensure proper categorization and taxability, with specific rates for developers and builders.

GST for Small Taxpayers – Composition Scheme:

• The Composition Scheme has been amended to allow small businesses to pay GST at a reduced rate (1%, 2%, 5%, etc.) on their turnover, provided the turnover is below a prescribed limit (currently Rs. 1.5 Crores).
• This scheme is designed to reduce the compliance burden on small taxpayers by allowing them to file returns on a quarterly basis and avoid detailed documentation.

GST on Services Provided by Government:

• The amendments clarified that services provided by the government or local authorities are taxable, with specific exceptions such as government services related to the welfare of the general public.
• The amendment ensures a clearer understanding of the nature of services by the government that will attract GST.

GST on Job Work:

• The GST Act was amended to clarify the provisions of job work, which includes activities performed by a third party for manufacturers. For example, job work related to textiles, jewelry, and certain manufacturing sectors was clarified to ensure that job workers are charged appropriately for their services.

GST Input Tax Credit (ITC) Adjustments:

• The amendments brought several adjustments to the Input Tax Credit provisions. These include changes regarding the reversal of ITC in the case of non-payment of invoices and changes in the timelines for claiming ITC.
• Businesses must reconcile the invoices uploaded by suppliers to ensure that ITC claims are legitimate.

Tax on Supply of Goods or Services to Government:

• The government amended the GST law to allow businesses to claim input tax credit (ITC) on supplies to the government, provided certain conditions are met.

GST for Educational and Health Services:

• Certain exemptions were granted to services related to education, healthcare, and other non-profit organizations under the GST law, making it easier for these sectors to operate.

Amendments for GST Refunds:

• The process for obtaining refunds for unutilized Input Tax Credit (ITC) and taxes paid on exports was made simpler and quicker. A provision for GST refund on export goods was introduced to ensure faster processing of refunds.

Recent Amendments and Notifications:

The government regularly updates the GST laws and introduces new amendments to address emerging challenges. Key recent amendments include:

• Extension of time limits for filing GST returns and claiming refunds.
• Taxpayer facilitation measures like self-assessment and GST audit requirements.
• Specific amendments for sectors like pharmaceuticals, food, and agriculture to support industry growth and compliance.