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Understanding the GST Amendment Act of 2018 and it’s Impact

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The GST Amendment Act 2018 was passed by the Lok Sabha on the 6th of August, 2018. The act amends the Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017. The act seeks to make changes in the GST rates, GST exemptions, and GST refunds. The amendments will come into effect from the 1st of September, 2018.

On February 1st, 2019, all provisions of the CGST (Amendment) Act, 2018, with the exception of sections 8(b), 17, 18, 20, and 28(b)(i), went into effect.

Did you know? The GST Council is presided over by the Finance Minister of the nation. The GST Council is currently led by Union Finance Minister Nirmala Sitharaman.

What Is GST Amendment Act 2018?

The GST (Goods and Services Tax) Amendment Act 2018 was introduced in the Lok Sabha on 5th July 2018 by the Minister of Finance, Mr. Piyush Goyal. The Bill amends the Goods and Services Tax (GST) Act, 2017. The GST Act was introduced in Parliament in March 2017 and came into effect on 1st July 2017. The Bill changed the composition of the GST Council, the body responsible for making decisions on GST-related issues. 

The Bill inserts a new clause in the GST Act, which states that the Council may now also recommend changes in the rates of tax on goods and services. The Council must make its recommendations on the tax rates by a two-thirds majority. 

Also Read: Key Advantages and Disadvantages of GST for Businesses

Amendments Made Under GST Amendment Act 2018:

The amendments that were made to the GST legislation under the GST Act of 2018 are as follows- 

  • The Central Goods And Services Tax (Amendment) Act 2018: 

The Central Goods and Services Tax (Amendment) Act 2018 was amended to include a new section that provides for interest payments on refunds. 

The Central Goods and Services Tax (Amendment) Act 2018 was amended to include a new section 9B. This section deals with the place of supply of goods or services in the case of intra-State supply. The amendment provides that the place of supply of goods or services in the case of intra-State supply shall be the place of supply as determined under the rules made by the Government. The new section provides that where any refund is due to any person on account of any order made by the Appellate Authority or the Tribunal or the Court, the proper officer shall pay interest on the such refund at the rate of nine percent per annum from the date following the month in which such order is made till the date on which the refund is granted.

  • The Integrated Goods and Services Tax (Amendment) Act 2018:  

The Integrated Goods and Services Tax (Amendment) Act 2018 was amended on March 19, 2019, to include a new section, 21A. This section provides for the grant of a refund of integrated tax paid on goods exported out of India, where the export takes place within one year from the tax payment date. The amendment to the Integrated Goods and Services Tax (Amendment) Act 2018 on March 19th, 2019, has substituted the existing section 15 of the Act with a new section 15. The new section 15 grants a refund of integrated tax paid on goods exported out of India, where the export takes place within one year from the tax payment date. The amendment has come into force from its publication in the Official Gazette.

  • The Union Territory Goods and Services Tax (Amendment) Act 2018: 

The amendment to the Union Territory Goods and Services Tax (Amendment) Act 2018 is an amendment to the existing legislation that provides for the levy and collection of GST on goods and services supplied in the Union Territory of Delhi. The amendment will come into force from the date of its notification in the Official Gazette. The amendment seeks to provide for the levy and collection of GST on the intra-state supply of goods and services in the Union Territory of Delhi. It also provides for the exemption from GST on the intra-state supply of goods and services made to a registered dealer in the Union Territory of Delhi. The amendment helped the efficient and smooth functioning of the GST in the Union Territory of Delhi and helped collect accurate GST revenue.

  • The Goods and Services Tax (Compensation to States) Amendment Act 2018: 

The GST (Compensation to States) Amendment Act 2018 was amended to compensate for any loss of revenue to states on account of the implementation of the GST regime. The amendment provides for establishing a GST Compensation Fund, into which the central government will transfer funds to make up for any shortfall in revenue to states. The Fund was managed by a GST Compensation Board, which will be responsible for disbursing funds to states. The amendment also set up a Dispute Resolution Mechanism to resolve disputes between the central government and states concerning the compensation payable to states.

Also Read: Importance and Functions of GST Network in India

Why was the GST Amendment Act of 2018 introduced? 

