Amendments to the Central Goods and Services Tax Act, under the Finance bill, 2019
/ Goods and services tax (GST)

Amendments to the Central Goods and Services Tax Act, under the Finance bill, 2019

Finance Minister Nirmala Sitharaman in her maiden Budget speech has sought to implement the amendments made by the GST Council under the Finance Bill, 2019. Here are all the major updates, along with our take on how this affects GST-registered taxpayers:

  1. Section 10: Composition scheme
    A new sub-section has been introduced to bring in an alike Composition scheme for service providers, as well as suppliers of both goods and services (mixed suppliers), having an annual turnover of up to INR 50 lakhs in the preceding financial year. Below mentioned are some further explanations which are added to the section –
  • Value of exempt supplies of services provided by way of extending deposits, loans or advances, with interest or discount as the consideration shall not be considered as part of the aggregate turnover, for determining eligibility into the scheme.

  • Value of exempt supplies of services provided by way of extending deposits, loans or advances, with interest or discount as the consideration shall not be considered as part of the aggregate turnover, to determine the value of turnover in a particular State or Union Territory.

In addition, any supplies made from April 1, 2019 of the year till the date the taxpayer becomes liable for registration shall not be taken into account.

As committed by the GST council, the amendment brings into effect the composition scheme for all the mixed suppliers clarifying that services which include extending deposits etc. shall not be part of aggregate turnover.

  1. Section 22 : Persons liable for registration
    The threshold limit for registration under GST is increased from INR 20 lakhs to INR 40 lakhs for a supplier of goods only. Only the suppliers of goods whose turnover exceeds INR 40 lakhs will now come under the purview of GST registration. The amendment is beneficial especially for small and medium taxpayers who need not to get themselves registered under GST unless their turnover exceeds INR 40 lakhs. This is applicable only to those who are exclusive suppliers of goods.
  1. Section 25: Procedure for Registration
    This is a new sub section introduced to mandate authentication using Aadhaar number for every registered person under GST. This section also prescribes the manner in which Aadhaar authentication needs to be done. In case a person fails to undergo Aadhaar authentication, then his registration would be deemed invalid. The mandatory disclosure of the Aadhaar number, first under the Income Tax Act, and now under the Central Goods and Services Act, shows the importance the Government has now placed on the Aadhaar Card. The government plans to administer both direct and indirect taxes via Aadhaar while PAN may continue to be in use for routine compliances.
  1. Section 31A: Mode of Payment
    This will be a new section inserted in the CGST Act which will mandate certain registered suppliers to give their recipients the option of prescribed modes of electronic payment.
  1. Section 39 : Section 39: Furnishing of returns
    This section has been amended to introduce an option for specified taxpayers to furnish their returns on a quarterly basis instead of monthly. Taxes will need to be paid monthly. The sub-section prescribes the time limit for Composition taxpayers to file their returns, which as per the Act, formerly need to have been filed every quarter. The Government has now introduced the annual filing of returns for Composition taxpayer, however, the tax will still need to be paid on a quarterly basis.
  1. Section 49: Payment of tax, interest, penalty and other amounts
    To remove inconveniences for taxpayers, a new sub-section has been added to facilitate the transfer of amounts paid under tax, interest, penalty, fee or any other amount that is available in the electronic cash ledger to the correct head under integrated tax, central tax, State tax, Union territory tax or cess in the electronic cash ledger, as applicable. This tax could not be utilized and would need to be paid again under the correct head. The introduction of this sub-section means that henceforth, all taxes that are incorrectly paid under the wrong heads of tax can now be simply transferred to the correct head.
  1. Section 50: Interest on delayed payment of tax
    This section has been amended to levy interest on unpaid taxes only to the extent of that portion paid in cash i.e. through the electronic cash ledger. This benefit will not extend to those cases where proceedings have been initiated under Section 73 and Section 74, i.e if there is a pending investigation and tax is due, interest shall have to be paid on the gross tax liability.

In conclusion, these amendments will help Indian government to move towards a cashless economy preventing the evasion of taxes. This will greatly reduce the cost and burden of compliance to these small businesses which had to file as many as 24 monthly returns in the past. Several other measures related to the back end infrastructure for registration and reporting of GST, administrative officials related to GST, etc. will also have to be put in place, before GST can be rolled out.

If you have any questions or would like to discuss more about the GST amendments, our experts can ensure right business insights and best practices for you.

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