India: Recommendations by GST Council from October 6 Meeting
On October 6, 2017, the Goods and Services Tax (GST) Council recommended the following changes to ease the burden of GST compliance on small and medium businesses:
- Deferment of scope of reverse charge mechanism: It was proposed that the liability to pay GST under the reverse charge mechanism on supplies received from a supplier who is not registered for GST is to be suspended up to March 31, 2018.
- Compliance concessions for small turnover businesses: It was proposed that taxpayers with an aggregate turnover not exceeding 1.5 crores (approximately US$230,000) will be permitted to file quarterly GST returns rather than monthly, though the payment of any liability would still need to be made on a monthly basis.
- Compulsory registration requirements removed for some transactions:For suppliers of services who have an annual turnover of less than 20 lakh (approximately US$30,000) and only supply interstate taxable services, mandatory GST registration will not be required.
- GST rate revisions:Revised GST rates for certain categories of supply were proposed.
- E-way bill system:The e-way bill system was proposed to be introduced in phases starting January 1, 2018, and full implementation by April 1, 2018. The system will be used to document the movement of goods in India.
- Composition scheme revisions:Proposed changes to the composition scheme include increasing the threshold limit and widening the scope of eligibility.
- Invoicing rules:Amendments to the rules on the issuance of tax invoices were proposed to simplify the position for certain types and classes of taxable persons.
The above proposals have not been enacted into legislation, however they indicate that the new GST system in India is still subject to considerable change and review. Consequently, it is imperative for businesses operating in India to be mindful of changes that could affect them.