[2020] 113 taxmann.
com 18 (Article)
[2020] 113 taxmann.com 18 (Article)©
Date of Publishing: January 3, 2020
Changes proposed vide Finance (No. 2) Act, 2019 partially made effective on 1-1-
2020
V.S. DATEY
Nirmala Sitharaman, Minister of Finance, Government of India, presented her maiden Budget 2019-2020 on 5-7-2019.
Finance (No. 2) Bill, 2019 was also presented. The Bill was passed and received assent of President on 1-8-2019 and
hence became Act on that day.
Only one change pertaining to section 54(8A) of CGST Act, which empowers Central Tax Authorities to disburse
refund of State GST also, was notified on 1-9-2019. Some more changes have been notified and made effective on 1-1-
2020. These are summarized below.
Composition Scheme will apply to service providers also
Section 10 of CGST Act, as was worded, made provisions for composition scheme only in respect of suppliers of
goods. This section is now amended by inserting section 10(2A) of CGST Act w.e.f. 1-1-2020 to provide for
composition scheme for suppliers of service and goods with aggregate turnover upto Rs 50 lakhs. The tax rate will be
upto 3% CGST plus 3% SGST/UTGST.
Really, this scheme is already implemented w.e.f. 1-4-2019, videNo. 2/2019-CT(Rate) dated 7-3-2019 issued under
section 9 of CGST Act. Practically, all provisions of composition scheme apply to simplified scheme for service
suppliers also. Thus, practically, there is no change.
Other changes made in composition scheme
Following are other changes in section 10 of CGST Act w.e.f. 1-1-2020– (a) 'Exempt supply' will not include interest or
discount on deposits, loans or advances for purpose of composition scheme. Thus, this interest will not be considered
for calculating 'aggregate turnover' for eligibility of composition scheme. (b) Casual taxable person or non-resident
taxable person will not be eligible for composition scheme.
Even earlier, the condition in respect of exclusion of interest from 'aggregate turnover' was already provided. vide
Removal of Difficulties Order No. 1/2019-CT dated 1-2-2019.
Calculation of exemption of 40 lakhs will be excluding interest on deposits, loans and advances
The small taxable persons with aggregate turnover upto 40 lakhs are not required to register under CGST Act. Now, it
is provided that Calculation of exemption of 40 lakhs will be excluding interest on deposits, loans and advances –
explanation to section 22(1) of CGST Act inserted w.e.f. 1-1-2020.
However, this exclusion is not available while calculating exemption limit of Rs 10/20 lakhs [anomaly in drafting
which needs rectification]
Authentication of Registration in GST will be Aadhaar number based
Fresh Registration under GST will be Aadhaar number based. The authentication will be on basis of Aadhaar number,
as prescribed – section 25(6B) of CGST Act inserted w.e.f. 1-1-2020.
Existing registered persons will also have to get verified through Aadhaar number or other method, within specified
time – section 25(6A) of CGST Act inserted w.e.f. 1-1-2020. If not done, registration will be cancelled.
In case of partnership firm, company, trust, HUF, AOP or BOI, the authentication will be by verification of Aadhaar
number of partner, director, trustee, authorised representative, managing committee member or Karta of HUF – section
25(6C) of CGST Act inserted w.e.f. 1-1-2020.
If an individual, partner, director, Karata of HUF, authorised representative or member of managing committee does not
have Aadhaar, verification will be by other method in manner as may be specified.
Government can exempt a person or class of persons or any State or Union Territory or part thereof, on
recommendation of GST Council – section 25(6D) of CGST Act inserted w.e.f. 1-1-2020.
Specified suppliers to provide facility of e-payment option to recipients of goods or service
The Government may prescribe a class of registered persons who shall provide prescribed modes of electronic payment
to the recipient of supply of goods or services or both made by him. The suppliers will give option to such recipient to
make payment accordingly, in such manner and subject to such conditions and restrictions, as may be prescribed –
section 31A of CGST Act inserted w.e.f. 1-1-2020.