The GST Amendment Act 2018 was introduced to amend the existing Goods and Services Tax (GST) law. The proposed amendments seek to simplify the GST law and make it more user-friendly. The amendments also aimed to plug loopholes and remove ambiguities in the existing law. It also helped curb revenue loss and prevent misuse of the GST provisions. The GST Amendment Act 2018 was introduced to change the current Goods and Services Tax (GST) law. The amendments were being made to improve the GST’s working, simplify and make it more efficient, plug loopholes, and remove ambiguities. One of the fundamental changes introduced is the concept of ‘e-way bills. E-way is generated electronically by the GST portal and is required to transport goods valued at more than 50,000. This helped in curbing revenue loss and preventing misuse of the GST provisions. Other changes being introduced included simplifying the GST return filing process, reducing the time period for filing revised returns, and clarifying the treatment of GST on a reverse charge basis.

GST Amendment Act 2018: What Does It Mean For You?

The Goods and Services Tax (GST) Amendment Act 2018 was passed by the Lok Sabha on 6 July 2018. The act amends the Goods and Services Tax (GST) Act, 2017, to introduce the e-way bill system for the transport of goods. The e-way bill system is an electronic waybill that the registered person must generate before moving goods. 

The e-way bill must be presented to the proper officer when demanded. The act also amends the GST Act to provide for the composition scheme for small taxpayers. Under the composition scheme, small taxpayers registered under the GST Act can pay tax at a reduced rate. The reduced tax rate is 1% for manufacturers, 5% for traders, and 6% for service providers.

Also Read: GST Billing Software – Return Filing & Accounting Software

The GST Amendment Act 2018 included the following changes: 

The following are the changes that were included under the GST Amendment act in 2018-

1. Changes in GST rates:

 The GST Amendment Act 2018 changed the GST rates on certain goods and services. The changes are as follows:

  • The GST rate on goods like footwear, textiles, and handloom products got reduced from 18% to 5%.
  • The GST rate on handicrafts got reduced from 12% to 0%.
  • The GST rate on books got reduced from 18% to 5%. 
  • The GST rate on movie tickets was reduced from 28% to 18%. 

2. Changes in GST exemptions: 

The GST Amendment Act 2018 has changed the GST exemptions on certain goods and services. The changes are as follows: 

  • GST exemption on sanitary napkins got extended to all sanitary napkins, irrespective of their price. 
  • GST exemption on rakhis got extended to all rakhis, irrespective of their price.
  • GST exemption on books got extended to all books, irrespective of their price. 

3. Changes in GST return filing: 

  • The due date for filing GST returns got extended from the 20th to the 22nd of the month. 
  • The late fee for filing GST returns got waived for July and August 2017. 
  • GST return filing was to be done on a quarterly basis for businesses with a turnover of up to 5 crores.

Also Read: Latest GST News all Business Owner Should Know | Legaltree

Changes made after GST Amendment Act 2018

The GST Amendment Act 2018 was introduced to improve India’s Goods and Services Tax (GST) regime. The Lok Sabha passed the amendment bill in July 2018 and received Presidential assent in August 2018. The significant changes introduced in the GST Amendment Act 2018 are as follows: 

  • Increase in the GST slab rates: The GST Act 2018 has revised the GST slabs, raising the highest rate from 28% to 40%. This was done to ensure that the tax burden is spread out more evenly and that the government collects more revenue.
  • Capping of GST rates on certain items: The GST Amendment Act 2018 has put a cap on the GST rates applicable to certain items such as gold, silver, and other precious metals. The maximum GST rate for these items has been capped at 3%.
  • Introduction of e-invoicing: The Act has introduced e-invoicing, allowing businesses to generate and share digital invoices directly with the government. This will help reduce tax fraud and ensure companies comply with GST regulations.
  • GST refund for exporters: The GST Amendment Act 2018 has relaxed the GST refund process. The earlier approach was cumbersome and could take up to several months for an exporter to get the refund. Under the new act, the refund process has been simplified, and the time limit for processing refunds has been reduced.
  • Reverse charge mechanism: The reverse charge mechanism under GST has been amended after the amendment act. Under this mechanism, the buyer of goods and services is liable to pay GST instead of the seller. The new provisions allow businesses to make the payment of tax in installments.
  • Input tax credit: The GST Amendment Act 2018 has also introduced several changes to the input tax credit system. The input tax credit is a mechanism that allows businesses to claim credit for taxes paid on inputs. The new provisions make it easier for companies to avail of the input tax credit on purchases.

Conclusion

The GST Amendment Act 2018 has brought several significant changes to India’s Goods and Services Tax. The most important changes include introducing a GST Council to oversee the implementation of the GST, introducing new tax rates, and introducing a single return filing system. These changes will likely make the GST more effective and efficient and reduce compliance costs for taxpayers. Overall, the GST Amendment Act 2018 was a welcome move that should help make India’s tax structure more efficient and equitable.

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