The CGST Rules, 2017 have been amended vide Notification No. 3/2019 – CT dated 29th January, 2019 to make certain consequential and necessary changes to the Rules in view of the Amendment Acts being made effective from 1st February, 2019. A brief analysis has been done below for ease of comparison, the possible reasoning and implications of the changes.
• Heading of Chapter II – “Composition Rules” substituted with “Composition Levy”
Comments – This amendment has been made to bring uniformity in the Composition Scheme by providing the power of complete framing of the Composition Scheme to the CGST Rules, under Section 10 of the CGST Act.
The Composition rates are prescribed under Rule 7 of the CGST Rules, however, even Notification No. 8/2017 – CT prescribed the rates separately. Notification No. 8/2017-CT has now been amended.
• Amendment to Rule 7 – Inclusion of the words “and services” in the Sr. No. 3 of the table
Comments – The CGST (Amendment) Act, 2018 has added a proviso to Section 10 that allows the persons opting for the Composition Scheme to provide services up to a certain value. This amendment to Rule 7 is in wake of the amendment to Section 10 of the CGST Act.
Form GSTR-4 has been amended to include reporting of value of services provided by the Composition taxable person.
• Amendment to Rule 8 – Deletion of first proviso
Comments – By omitting this proviso, the requirement for having separate registration under GST for SEZ Developers and SEZ units in the same State is removed, as a corollary to the amendment that allows to obtain separate registrations for multiple places of business within the same State.
• Substitution of old Rule 11 for separate registration of business verticals with new Rule 11 providing for multiple registrations in same State
Comments – Consequent to the decision of the GST Council in the earlier meetings, the CGST Rules have been amended to allow separate registrations for multiple places of business within the same State without the requirement of having a separate business vertical. There are also certain conditions prescribed for opting for multiple registrations regarding opting of composition scheme and inter-branch transactions in the new Rule 11.
Form GST REG-01 has been amended to include the necessary changes.
• Addition of Rule 21A for temporary suspension of Registration
Comments – This Rule has been inserted after Rule 21 to provide for suspension of GST Registration for the period from date of application for cancellation of registration till the completion of proceedings. This means that the taxpayer shall not have to comply with the requirements of the GST from the date of application for cancellation till completion of cancellation proceedings subject to conditions prescribed in the new Rule.
Form GST REG-17 (Show Cause Notice) & Form GST REG-20 (Dropping of Proceedings) have been amended to include a note for suspension of Registration.
• Addition of Rule 41A for transfer of ITC on obtaining separate Registration within the State
Comments – By virtue of this Rule, the available closing balance of ITC in a particular State may be distributed to the new registrations obtained for the different places of business in the same State on the basis of value of assets held by the places of business at the time of such new Registrations.
New Form ITC – 02A has been prescribed for this purpose in the Amendment Rules.
• Addition of “Entry 92A” in Rules 42 & 43
Comments – Minor amendment to exclude the duties and taxes levied under Entry 92A of List I from the value of exempt supplies as provided in the Explanation to Rules 42 & 43.
• Deletion of clause (a) of Explanation to Rule 43(2) for exempt services
Comments – This amendment has removed the clause (a) of Explanation to Rule 43(2) which excluded the supplies of services made to Nepal & Bhutan against payment in INR from the value of “exempt supplies” for the purpose of Rule 42 & 43. Hence, such services shall now be considered as “exempt supplies”.
• Amendment to Rule 53 for revised tax invoice
Comments – The particulars to be mentioned of credit notes and debit notes have been prescribed under a separate sub-rule 53(1A) and removed from Rule 53(1). The following requirements have also been removed from the particulars to be mentioned on the Revised Invoice –
– “Nature of document
– Value of taxable supply of goods or services, rate of tax and the amount of the tax credited or, as the case may be, debited to the recipient.”
• Addition of sub-Rule 1A to Rule 53
Comments – The particulars to be mentioned on credit notes and debit notes have been separately provided under this new sub-Rule. The requirements are in line with the requirements of other documents prescribed under the Rules.
• Amendment to Rule 80
Comments – The CGST (Amendment) Act 2018 has inserted a proviso to Section 35(5) of the CGST Act to exclude “any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor-General of India or an auditor appointed for auditing the accounts of local authorities” from the GST Audit under Section 35(5). The amendment to Rule 80 is a consequential amendment to exclude the persons provided in the above proviso from Rule 80 which prescribes the conditions for GST Audit.
• Amendments to Rule 83
Comments – The time limit for passing the GSTP examinations has been extended from 18 months to 30 months from the appointed date (1st July, 2017).
Sub-rule 8 has been substituted with new sub-rule 8 to add compliances that can be undertaken by a GST practitioner on behalf of his clients. The new additions include generation of e-Waybill, filing of GST ITC-04 and application or withdrawal of Composition scheme.
Consequential amendment to the proviso to Rule 83(8) has also been made to accommodate the enhanced scope of the GST practitioner.
Form GST PCT-05 (Authorisation of GST Practitioner) has also been amended to include the above enhancement of scope.
• Amendment to Rule 85(3) & 86(2) to add Sections 49A and 49B
Comments – Sections 49A and 49B were introduced by the CGST (Amendment) Act, 2018 to change the method of inter-head utilisation of Input Tax Credit. The amendments to Rule 85(3) and Rule 86(2) have been made consequent to introduction of above Sections.
• Amendment to Rule 89(2) to substitute clause (f)
Comments – Rule 89(2) prescribes the documentary evidences to be submitted for claim of refund of tax or any other amounts. The old clause (f) mentioned that a declaration had to be submitted that the SEZ developer or units had not availed the ITC of the tax paid by the supplier. However, the new clause (f) provides for a declaration stating that the tax has not been collected from such SEZ developer or unit. This could possibly remove the hassle of obtaining the declaration from the SEZ customer.
Form GST RFD-01 (Application for Refund) and GST RFD-01A (Manual Application for Refund) has been amended to include the new clause (f)
• Amendments to Rules 91 & 92 for revalidation of applications
Comments – Procedural amendments to Rule 91 and Rule 92 have been made to provide for revalidation of payment advice of refund in Form GST RFD-05, where the refund is not disbursed within the same financial year as the payment advice. Also, the order sanctioning refund in Form GST RFD-04 and GST RFD-06 shall not be required to be revalidated by the officer sanctioning the refund.
• Amendment to Rule 96A
Comments – The IGST (Amendment) Act, 2018 has amended the definition of “exports of services” to allow for consideration to be received in INR where permitted by the RBI. The amendment to Rule 96A is in consequence to the above amendment in the Act.