CBIC ISSUES NOTIFICATIONS AND ORDERS TO GIVE EFFECT TO THE DECISIONS TAKEN IN 31ST GST COUNCIL MEETING AND ISSUES CLARIFICATORY CIRCULARS - PWC INDIA
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Tax Insights from India Tax & Regulatory Services CBIC issues notifications and orders to give effect to the decisions taken in 31st GST Council meeting and issues clarificatory circulars January 9, 2019 In brief The Central Board of Indirect Taxes and Customs (CBIC) has issued various notifications and orders to give effect to the decisions taken at the 31st GST Council meeting. CBIC also issued multiple circulars to clarify various issues. In detail provisos in section 16(4) (Order no. 4/2018-Central 1 and section 37(3) of CGST Tax dated 31 December, The gist of the developments Act, 2017. 2018) are as follows – (Order no. 2/2018-Central Amendments which do not Amendments introduced impact rate of tax through ‘removal of Tax dated 31 December, difficulty’ orders 2018) The due date for The due date for submission of specified The due date for availing submission of annual details for migration of the input tax credit (ITC) in return and reconciliation assessees into GST who did respect of any invoice, statement along with GST not complete the migration where the supply has been audit report has been procedure has been made during financial year extended to 30 June, 2019. extended to 31 January, 2017-18 and the details of 2019. which have been uploaded (Order no. 3/2018-Central by the supplier (by March, Tax dated 31 December, (Notification no. 67/2018- 2019), has been extended to 2018) Central Tax dated 31 the due date for furnishing December, 2018) the monthly return for the The due date for submission of monthly The due date for month of March, 2019. statement of tax collected at submission of Form GSTR Further, suppliers are also source by the electronic 3B for the period July, 2017 allowed to rectify any error commerce operators for the to February, 2019 for the or omission in respect of months of October, newly migrated assessees details of outward supply November and December, has been extended to 31 disclosed earlier till the date 2018 has been extended to March, 2019. Further, the of submission of return for 31 January, 2019. due date for submission of the month of March, 2019. Form GSTR 1 for This is sought to be achieved by inserting 1 The alert does not cover the goods and services. It only orders, which clarify various aspects or notifications making amendments summarises the notifications/ circulars/ amend any procedures/ law. relating to changes in rate of various www.pwc.in
Tax Insights the (6) quarters July, 2017 to Information Technology under the return is nil, the late December, 2018 and for the Act, 2000. fee in excess of INR 10 per day (20) months July, 2017 to (under Central GST Act, 2017) For claiming refund of February, 2019 for such newly has been waived. Further, in accumulated credit in case migrated assessees will be 31 cases where the returns in of inverted duty structure, March, 2019. Form GSTR 3B for the period the term ‘relevant period’ July, 2017 to September, 2018 (Notification nos. 68-72/2018- has been defined to mean has not been filed and is filed Central Tax all dated 31 the same as for refund between 22 December, 2018 December, 2018) claim of accumulated credit and 31 March, 2019 the late by exporters, i.e. the period The provisions for deduction fee will be completely waived. for which the claim has of tax at source under GST been filed. (Notification no. 76/2018- would not be applicable to Central Tax dated 31 supplies of goods and services A new rule has been December, 2018) between two persons when inserted to bar a person both are required to deduct who has not filed returns For the persons who have not tax. for two consecutive periods submitted Form GSTR 4 from generation of e-way (return for composition (Notification no. 73/2018- bills. This rule will be dealers) for the periods July, Central Tax dated 31 effective from a date yet to 2017 to September, 2018 and December, 2018) be notified. submit Form GSTR 1 for these The GST Rules have been periods between 22 December, Forms GST RFD-01 (refund amended. The key 2018 to 31 March, 2019 the application), GST RFD-01A amendments are as under: late fee payable for such delay (refund application), GSTR is waived. A person who is required to 9 (annual return) and collect tax in a State, where GSTR 9A (annual return) (Notification no. 77/2018- it does not have a physical and GSTR 9C Central Tax dated 31 presence, can obtain (reconciliation statement December, 2018) registration in that State by and GST audit report) have The due date for submission of mentioning the details of its been substituted with Form ITC 04 (return for principal place of business revised formats. movement of goods to/ from located in another state. (Notification no. 74/2018- job worker) for the period The requirement of Central Tax dated 31 July, 2017 to December, 2018 disclosure of challans in December, 2018) has been extended to 31 Form GST ITC 04, in case March, 2019. For the persons who have not of the goods sent from one submitted Form GSTR 1 (Notification no. 78/2018- job worker to another, has (return for outward supplies) Central Tax dated 31 been withdrawn. for the periods July, 