The GST council in its earlier meetings and the 38th meeting held on 18 December 2019 had approved several changes of GST provisions. Further, amendments in the CGST Act 2017 already passed by the Parliament were yet to be notified. The CBIC on 1 January 2020 issued notifications making several of these changes effective. Such changes along with other key updates are summarized below:
A clarificatory amendment vide Notification No. 29/2019 dated 31 December 2019 has been issued to make it certain that RCM on renting of motor vehicle will apply only when the service provider (other than a body corporate), making supply to a body corporate does not issue an invoice charging GST @12% (with ITC)
Various amendments approved by GST council meeting and brought in through the Finance Act, 2019 have been made effective –
Composition scheme has been introduced for service providers having turnover up to INR 5 million. The GST rate prescribed is 6% (CGST +SGST) (vide Notification No. 01/2020-Central tax).
Aadhar based authentication has been introduced for every registered person or any taxpayer while obtaining GST registration. In the absence of Aadhar, alternate and viable means of identification would be prescribed.
Facility to transfer the available cash balance between different tax heads has been notified
Enabling provision to grant power to extend the due date of annual return and due date of furnishing periodic statement and annual statement for tax collected at source under section 52 has been notified.
Penalty of 10% of amount profiteered would be applicable. The penalty would not be payable if the profiteered amount is deposited within 30 days of passing of final order.
|Order No.||Return||Old Due Date||Revised Due date|
|Order No. 10/2019-Central Tax dated 26 December 2019||GSTR 9 and 9C for FY 2017-18||31 December 2019||31 January 2020|
|Notification No. 02/2020 dated 1 January 2020||Form GST TRAN-1||31 December 2019||31 March 2020|
|Form GST TRAN-2||31 January 2020||30 April 2020|
The Government vide Notification No. 74/2019 dated 26 December 2019 has waived late fee for delayed filing of GSTR-1 for the period July 2017 to November 2019 provided the same are filed by 10 January 2020.
The government has changed the rate of GST for the following goods –
|HSN||Description||Old Rate of GST||New Rate of GST|
|3923 or 6305||Woven and non-woven bags and sacks of polyethylene or polypropylene strips or the like, whether or not laminated, of a kind used for packing of goods||12%||18%|
|6305 32 00||Flexible intermediate bulk containers|
Vide Notification No. 27/2019-Central tax (Rate) dated 30 December 2019.
The government has released detailed explanation in relation to e-invoicing – Form GST INV-01 vide Notification No. 02/2020 dated 1 January 2020.
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The measures introduced for reducing the ITC cap from 20% to 10% and restriction on utilization of possible ineligible credit have been brought in with the objective of shoring up stagnant GST collections. These measures will lead to working capital blockage arising due to restrictions imposed on doubtful credit. Businesses should strengthen their systems and ensure to partner with compliant vendors for reducing unmatched credits.
In the year 2020, taxpayers should prepare for GST 2.0 slated to be introduced in the form of e-invoicing, new returns and possible increases in GST Rates.