On the recommendation of all-powerful GST Council, Government has introduced GST Amendment Act, 2018 in August, 2018. The amendments introduced through this Amendment Act are effective from February 1, 2019. Moreover, on the basis of recommendation made by the GST Council, in last three meetings, several changes have also been introduced. All such major changes in GST law which are made effective from February 1, 2019 are as follows:
1. Threshold limit increased for registration in certain States
The threshold limit for mandatory registration under GST has been increased from Rs. 10 lakhs to Rs. 20 lakhs in the States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand. Consequently, Special category States under GST Act shall now exclude the States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand.
2. Reverse Charge in case of supply received from Unregistered Persons
The provision as to levy of GST under reverse charge, if goods or services are received by a registered person from any unregistered person and the value of such supply in a day exceeds Rs. 5,000, was deferred for the time being by way an exemption notification. The charging provisions of Section 9(4) has been amended and Government has been empowered to notify specific classes of registered persons who shall be liable to pay tax under reverse charge on supply of specified goods and services.
3. Rationalization of Composition Scheme
The limit for opting composition scheme has been increased from Rs. 1 crore to Rs 1.5 crores. Previously, traders and manufacturers, who were also rendering services, were not eligible to opt for composition scheme. Now, as per new norms a registered supplier of goods shall be eligible for composition scheme even if it is engaged in supply of services provided the value of such supply doesn’t exceed 10% of its turnover in the preceding financial year in a State/ Union Territory or Rs 5 lakhs, whichever is higher. The total tax under composition levy shall be at 1% (0.5% CGST + 0.5% SGST) of turnover of taxable supplies of good and service in State or Union Territory.
4. Mandatory utilization of IGST credit for payment of any tax
As per the new process, it would be mandatory for a supplier to utilize the credit of IGST first for payment of output tax liability (IGST, CGST, SGST or UTGST), and the balance of other ITC (CGST, SGST or UTGST) can be used only if balance of credit of IGST is completely exhausted. This change can be understood with following example.
| Particulars | IGST | CGST | SGST |
| Output tax liability (A) | 100 | 100 | 100 |
| Available ITC (B) | 200 | 50 | 50 |
| Up to January 31, 2019 | |||
| ITC utilized (C) | 100 | 50 | 50 |
| Balance ITC (D = B-C) | 100 | – | – |
| Unpaid output liability (E = A – C) | – | 50 | 50 |
| Utilization of IGST for payment of CGST/SGST | – | 50 | 50 |
| Balance ITC | – | – | – |
| Net Liability | – | – | – |
| On or After February 1, 2019 | |||
| Utilization of IGST for payment of IGST, CGST and SGST (C = B – A) | 100 | 100 | – |
| Utilization of SGST for payment of SGST (C = B – A) | – | – | 50 |
| Balance ITC (D = B – C) | – | 50 | – |
| Unpaid output liability | – | – | 50 |
| Balance ITC | – | 50 | – |
| Net Liability to be paid in cash | – | – | 50 |
5. Mandatory registration by an e-commerce operator only if it is liable to collect TCS
Earlier, an e-commerce operator was required to take mandatory registration irrespective of the fact that whether it was required to collect TCS or not. With effect from February 1, 2019, the registration shall be mandatory only for that e-commerce operator who is required to collect TCS. As per Section 52 of the CGST Act, it is mandatory for an e-commerce operator to collect the TCS if it allows the third-party seller to sell goods or services through its platform.
6. Single credit note can be issued for multiple invoices
Earlier, the supplier was required to raise separate credit note for each invoice, which was very inconvenient and cumbersome. Now, the suppliers have been allowed to issue consolidated credit note and debit note in respect of multiple invoices issued in the same financial year.
7. Registration to be suspended first before cancellation
With effect from February 9, 2019, where any person applies for cancellation of his GST registration, his registration shall be deemed to be suspended from the date of filing of application for cancellation. During the period of suspension, a reasonable opportunity of being heard must be given to him by the authorities before approving the cancellation of his registration. During the period of suspension, the supplier shall not collect GST on supply of goods or services and shall not be required to file GST returns.
8. Relaxation from taking registration extended to suppliers who are rendering services through e-commerce operators
With effect from February 1, 2019, a supplier, who is supplying services through e-commerce operator, is not required to obtain registration if his total turnover during the financial year doesn’t exceed Rs. 20 lakhs (Rs. 10 lakhs for special category States). This relaxation is available only for supplier of services and not for supplier of goods.
9. Transfer of ITC to new registered place of business of existing supplier
Any registered person, who has obtained separate registration for multiple places of business within same State or UT, can transfer the credit of ITC from his existing place of business to his newly registered place of business. The credit of existing business shall be transferred in proportion to the value of assets transferred to the newly registered unit. For this purpose, a new Form ITC-02A has been introduced.
10. No ITC of GST paid on motor vehicle with sitting capacity of up to 13 persons
Input tax credit shall not be available for the GST paid in respect of passenger motor vehicles, with approved seating capacity up to 13 persons including driver. However, the input tax credit shall be allowed if motor vehicle is used for further supply of such motor vehicles or transportation of passengers or imparting training to drive such motor vehicles.
Further, the Input tax credit shall not be available for the GST paid in respect of general insurance, servicing, repair and maintenance of such motor vehicles, vessels or aircraft. However, the credit for the tax paid on these services shall be allowed in following cases:
| (a) | If motor vehicles, vessels or aircraft are used for the purposes specified above and ITC is allowed thereon | |
| (b) | If these services are received by a taxable person engaged in: |
| ♦ | The manufacturing of such motor vehicles, vessels or aircraft | |
| ♦ | Supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by them |
11. Concept of ‘Business Vertical’ has been omitted
The concept of obtaining separate registration for a different business vertical within the same State or UT has been omitted. Therefore, more than one registration may be obtained in the same State or UT for different places of business, whether or not these places of business are engaged in supplying different set of goods or services.
12. Relevant date changed for filing of application for GST Refund
The application for refund of tax should be made before expiry of 2 years from relevant date. Earlier, the relevant date for filing of application for refund of unutilized ITC, due to inverted tax structure, was end of the financial year in which such claim or refund arises. Now, the relevant date would be the due date for furnishing of return under section 39 of CGST Act for the relevant period in which such refund claim arises.
13. Time limit for clearing GST exam extended
Any person, who has been registered as GST practitioner, shall be eligible to remain enrolled if he passes GSTP examination within a period of 30 months from the date of registration. Moreover, a GST practitioner can now additionally perform the following:
| (a) | Furnish information for e-way bill generation, | |
| (b) | Furnish details of challan with respect to inputs or capital goods sent to job worker | |
| (c) | Amend or cancel the enrollment of records to be maintained by owner or operator of godown or warehouse and transporters | |
| (d) | File application for availing or opting out of the composition scheme. |