Clarification for refunds of cess on goods to be exported, changes in the enabling provisions for reverse charge mechanism (RCM) and composition scheme and returns filing are part of about 35 amendments being finalised in Goods and Services Tax (GST)-related laws. The government is likely to amend the GST laws to introduce enabling provision of bringing in any transaction under RCM, with an aim to extend it first for the composition scheme, government officials said.
At present, the Central GST (CGST) Act defines RCM as the provision where the registered recipient of goods and/or services is liable to pay GST instead of the unregistered supplier. “Now, the definition will be modified to enable it for registered persons also under GST,” a senior official said, adding that this would enable inclusion of composition scheme under the RCM mechanism. The liability to pay tax on reverse charge basis was deferred till June 30 by the GST Council.
The final draft for amendments will be introduced in the next GST Council meeting, following which it would need to be cleared by Union Cabinet before its introduction in the Monsoon Session of Parliament, another senior government official said. One of the amendments is related to the GST (Compensation to States) Act, 2017 to provide more clarity for refunds of cess to manufacturers for goods to be exported. Explaining the proposed change, an official said: “The amendment will bring in more clarity. Say, an automobile manufacturer is selling the car to an exporter, he would have paid cess on it. But, since it is meant to be exported, cess would need to be refunded. So, certain tweaking of the law is required…”
The other proposed amendments for the composition scheme relate to inclusion of supply of services by composition taxpayer up to Rs 5 lakh per year and increase in annual turnover eligibility to Rs 2 crore from Rs 1 crore, after which the eligibility will be increased to Rs 1.5 crore per annum, as approved by the GST Council last year.
Also, amendments would be made to enable taxation of renting of immovable property by government or local authority to a registered person under RCM while renting of immovable property by government or local authority to unregistered person shall continue under forward charge, officials said.