The Central Government is all set to bring amendment in the present Goods and Services Tax ( GST ) laws as to introduce reverse charge mechanism for the first time to extent the same to the composition scheme, government officials confirmed.
As per reports, nearly 35 amendments are being finalized in the current GST laws including clarification for refunds of cess on goods to be exported, changes in the enabling provisions for reverse charge mechanism (RCM) and composition scheme and returns filing ec.
At present, the Central GST (CGST) Act defines RCM as the provision where the registered recipient of goods and/or services is liable to pay GST instead of the unregistered supplier. “Now, the definition will be modified to enable it for registered persons also under GST,” a senior official said.
This would enable inclusion of composition scheme under the RCM mechanism, he added. The liability to pay tax on reverse charge basis was deferred till June 30 by the GST Council.
Reportedly, the final draft for amendments will be introduced in the next GST Council meeting. Thereafter it will be sent to the Union Cabinet for approval before its introduction in the Monsoon session of the Parliament.
One of the amendments is related to the GST (Compensation to States) Act, 2017 to provide more clarity for refunds of cess to manufacturers for goods to be exported.
The other proposed amendments for the composition scheme relate to inclusion of supply of services by composition taxpayer up to Rs 5 lakh per year and increase in annual turnover eligibility to Rs 2 crore from Rs 1 crore, after which the eligibility will be increased to Rs 1.5 crore per annum, as approved by the GST Council last year.
The amendment would also impose tax on renting of immovable property by government or local authority to a registered person under RCM while renting of immovable property by government or local authority to unregistered person shall continue under forward charge, officials said.