Key highlights of the Amendments in GST Laws effective from 1^stFebruary 2019 vide CGST (Amendment) Act, 2018 and IGST (Amendment) Act, 2018

The amendments in GST law as recommended by the GST Council were passed by the Parliament by enacting the CGST (Amendment) Act, 2018 and IGST (Amendment) Act, 2018 on 30 August 2018. These amendments have been made applicable with effect from 1 February 2019 by issuing Notifications on 29^th January 2019 in this regard vide Notification No 01/2019 – Integrated Tax (for IGST Act) and Notification No 02/2019 – Central Tax (For CGST Act).

The Key highlights of the amendments along with comments on impact is summarized below for ease of understanding –

Sl.No	Amendment to Section of the Act	Header	Amended Provision	Impact of Amendment
1	Section 2(102) of CGST Act	“Security”	The following clarification by way of an explanation has been inserted in the definition of ‘service’ – *For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or arranging transactions in securities.*	This is a clarificatory amendment according to which any service charges, service fees, booking fees, etc., charged in relation to securities would attract GST as it is a consideration for the provision of service.
2	Section 7 of CGST Act	Definition of Supply	It has been clarified that by merely falling of activity falls under ‘Schedule II (which specifies if an activity is to be treated as goods or service), it does not necessarily qualify as a supply. First, an activity has to be supplied as per Sec 7(1), and then only it will be tested as per Schedule II.	It is imperative for the entities to re-evaluate the positions adopted in respect such supplies which are covered under Schedule II of the Act.
3	Section 9(4) of CGST Act	RCM on procurement from Unregistered Dealers applicable only in notified cases	The amendment Act has substituted earlier Sec 9(4) which mandated that a registered person is liable to pay tax under reverse charge on purchases from an unregistered supplier. The Government suspended this provision from October 2017. The provision has now been substituted with new clause which provides an enabling power to the government to notify class of registered persons who would be liable to pay tax under reverse charge on procurements of taxable goods or services from unregistered suppliers.	Presently, no class of persons has been notified and procurement of goods or services from unregistered dealers which falls under Sec 9(4) does not attract GST under RCM. The entities would not be required to pay tax under RCM on procurement from unregistered suppliers.
4	Section 10 of CGST Act	Enhancement of threshold turnover for Composition Scheme to Rs 1.5 Crs Composition dealer can supply services	Section 10 has been amended so as to enhance the limit of composition levy from one crore rupees to one crore and fifty lakh rupees. Now Composition dealers can supply services of value not exceeding 10% of the turnover in the preceding financial year in a State/Union territory or Rs. 5 lakhs, whichever is higher.	The threshold for composition scheme has been enhanced by Rs 50 lakhs and they are also eligible to supply services upto 10% of the turnover or Rs 5 lakhs, whichever is higher.
5	Second Proviso to Section 16(2) of CGST Act	Interest not applicable on the reversal of ITC because of failure to pay consideration to the supplier within 180 days	Earlier as per Second Proviso to Section 16(2), where a recipient fails to make payment to the supplier within 180 days from the date of issue of invoice, he was liable to add an amount equal to input tax credit (ITC) availed in respect of such supply to his outward tax liability, along with interest thereon. Interest was applicable from the day said ITC was availed till the date of reversal. The requirement to pay such interest has been done away with	The businesses may have a mutual understanding to clear the invoices after 180 days or there may be dispute related to a contract which may result in a delay of clearing the invoices. Now, due to the removal of interest liability, the only requirement of reversal of ITC remains
6	Section 16(2)(b) of CGST Act	Bill to and Ship to for Supply of Services.	*ITC can be claimed to the party services are billed to, for services provided to the third party –* Section 16 mandates, one key condition for availing of ITC by a registered person is that such the person should have received such goods or services. The Act allowed ITC for the supply of goods in case of ‘bill-to-ship-to’ transactions, where the goods would be directly sent to a third person. The Amendment Act allows ITC availability to the party services are billed to, for services provided the to third party.	This amendment now allow ITC benefit to a registered person even when the services are provided by the supplier to a third person on the direction of and on account of such registered person.
7	Schedule III of the CGST Act, 2017	Schedule III – an addition of Sale of goods from Customs bonded warehouse, High sea sales and drop shipments	The amendment Act has inserted the following transactions in Schedule III of CGST Act, 2017: · Supply of goods from customs bonded warehouse to any person before clearance for home consumption · Supply of goods by the consignee to any other person, by the endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin outside India but before clearance for home consumption, i.e., high seas sales · Sale of imported goods outside India, without such goods entering into India at any stage, i.e., drop shipment	Notifications were earlier issued for the 3 items. Amendment in the law brings more clarity for businesses.