2017 to December, 2018) The requirement of affixing September, 2018 who now The Integrated GST Rules, signature or digital submit Form GSTR 1 for these 2017 have been amended. The signature on invoice or a periods between 22 December, major amendments are as bill of supply or 2018 to 31 March, 2019, the under: consolidated invoice or any late fee payable for such delay other document issued by is waived. In case of advertisements an insurer or a banking over internet, the rules (Notification no. 75/2018- company or financial have been amended to Central Tax dated 31 institution, including non- provide a deeming fiction December, 2018) banking financial that such services are companies or ticket issued For delayed submission of provided all over India. by a passenger transport Form GSTR 3B (periodical The value of supply of company has been done return) from the month of service attributable to away with, if the respective July, 2017 onwards, the late different States, when the document is issued in fee which is in excess of INR services are supplied/ accordance with the 25 per day (under CGST Act, performed in multiple provisions of the 2017) has been waived. In States and a consolidated case, Central GST payable 2 pwc
Tax Insights consideration is charged any break up for services individual State, will be as without supplied in an under: Sr. Nature of supply Allocation of consideration No. 1 Services in relation to immovable property or stay/ Where such immovable properties etc. are located in organisation of function in hotels etc. or services multiple States, the services are deemed to be provided ancillary to them. in all the States. The values would be allocated as under: This will also be applicable in the cases, where the location of the service provider or the service For stay in hotels on the basis of nights stayed. recipient is outside India. For stay in houseboat or vessel in proportion of time spent by the boat or vessel in each State on the basis of declaration made by service provider. In case of all other services, including the services by way of accommodation for organisation of function etc. and also, in cases, where the stay is made in a hotel (which is single property located in two or more contiguous States), in proportion of the immovable property lying in each State. 2 Services in relation to organisation of event or The value of service for each State shall be determined assigning of sponsorship to such events, when the by application of the generally accepted accounting services are supplied to an unregistered person and principles. the event is held in multiple States. This will also be applicable in the cases, where the location of the service provider or the service recipient is outside India. 3 Supply of services relating to leased circuit, where The value of services for each State would be the leased circuit is installed in multiple States. determined on the basis of number of points of the leased circuit in each State and the consideration split accordingly. 4 Supply of services for goods which need to be If the services are provided on the same goods, the physically made available by the service recipient value of services would be equally divided between to the provider, and the services are performed in each of the States where the services are performed. multiple States and the location of the supplier or Where the services are provided on different goods, the recipient is outside India. the consideration would be split on the proportion of invoice value of goods in relation to which the services are performed. 5 Services supplied to an individual, represented The value of the services in each State would be either as the recipient of services or person acting determined by applying generally accepted accounting on behalf of the recipient, which require the principles. physical presence of the recipient or the person acting on his behalf, where the location of supplier or the location of recipient is outside India and the services are supplied in multiple States. (Notification no. 4/2018-Integrated Tax dated 31 December, 2018) 6 pwc
Tax Insights (Circular no. 76/50/2018-GST copy of the refund Circulars issued, clarifying dated 31 December, 2018) application and the various issues2 supporting documents were A circular is issued providing A circular is issued, providing required to be physically clarification on export of various topical clarifications. submitted to the services in cases, where a The key clarifications are as jurisdictional tax officer. service exporter has under: Now such documents can outsourced portion of the be uploaded on the Penalty under section service contract to a person common portal. 