GTA OPTING FCM NOT REQUIRED TO FILE DECLARATION
COUNCIL RECOMMENDATION
- As a trade friendly measure, it has been decided that GTAs will not be required to file declaration for paying GST under forward charge every year.
- If they have exercised this option for a particular financial year, they shall be deemed to have exercised it for the next and future financial years unless they file a declaration that they want to revert to reverse charge mechanism (RCM).
- The last date of exercising the option by GTAs to pay GST under forward charge shall be 31st March of preceding Financial Year instead of 15th March. 1st January of preceding Financial Year shall be the start date for exercise of option.
Our Comment
A welcome development aimed at reducing the compliance burden for Goods Transport Agencies (GTA). The proposed change suggests eliminating the requirement of filing a declaration every year.
Declaration is required to be filed only if they choose to opt out of the Forward Charge Mechanism (FCM) and switch to the Reverse Charge Mechanism (RCM)
Window for exercising the FCM option will be available from 1st January to 31st March of PFY
However, it is currently unclear whether GTAs will have the flexibility to change their option in the middle of the year. Further clarification on this matter is still pending.
This move is a step forward in simplifying compliance procedures for GTAs and provides them with more flexibility in their operations.
SERVICES BY DIRECTOR IN PERSONAL CAPACITY NOT UNDER RCM
COUNCIL RECOMMENDATION
- It has been decided to clarify that services supplied by a director of a company to the company in his private or personal capacity such as supplying services by way of renting of immovable property to the company or body corporate are not taxable under RCM.
- Only those services supplied by a director of company or body corporate, which are supplied by him as or in the capacity of director of that company or body corporate shall be taxable under RCM in the hands of the company or body corporate under notification No. 13/2017-CTR (Sl. No. 6) dated 28.06.2017..
Our Comment
The department has been litigating services such as renting of immovable property and guarantee services provided by directors etc. in their personal capacity, compelling them to pay GST under Reverse Charge Mechanism (RCM).
The aforementioned clarification aims to bring clarity by stating that only services supplied by directors in their capacity as directors will be taxable under RCM.
Clarification is expected to be effective retrospectively.
However, directors may now be required to register for GST if the value of services provided exceeds the threshold limit of Rs. 20 lakhs.
FOOD & BEVERAGES IN CINEMA HALLS – TAXABLE AS RESTAURANT SERVICE DURING INTERIM PERIOD
COUNCIL RECOMMENDATION
- It has been decided to clarify that supply of food and beverages in cinema halls is taxable as restaurant service as long as (a) they are supplied by way of or as part of a service and (b) supplied independently of the cinema exhibition service.
- Where the sale of cinema ticket and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinemas, the principal supply
Our Comment
There is a proposal to reduce the GST rate on Food and Beverages (F&B) served in cinema halls from 18% to 5%.
However, if the F&B is booked together with the tickets, it will be taxed at 12% or 18%. (at the same rate as applicable on principal supply i.e tickets by treating it as composite supply)
This measure may be an aims to encourage buyers to visit the physical counters at the cinema hall rather than relying on online aggregators.
TAXABILITY OF ONLINE GAMING @ 28%
COUNCIL RECOMMENDATION
- Suitable amendments to be made to law to include online gaming and horse racing in schedule III as taxable actionable claims.
- All three namely Casino, Horse Racing and Online gaming to be taxed at the uniform rate of 28%.
- Tax will be applicable on the face value of the chips purchased in the case of casinos, on the full value of the bets placed with bookmaker/totalisator in the case of Horse Racing and on the full value of the bets placed in case of the Online Gaming.
Our Comment
The said amendment is intended to overturn the decision of the Karnataka High Court negating the demand of tax authorities to charge 28 per cent Goods and Services Tax (GST) levy for skill games.
Tax is proposed to be levied on entire bet value instead of platform fee.
It is expected to bring clarity on categorisation of online gaming activities between the concept of skill vs chance for the purpose of levy of GST
However, this amendment raises concerns about the potential negative impact on the profit margins of gaming platforms. Consequently, it may reduce their popularity among potential investors and have implications for foreign investment and innovation within the graphic and technology sector.
GST APPELLATE TRIBUNAL (GSTAT) MAY SEE SOME LIGHT NOW
COUNCIL RECOMMENDATION
- The Council has recommended the Rules governing appointment and conditions of President and Members of the proposed GST Appellate Tribunal for enabling smooth constitution and functioning of GST Appellate Tribunal.
- The Council also recommended that provisions of Finance Act, 2023 pertaining to GST Appellate Tribunal may be notified by the Centre with effect from 01.08.2023, so that the same can be brought into operation at the earliest
Our Comment
The Much awaited GST Appellate Tribunal may see the light of the day by end of the FY if all goes as per plan
ISD MECHANISM IS NOT MANDATORY
COUNCIL RECOMMENDATION
- The Council has recommended to clarify through a circular that Input Services Distributor (ISD) mechanism is not mandatory for distribution of input tax credit of common input services procured from third parties to the distinct persons as per the present provisions of GST law.
- The Council has also recommended that amendment may be made in GST law to make ISD mechanism mandatory prospectively for distribution of input tax credit of such common input services procured from third parties.