8	Section 17(3) of CGST Act	No reversal of ITC in relation to supplies referred to in Schedule III	Activities or transactions specified in Schedule III of the CGST Act, other than the sale of land have been excluded from the ambit of ‘exempt supply’ on which ITC is blocked.	Reversal of proportionate ITC is not required for items specified in Schedule III (other than the sale of Land) since these are excluded from the ambit of “exempt supplies”.
9	Section 17(5)(a) & 17(5)(aa) of CGST Act	ITC on Motor Vehicles	ITC is allowed in respect of motor vehicles for transportation of persons having an approved capacity of more than thirteen persons including driver when they are used for business purposes. Furthermore, ITC in respect of services of general insurance, servicing, repairs and maintenance in respect of above motor vehicles should also be available (On Motor vehicles on which ITC is allowed)	Businesses who use vehicles (more than 13 seating capacity) such as buses, etc. for transportation of employees should be eligible for ITC. This is a welcome move since many entities hire buses for pick and drop of employees. ITC should be available in respect of dumpers, work-trucks, fork-lift trucks and other special purpose motor vehicles.
10	Section 17(5)(b) of CGST Act	ITC now available if facilities provided to employees is mandated under any law	ITC is now available in respect of food and beverages, health services, travel benefits to employees, etc. where the provision of such goods or services is obligatory for an employer to provide to its employees under any law for the time being in force.	This provision would particularly benefit businesses which are required to provide canteen facilities to their employees in accordance with the Factories Act. Also, some entities provide Cab facilities to female employees as per Govt Notifications. Businesses can avail ITC benefit in respect of such input services when the same is mandatory to be provided as per regulations.
11	Section 34(1) & 34(3) of CGST Act	Option to raise consolidated credit/debit notes	The registered person would be allowed to issue consolidated credit/debit notes in respect of multiple invoices issued in a financial year without linking the same to individual invoices.	The requirement for issuance of invoice wise debit/credit note is removed, and the facility of consolidated credit/debit notes for multiple invoices is has been allowed. This should especially help such businesses which have dealer/distributor network which allowed post sales discounts based on the volume of sales or lifting of a certain quantity which may not be feasible to be tagged to a particular invoice. Such discount was spread over a period of time and not allowed against a particular invoice. GSTN portal is to be updated to enable this functionality.
12	Section 39(9) of CGST Act	Facility to amend GST returns	The taxpayers would be allowed to amend their filed returns by way of an amended return.	The Government is yet to release the details of such amendment facility but this is a welcome move which may bring relief for any mistakes or errors committed while filing returns. We shall have to wait for GSTN Portal to allow such amendment in returns.
13	Section 54(8)(a) of CGST Act	Unjust enrichment applicable to refund claims pertaining to SEZ supplies	It has been provided that the principle of unjust enrichment will apply in case of refund claim arising out of supplies of goods or services made to SEZ developer/unit.	Earlier the clause included a refund of tax on Zero-rated supplies (Zero Rated supplies includes both Exports and supplies to SEZ Unit or SEZ Developer) The principle of unjust enrichment ensures that a taxpayer does not claim a refund of an amount, the incidence of which has been already passed on to another person.
14	Explanation to Sec 79(4) of the CGST Act	Recovery of due from any distinct person	Recovery can be made from any branch of a registered person in any state through ‘distinct person”	The government has introduced an Explanation to Sec 79 to empower the tax authorities to recover tax dues from any branch of a registered person through ‘distinct person’
15	Section 107 of the CGST Act	Reduction of the maximum amount of pre-deposit for filing an appeal before Appellate Authority	Amount of pre-deposit payable for the filing of an appeal shall be capped at 10% of the amount of tax in a dispute subject to a maximum of Rs twenty-five crore rupees	This is a welcome move for large tax disputes where the dispute runs in several hundred crores.
16	Section 112 of the CGST Act	Reduction of the maximum amount of pre-deposit for filing an appeal before Appellate Tribunal	Amount of pre-deposit payable for the filing of an appeal shall be capped at 20% of the amount of tax in a dispute subject to a maximum of Rs fifty crore rupees	This is a welcome move for large tax disputes where the dispute runs in several hundred crores.
17	Section 2(6)(iv) of IGST Act	Services to qualify as an export even if consideration is received in Indian rupees, subject to RBI regulations	One of the conditions for export is receipt of consideration in convertible foreign currency. The criteria for service to qualify as ‘export of services’ has been relaxed to allow receipt of payment in Indian rupees, provided it is permitted by the Reserve Bank of India (RBI).	The government had already relaxed this condition for exports to Nepal and Bhutan through notification. This has been further strengthened through amending the Act and services shall qualify as an export even though the consideration is realized in Indian Rupees
18	Section 12(8) of the GST Act	POS for transport services for goods transported outside India to qualify as export	The place of supply in respect of transportation of goods from a place in India to a place outside India by a transporter located in India will be outside India.	This will reduce the transportation cost to businesses with respect to the export of goods.