73(11) of the Central GST outside India. It has been Act, 2017 is not applicable clarified that: In case of refund of in case of delayed filing of accumulated credit due to In such case, two supplies Form GSTR 3B returns as an inverted duty structure, take place; one from Indian such penalty pertains to the refund would be service exporter to the end non-payment of tax. granted irrespective of client, and another from However, penalty for applicable tax rates on the outsourced service provider delayed payment of tax various inputs (whether to Indian service exporter. under section 125 of the higher or lower or equal to Central GST Act, 2017 is The Indian service exporter the rate applicable on applicable. will be required to pay GST output supply). under reverse charge on In case of revision of prices, The assessee would get services received from the after the appointed date, of interest on delayed refund outsourced service any goods or services on the refund amount provider. supplied before the immediately starting from appointed day, which If the full consideration for the date after expiry of 60 requires issuance of any the services as per the days from the date of supplementary invoice, contract is not received in receipt of application debit note, credit note, the convertible foreign (ARN) till the refund has rate as per the provisions of exchange where the end been actually credited to the Central GST Act, 2017 client directly pays the the bank account of the will be applicable. outsourced service claimant. provider, even that portion The provisions of tax Where the refund of the consideration would deduction at source under application has been be treated as receipt for section 51 of the Central electronically submitted exports if Reserve Bank of GST Act, 2017 are and the ARN is generated India has permitted applicable only to such on the common portal retention of part of authority or board or any before the issuance of this consideration outside India other body set up by an Act circular but the application and the Indian service of Parliament or a State has not been received by exporter has paid legislature or established by the jurisdictional office Integrated GST on any Government in which (except refund of excess consideration paid to 51% or more participation balance in electronic cash outsourced service provider by way of equity or control ledger), the refund claims under reverse charge. is with the Government. of less than INR 1,000 (Circular no. 78/52/2018-GST should be rejected and the Taxable value for the dated 31 December, 2018) amount re-credited to the purposes of GST shall electronic credit ledger. In include the amount of tax A circular is issued providing case of refund claims for collected at source (TCS) clarification on various issues amounts more than INR under the provisions of the relating to refund. The major 1,000 the claimant should Income-tax Act, 1961 since clarifications are as under: be sent an electronic mail the value to be paid to the While submitting the communication to submit supplier by the buyer is refund application, it was the application to the inclusive of the TCS. previously required that the jurisdictional office within 2 Only the circulars having wider impact have been covered in this tax insight. 2 pwc
Tax Insights 15 days of receipt of the portion of compensation (Circular no. 79/53/2018-GST mail, failing which, the cess attributable towards dated 31 December, 2018) refund application would exports, the amount of A circular is issued, clarifying be dismissed and the credit claimed would be the applicable rate of tax and amount debited would be treated as total credit and classification of various goods. re-credited to the credit the refund claim would be Some salient clarifications are ledger. In case of refund allowed of such amount in as under: applications of excess the proportion of exports. If balance in electronic cash the assessee avails the LPG supplied in bulk, ledger, the amount debited balance credit after whether by refiner/ in the electronic cash ledger reversing the initial entry fractionator to OMC or by may be re-credited if there writing off the one OMC to another for are no liabilities in proportionate ITC of cess, it bottling and further supply electronic liability register. can again claim the refund for domestic use will attract The amount should be re- of such credit of cess and GST @ 5% with effect from credited, even though the consequently, refund. 25 January, 2018. return in Form GSTR 3B (Restricted to amount of Concessional rate of GST for the relevant period has refund computed to be on goods used for setting not been filed. available, if the entire up of Waste to Energy credit has been claimed If an exporter, whose Plants is available only on initially). output does not attract the goods covered under compensation cess, has not The credit of an invoice for chapters 84, 85 and 94, and claimed credit of previous period, which is other products would not compensation cess until claimed in subsequent be eligible for the May, 2018 and decides to period, should be concessional rate of tax. avail credit of such considered for the purpose Further, the supplier needs compensation cess later of computing eligible to satisfy himself with and claims refund of such refund for the period for requisite document from compensation cess in a which such credit has been the buyer before claiming single month in which the claimed. concessional rate of tax. credit is claimed, the The credit of any inputs Any inter-State movement amount of refund would be used in the business and for of goods for provision of recomputed as if the same making taxable (including service on own account by a was available in the months zero rated) supplies should service provider, where in which refund of be considered as net ITC neither transfer of title in accumulated credits due to for refund, and