- It will also clarify issues regarding taxability of internally generated services provided by one distinct person to another distinct person i.e. cross charge valuation for salary of staff etc.
Our Comment
A very welcome clarification indeed for the trade that ISD cannot be stated to be a mandatory mechanism for transfer for common HO credits.
It is also clarified that ISD mechanism shall be mandatory prospectively for the input services procured from third parties.
Transfer of credit in respect of Input shall be made by way of cross charge. Also suitable clarifications to be issued for valuation of cross charge amongst distinct persons.
IMMUNISATION FROM FILING ANNUAL RETURNS (GSTR-9)
COUNCIL RECOMMENDATION
- Relaxations as provided for FY 21-22 in various tables of GSTR 9 to continue for FY 22-23 also.
- Further, for easing compliance burden on smaller taxpayers, exemption from filing of annual return (in FORM GSTR-9/9A) for taxpayers having aggregate annual turnover up to two crore rupees, to be continued for FY 2022-23 also.
Our Comment
The benefit is extended every year by way of notification
A hesitation is appeared to waive off completely the requirement of filing GST Annual Return for small tax payer whose turnover doesn’t exceed Rs. 2.00 Crores annually. It is apt to be incorporated as permanent inclusion.
GST LIABILITY ON WARRANTY SUPPLY
COUNCIL RECOMMENDATION
Circular to be issued to provide clarity on various issues pertaining to the GST liability as well as the liability to reverse input tax credit in cases involving warranty replacement of parts and repair services during warranty period without any consideration from the customers, clarifying inter alia that no GST is chargeable by the manufacturer on such replacement of parts and/ or repair service and also, no reversal of input tax credit is required to be made by the manufacturer.
Our Comment
A trend of litigation is observed for reversal of ITC in respect of supply of parts during warranty period without consideration from the customer.
It’s a welcome clarification that no GST shall be charged by the manufacturer on the replacement of parts during warranty period .
Refer our post on the recent SC judgement in the matter of M/s Tata Motors at https://gkaca.in/tax-on-goods-supplied-under-warranty/
BENEFIT OF CIRCULAR 183 EXTENDED FOR FY 19-20 & 20-21. (upto 31.12.2021) MATCHING OF ITC BETWEEN 2A & 3B
COUNCIL RECOMMENDATION
- Difference in ITC as per GSTR 2A and GSTR 3B can be reconciled by self-certificate/ CA certificate for the period 2019-20 and 2020-21 (upto 31.12.2021) also in terms of Circular No. 183/15/2022-GST dated 27th December, 2022.
- The Council has recommended a mechanism for system-based intimation to the taxpayers in respect of the excess availment of ITC in FORM GSTR-3B vis a vis that made available in FORM GSTR-2B above a certain threshold, along with the procedure of auto compliance on the part of the taxpayers, to explain the reasons for the said difference or take remedial action in respect of such difference. For this purpose, rule 88D and FORM DRC-01C to be inserted in CGST Rules, 2017, along with an amendment in rule 59(6) of CGST Rules, 2017. This will help in reducing ITC mismatches and misuse of ITC facility in GST.
Our Comment
The benefit of circular 183 has been extended by the Hon’ble Karnataka HC for FY 19-20.
The GST council has also proposed to extend the same till 31.12.2021. It is to be noted that provision of section 16(2) (aa) has come into force w.e.f 1.1.2022 therefore matching of ITC with GSTR-2B is prerequisite.
OTHER PROPOSALS
COUNCIL RECOMMENDATION
MERE HOLDING OF SECURITIES OF A SUBSIDIARY COMPANY BY A HOLDING COMPANY CANNOT BE TREATED AS A SUPPLY
Circular to be issued clarifying that mere holding of securities of a subsidiary company by a holding company cannot be treated as a supply of services and therefore, cannot be taxed under GST
MANNER OF COMPUTATION OF INTEREST UPON WRONG AVAILMENT OF IGST ITC
In cases of wrong availment of IGST credit, the balance of input tax credit (ITC) in electronic credit ledger, under the heads of IGST, CGST and SGST taken together, has to be taken in consideration while calculating such interest liability as per rule 88B of CGST Rules, 2017.
ENABLE MANUAL FILING OF APPEAL AGAINST THE ORDERS PASSED IN RESPECT OF TRAN-1/ TRAN-2 CLAIMS
Special procedure to be provided under section 148 of CGST Act, 2017 to enable manual filing of appeal against the orders passed by proper officers in respect of TRAN-1/ TRAN-2 claims of the registered persons, filed in pursuance of the directions of Hon’ble Supreme Court in case of the Union of India v/s Filco Trade Centre Pvt. Ltd.
EXTENSION OF ANMESTY SCHEME
Amnesty scheme for non-filers of FORM GSTR4, FORM GSTR-9 & FORM GSTR10 returns, revocation of cancellation of registration and deemed withdrawal of assessment orders issued under Section 62 of CGST Act, 2017, shall continue till 31.08.2023.
EWB FOR INTRA-STATE MOVEMENT OF GOLD
EWB for intra-State movement of gold and precious stones under Chapter 71 within their States to be operational as per States discretion
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