The 1st of July 2017 was a historic one in the timeline of indirect taxes in India. From the midnight of this day, the Goods and Services Tax was to replace all others taxes like the central excise duty, service tax, state-level VAT, etc. This tax was chalked out to be levied only on the supply and receipt of goods.
Before delving into how the Goods and Services Tax rules have changed over the years, we need to understand its history. As the nation stepped to a new millennium, the year 2000 saw the then Prime Minister of India conceptualizing a uniform taxation system across the country.
By then several developed nations like France and Canada were implementing this system and the Indian GST was pictured as a duel GST framework that had both State and Central components.
The Union Budget of ’06-’07 saw the first announcement on the implementation of GST. More than one and a half-decade since the conceptualization of GST, the Constitutional Amendment Bill was passed in the Lok Sabha on May 2016. This bill cleared the way for the Goods and Services Act of 2017.
Several changes were made to GST Rules. Here is a peek at some of the most significant changes to the gst rules.
Gift by an Employer to Their Employee will not Have GST
Unlike in the initial GST rules, now when an employer gifts an item to their employee, GST will not be charged on the same. This rule is applicable for gifts whose monetary value does not exceed that of Rs. 50,000.
No GST on the Sale of a Building
In the initial GST Act, anything (other than money) that can be moved from one place to the other was considered to be ‘goods’. Any item that does not fall under this category was under ‘Services’. Latest changes to the GST act clearly state under its Schedule III that the sale of the property will neither be a supply of goods, nor will it be the supply of services.
By that they mean that the sale of the property will not invoke GST on it. However, note that stamp duty will still apply to it. Selling of under-construction building, renting or leasing of a property, etc. will continue to invoke GST.
Reverse Charge GST for purchase from an unregistered seller
As per the 2018 changes to the Act, when a registered buyer purchases from an unregistered seller reverse charge is applicable on it. This rule means that here the person making the purchase is liable to pay the gst tax.
No permission required for opting for Composition Scheme
The concept of introduction of GST revolved around reducing the burden of the common man. A commendable step in this regard is the amendment that allows businesses with an annual turnover of fewer than 50 lakhs to apply for the Composition Scheme under GST directly. You don’t need to attach any formal approval before the application.
Change in Provision Time
The documented time of supply of services will depend on whether the invoice has been prepared within its permitted timeframe. The permitted timeframe will depend on whether it is a one-time supply of goods or a continuous one if the service is provided by a bank or anyone else.
If the invoice is generated within the prescribed time, then the supply of services should be mentioned either as invoice issue date or the date on which payment is received. If the invoice is not generated promptly, then as per the latest rules, the date of providing service or the one when payment is collected can be taken as the time of supply.
The GST Act has done away with the cascading effect of indirect taxes. The above changes to the original GST rules is a testimony to the fact that GST centres around helping businesses manage their taxes more efficiently and paves the way for a more independent and industrially capable nation.
The situation of taxes in the country before the implementation of GST was more or less, chaotic. A single business person had to be aware of a variety of tax laws. With GST, this problem is sorted as indirect taxes are consolidated into one.
Stay updated on the latest updates regarding GST as that can be beneficial for your business.