ITC claimed such goods nor transfer to a exports has been claimed. as inputs on items such as distinct person is involved, The consignments exported stores and spares does not constitute a supply on payment of Integrated (including charged off to of such goods and it is GST in the past would not revenue and not clarified that any be eligible for such refund capitalised), packing movement on own account of compensation cess. materials, material would not be liable to GST. The refund of purchased for machinery (Circular no. 80/54/2018-GST compensation cess paid on repairs, printing and dated 31 December, 2018) inputs would be available, stationery items should be irrespective of whether the considered for refund if A circular is issued clarifying inputs are used to make an such credit is otherwise that the services provided by intermediate product (such eligible. International Finance as electricity), which is used Corporation and Asian The refund of tax paid on to make the final product Development Bank are exempt input services and capital which is exported. from GST in terms of goods would not be International Finance In case of compensation available in case of claim of Corporation (Status, cess paid on inputs used for refund of accumulated Immunities and Privileges) domestic supply as well as credit due to inverted duty Act, 1958 and Asian exports, where the assessee structure. Development Bank Act, 1966 only avails the credit of the 6 pwc
Tax Insights respectively. The exemption the issues arising from Central of customs under section will be available only to the GST (Amendment) Act, 2018 3(1) of the Customs Tariff services provided by Asian on section 140(1) of the Act, 1975 will be allowed. Development Bank (ADB) and Central GST Act, 2017 dealing (Circular no. 87/06/2019-GST International Finance with carry forward of credit dated 2 January, 2019) Corporation (IFC), and not to balances. The clarifications are any entity appointed by or as under: The takeaways working on behalf of ADB or The closing balance of The Council had issued a number IFC. CENVAT credit pertaining of amendments, some of which, (Circular no. 83/02/2019-GST to service tax can be carried were not announced at the time of dated 1 January, 2019) forward as the legislative the 31st GST Council meeting. The intent was not to disallow amendment in Integrated GST A circular is issued, clarifying transition CENVAT credit Rules, determining the place of the issues relating to in the form of service tax. supply where a service straddles transactions between the banking companies and The expression “eligible multiple States is prospective in banking facilitators (BF)/ duties” under section nature and it would be interesting banking correspondents (BC). 140(1) of the Central GST to see the approach adopted by The clarifications are as under: Act, 2017 does not refer to the authorities for the past the condition regarding period. The further simplification Banking company provides of refund procedures, doing away goods in stock or to a services to the customers with physical submission of condition regarding inputs and is liable to pay GST on application and various and input services in the entire value of service supporting documents is transit. It has also been charge or fee charged to welcome, and will lead to decided not to notify customers, whether or not reduction in procedural aspects. clauses 28(b)(i) and received via BF/ BC. Parties claiming refund of 28(c)(i) of the Central GST To avail exemption on (Amendment) Act, 2018 compensation cess as exporters services provided in (dealing with linking carry will need to review the relation to ‘accounts in forward of closing balance classifications and their impact rural area branch’, the of credits as per returns on past claims which are still applicable conditions in with various conditions) to unprocessed. Further, the notification, i.e., the avoid such linkage. clarifications regarding carry classification of services of forward of CENVAT credit of The eligible duties which service tax etc. clear the BF/ BC in their respective are allowed to be carried apprehension of the industry individual capacity should forward under section regarding potential challenge to be covered under the 140(1) of the Central GST carry forward of service tax heading 9971, and the Act, 2017 would only cover credits etc. on the basis of service should be with the duties listed as eligible language as drafted. However, the respect to accounts in a duties in sr. nos. 1 to 7 of clarification prohibiting the carry branch located in the rural explanation 1 to section 140 forward of the credit of the cesses area. The classification of the Central GST Act, may see judicial challenge from adopted by the bank as per 2017 and eligible duties and the industry. the Reserve Bank of India taxes as listed in sr. nos. 1 guidelines in this regard Let’s talk to 8 of explanation 2 to should be accepted. section 140 of the Central For a deeper discussion of how (Circular no. 86/05/2019-GST GST Act, 2017. this issue might affect your dated 1 January, 2019) business, please contact your No transition credit of A circular is issued, clarifying cesses, including cess local PwC advisor collected as additional duty 6 pwc
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