Changes in GST from Jan 2020.

GST: Government notifies changes to rules on input tax credit

The detailed information of changes in GST are:

1. Changes in exemption list w.e.f. 01.01.2020: Specified services (Long Term Lease of industrial plots or plots for development of infrastructure for financial business) provided by an entity having 20% or more (Earlier it was 50%) ownership of CG, SG, UT to industrial units or developers are exempt from GST subject to the following conditions: (Newly inserted) (Notification No. 28/2019-CTR dated 31.12.2019)

i. Leased plots shall be used for the purpose for which they are allotted, that is, for industrial or financial activity in an industrial or financial business area.

ii. The State Government concerned shall monitor and enforce the above condition as per the order issued by the State Government in this regard.

iii. In case of any violation or subsequent change of land use, due to any reason whatsoever, the original lessor, original lessee as well as any subsequent lessee or buyer or owner shall be jointly and severally liable to pay such amount of central tax, as would have been payable on the upfront amount charged for the long term lease of the plots but for the exemption contained herein, along with the applicable interest and penalty.

iv. The lease agreement entered into by the original lessor with the original lessee or subsequent lessee, or sub- lessee, as well as any subsequent lease or sale agreements, for lease or sale of such plots to subsequent lessees or buyers or owners shall incorporate in the terms and conditions, the fact that the central tax was exempted on the long term lease of the plots by the original lessor to the original lessee subject to above 2 condition and that the parties to the said agreements undertake to comply with the same.

2. RCM w.e.f. 31.12.2019: Renting of motor vehicle designed to carry passengers (Earlier all vehicle covered) where the cost of fuel is included in the consideration charged from the service recipient, provided to a body corporate by any person, other than a body corporate who supplies the service to a body corporate and does not issue an invoice charging central tax at the rate of 6% to the service recipient. (Notification No. 29/2019-CTR dated 31.12.2019)

Auditor Remarks: Earlier the aforesaid services are covered under RCM subject to condition that supplier paying central tax at the rate of 2.5% on renting of motor vehicles with ITC only of input service in the same line of business. Therefore, a few questions like what is the use of ITC of 2.5% for the supplier, etc. Now, the CBIC remove all such drafting errors and clarified the entry.

The govt permitted officers at the level of commissioners to bar debit of input tax credit for one year in case of credit being availed fraudulently. The GST Council had approved a proposal in this regard at its meeting on December 18 to check tax evasion and menace of fake invoicing.

The Centre has notified changes to the goods and services tax (GST) rules, lowering the input tax credit to 10% from 20% of eligible credit, if invoices or debit notes are not reflected in filings.

It has also permitted officers at the level of commissioners to bar debit of input tax credit for one year in case of credit being availed fraudulently. The GST Council had approved a proposal in this regard at its meeting on December 18 to check tax evasion and menace of fake invoicing.

The Centre further notified that e-way bill of taxpayers who have not filed their Form GSTR-1 for two months or two quarters shall be blocked. The government has also allowed waiver of late fee for entities furnishing outward supply details in Form GSTR-1 between December 19, 2019 and January 10, 2020, for the period between July 2017 and November 2019.

Regards,

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