Thus, prescribed class of suppliers of goods or services (mostly bigger companies) will have to provide option to
recipient of goods or services supplied by them, of making e-payment. [In fact, many big companies are already doing
so].
It is not mandatory that the recipient must make payment only to supplier through electronic mode only.
Really, this provision has nothing to do with GST Law or tax invoice as such.
Time limit for filing annual return can be extended
Section 44 of CGST Act has been amended w.e.f. 1-1-2020 to provide powers to Commissioner for granting extension
of time limit for filing annual returns
Earlier, such extension was given by issuing Removal of Difficulties order.
Single electronic cash ledger for making payment
Earlier, different electronic cash ledgers were maintained for different major heads and minor heads, which was very
clumsy and prone to mistakes. Now, it is provided that payment can be made in single electronic cash ledger from
which amount may be transferred to other electronic cash ledgers of different major heads and minor heads – insertion
of section 49(10) of CGST Act w.e.f. 1-1-2020 [ease of doing business. It is common sense but as is rightly said,
common sense is most uncommon].
Where any amount has been transferred to the electronic cash ledger under CGST Act, the same shall be deemed to be
deposited in the said ledger as provided in section 49 (1) of CGST Act – section 49(11) of CGST Act w.e.f. 1-1-2020.
Section 53A of CGST Act has been inserted w.e.f. 1-1-2020 and section 17A of IGST Act was inserted w.e.f. 1-8-2019
to transfer amounts deposited in electronic cash ledger to SGST/UTGST. This will be done by GSTN system and
taxable person is not concerned.
Powers to Central Government to refund State Tax and vice versa
Earlier, if taxable person was under jurisdiction of Central Government, if Central Government sanctions refund, the
taxable person had to go to State/Union Territory GST authorities to get refund of SGST/UTGST. Now, it is provided
that Central Tax Authorities may refund SGST/UTGST also – section 54(8A) of CSGT Act. Similar provision will be
made in SGST Acts also. This section has been made effective on 1-9-2019. Integrated refund scheme with disbursal
by single authority has been introduced w.e.f. 24-9-2019.
Time limit for filing TCS statement can be extended
Section 52 of CGST Act has been amended w.e.f. 1-1-2020 to provide powers to Commissioner for granting extension
of time limit for filing TCS statements.
Earlier, such extension was given by issuing Removal of Difficulties order.
Penalty for profiteering
Penalty upto 10% of amount profiteered can be imposed by Authority for Anti-Profiteering. The penalty will not be
payable if amount ordered is deposited within 30 days – section 171(3A) of CGST Act inserted w.e.f. 1-1-2020.
Amendments made Finance (No. 2) Act, 2019 not made effective
Following amendments made by Finance (No. 2) Act, 2019 are not yet notified.
National Appellate Authority for Advance Ruling – Presently, appeal against order of Authority of Advance Ruling
(AAR) of a State/Union Territory was lying with Appellate Authority of Advance Ruling (AAAR) of the State/Union
Territory. There was no provision for filing further appeal or revision (except writ petition before High Court). Now,
provision is proposed to be made to file appeal before National Appellate Authority for Advance Ruling, against order
of Appellate Authority of Advance Ruling (AAAR). This provision is not yet made effective.
Interest for late payment of tax only on net amount and not gross amount – Section 50 of CGST Act makes provision
for late payment of taxes. Present view is that interest is payable on gross amount of tax payable without considering
ITC available [There are different views on this issue, and my view is that interest is payable only on net amount, as
interest is only compensation, not penalty].
Now, section 50 of CGST Act is proposed to be amended to provide that interest will be payable on net amount payable
by electronic cash ledger. However, if such payment is made after commencement of proceedings under sections 73 or
74 of CGST Act [i.e. demand for short payment of taxes], interest will be payable on gross amount.
For some unknown reasons, this section has not been made effective [truly cunning and highly unfair way of doing
things].
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