Amendment to CGST Rules
The government vide Notification No. 39/2018 - Central Tax dated 4 September 2018 has made certain key amendments to the CGST Rules as mentioned below:
- The format of GST annual
return notified
Our key preliminary observations in respect of the annual return are as given below:
- Input Tax Credit (ITC) - To be trifurcated into ITC on inputs, capital goods and input services.
- ITC of IGST availed on imported goods - To be reported along with IGST paid on imports.
- HSN wise summary of inward supplies - Although GSTR 2 remains suspended, this needs to be disclosed separately in annual return.
- Adjustments of any errors - Contrary to industry expectations, the annual return does not provide an option to adjust/amend any errors made at the time of filing periodical returns. Hence, it should be ensured that any pending adjustments/amendments on account of such mistakes are made in the return filing for September 2018, especially taking credit for the amounts remaining unavailed.
- Credit notes - Only the credit notes declared (where GST is adjusted) through Table 9B of GSTR-1 have to be disclosed in the annual return.
- Transactions related to previous financial year (i.e., July 2017 to March 2018 in this case) disclosed in returns for the period of April 2018 to September 2018 - This would have to be disclosed separately along with the differential tax paid on account of such disclosures.
- Changes in GST ITC-04 - Goods
dispatched to or received from a job worker
Additional disclosures
- Losses and wastages - The details of losses and wastages (if any) in the process of job work would be required to be furnished in GST ITC-04 from the period of July 2018 onwards.
- Goods received from some other job-worker - The details of goods received back from job worker other than the job worker to whom such goods were originally sent.
- Goods supplied from premises of job-worker - Goods sent to job worker and subsequently supplied from the premises of the job worker.
Facility of multiple entries against a single challan
Earlier, only a single entry of items was allowed against a unique challan number. Now, the facility of multiple entries of items against a single challan number would be allowed.
- Relaxation in invoicing
requirements to avail ITC Chapter VI of CGST Rules lays
down a detailed list of particulars, which a tax invoice should
contain. Furthermore, as per Rule 36(2), ITC can be availed in
respect of a document only if details, as specified in Chapter VI,
are contained in such a document. Now, a proviso has been inserted
to provide that ITC can be availed if the relevant document
contains the following particulars:
- Amount of tax charged;
- Description of goods/services;
- Total value;
- GSTIN of the supplier and recipient;
- Place of supply in case of inter-state supply.
- Change in definition of
'adjusted total turnover' for computing refund The
definition of 'adjusted total turnover' to calculate the
GST refund in case of refund of unutilized ITC in case of the
service provider has been amended.
Provision before amendment Provision after amendment Impact "Adjusted Total turnover" means the turnover in a state or a union territory, as defined under clause (112) of Section 2, excluding: - The value of exempt supplies other than zero-rated supplies; and
- The turnover of supplies in respect of which refund is claimed under Subrules (4A) or (4B) or both, if any, during the relevant period.
"Adjusted Total Turnover" means the sum total of the value of: - The turnover in a state or a union territory, as defined under Clause (112) of Section 2, excluding the turnover of services; and
- Theturnover of zero-rated
supply of services determined in terms of Clause (D) above and
non-zero-rated supply of services, excluding:
- The value of exempt supplies other than zero-rated supplies; and
- The turnover of supplies in respect of which refund is claimed under Subrule (4A) or Subrule (4B) or both, if any, during the relevant period.
In the adjusted total turnover formula,
instead of turnover of services during the relevant period,
zero-rated supply of services as per Clause 'D' (i.e., payments received in foreign exchange) will be considered to determine adjusted total turnover.
Example:
Total turnover in relevant period - INR 15,000
Turnover of export of services in the relevant period - INR 10,000
Remittance received in relevant period - INR 5,000
ITC - INR 2,000
Before amendment - Refund amount = (5000/15000)*2000 = 666.67
After amendment - Refund amount = [(5000/ (15000-10000+5000)]*2000 = 1,000
Clarifications issued through circulars
The government has issued various circulars to clarify certain key aspects of the GST law. Key points regarding the same have been encapsulated in the table below:
Circular reference | Clarification issued |
No. 57/31/2018-GST dated 4 September 2018 | The principal-agent
relationship in the context of entry in Schedule I of CGST Act,
2017
|
No. 59/33/2018-GST dated 4 September 2018 | Refund related
issues
|
SKP Comments
- The notified annual return format is broadly an aggregation of the disclosures made in the periodical returns, i.e., GSTR 1 and GSTR 3B. However, in view of certain additional requirements such as trifurcation of inputs, HSN summary of inward supplies, etc., it is advisable to begin preparation in advance to meet the annual return due date of 31 December 2018.
- Earlier, the formula for adjusted total turnover was resulting in an anomaly whereby, the refund amount was getting restricted because of the numerator (remittance received) and the denominator (amount invoiced) not being comparable. The amendment has rectified this error, and going forward exporters should be eligible for the correct amount of refund of ITC.
The clarification provided in respect of the principal-agency relationship should substantially restrict the scope of entry under Schedule I of the CGST Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.