India: GST Amendment Acts Receive Presidential Assent

Recently, the provisions of the Integrated Goods and Services Tax Act, 2017 (IGST Act), the Central Goods and Services Tax Act, 2017 (CGST Act), the Union Territory Goods and Services Tax Act, 2018 (UTGST Act) and the Goods and Services Tax (Compensation to States) Act, 2017 have been amended by the Parliament. The amendment acts of 2018 have received Presidential assent on 29 August 2018. The amendments shall come in force on the date as notified by the Central Government. The notification shall be issued after the amendment of the State Goods and Services Tax Acts (SGST Act) by the respective State Legislatures.

The major amendments are discussed below.

Amendment Comment
Section 7(1) of the CGST Act:

Definition of Supply
The definition of supply has been amended to remove the inference that any activity included in Schedule II of the CGST Act would automatically qualify as a supply.

The amendment brings clarity that Schedule II of the CGST Act shall be referred to only to determine whether a supply is supply of goods or services but not whether an activity, per se, is a supply.
Section 9(4) of the CGST Act & Section 5(4) of the IGST Act:

Taxability of inward supplies from unregistered dealers
The existing provision has been substituted to provide that the Government shall notify class of persons who shall be liable to pay tax on procurement of specified supplies from the unregistered persons. The existing provisions required payment of tax by all registered persons procuring any kind of supply from an unregistered person.

The amendment removes a major irritant which was seen as disincentivising supply by the unregistered suppliers mainly comprising artisans, professionals and tiny and small sectors.
Section 10 of the CGST Act:

Composition Levy Scheme
The threshold turnover for eligibility of the composition scheme has been enhanced from INR 10,000,000 to INR 15,000,000. Further, compositions dealers are also allowed to supply services (other than restaurant services) not exceeding ten percent of the total turnover in the state in the previous financial year or INR 500,000, whichever is higher.

The widening of the eligibility criteria for composition levy was driven by the reason that each registered person who may supply goods may also be providing certain incidental services which would debar them from enjoying the benefit of a composition levy.
Section 16(2) of the CGST Act:

Deeming fiction for receipt of supply of goods and service
The existing explanation to Section 16(2)(b) has been substituted to provide that a registered person shall be deemed to have received goods or services where the goods are delivered or the services are provided by a supplier to a person on the direction of the said registered person.

The amendment broadens the deeming fiction to include receipt of service by a third person (agent or otherwise). This makes the recipient eligible for input tax credit (ITC) on such services. This will encourage contract manufacturing and job work.
Section 17(3) of the CGST Act:

Value of exempt supply for ITC reversal
The definition of value of exempt supply has been revised to exclude value of activities or transactions specified in Schedule III of the CGST Act, except the value of sale of land and /or sale of building for which occupation certificate has been received.

The amendment reduces the quantum of ITC to be reversed due to activities which are considered neither as supply of goods not services, for example, the supply of actionable claim.
Section 17(5) of the CGST Act:

Blocked ITC
ITC has been allowed for-
  • Motor vehicles with seating capacity of more than thirteen persons without any restrictions.
  • Motor vehicles with seating capacity of less than thirteen persons provided they are used for making specified outward taxable supplies.
  • Lease or rent of motor vehicles provided that they have been used for making specified outward taxable supplies.
  • Supplies that are received by the registered entity in compliance with statutory requirements concerning its employees.
Due to the amendments made, a registered person will be entitled to take credit on buses and other motor vehicles which are being used by them for transportation of their employees.

The amendment regarding ITC availment on supplies received by an entity while discharging its statutory obligations towards employees, has been effected by way of a proviso which is inserted after sub-clause (iii) of Section 17(5)(b) of the CGST Act which relates to travel benefits extended to employees on vacation. Considering the placement of the proviso, it could be interpreted that ITC would be available only in relation to supplies received by the entity which is required to discharge any statutory obligation in relation to an employee's leave travel benefits. However, if an inference is drawn from the decisions taken in the 28th GST Council Meeting (held on 21 July 2018)it is clear that the intention was to allow ITC in relation to all supplies received by the employer while discharging its statutory obligations towards its employee. It is to be seen that in case of a dispute regarding availment of ITC, which of the two views, presented above, will be taken by the authorities as this is now reduced to a question of interpretation.
Section 24(x) of the CGST Act:

Registration of e-commerce players
Requirement of compulsory registration of e-commerce players has been relaxed to the extent that only such e-commerce players, who are required to comply with Tax collected at source (TCS) provisions under Section 52 of the CGST Act, are compulsorily required to take registration even if they do not cross the minimum threshold in terms of their turnover.

This amendment provides the much needed relief to e-commerce players who operate on a small scale.
Sections 2(18), 25(2) of the CGST Act & Section 8 of the IGST Act:

Business vertical and registration of multiple units
The definition of "business vertical'' under the IGST and CGST Acts have been deleted. Further, the reference to business vertical, under the provisions relating to registration under the CGST Act has also been deleted.

This will allow an entity to have multiple GST registrations within the same state even if they do not qualify as separate business verticals.
Section 43A of the CGST Act:

Revision of returns
A new provision under Section 43A has been introduced to allow amendment of the section relating to inward supplies in the returns filed. Further there is also a mechanism involved for availment of credit up to a certain limit even in cases where the supplier does not supply adequate details in its returns.

This provision will provide persons an option to amend the portion relating to inward supplies which did not exist before. Further, the proposal of a mechanism to allow availment of ITC even when the supplier does not discharge its reporting obligations, alleviates the concerns of the trade to a large extent.
Section 54(2) of the CGST Act:

Period for filing of refund claim
The due date for filing of refund claims for accumulated ITC has been revised to the date on which the monthly return has to be filed.

This is a step towards ensuring that the working capital of eligible entities does not get tied up till the end of the year.
Section 140 of the CGST Act:

Transition of CENVAT Credit
Section 140 of the CGST Act has been amended to state that only CENVAT credit of eligible duties will be allowed to be carried forward to the GST regime.

This amendment has retrospective operation since it is made effective from 1 July 2017. The registered persons who have availed the credit of Education Cess (EC), Secondary and Higher Education Cess (SHEC) and Krishi Kalyan Cess (KKC), may now receive show cause notices / demand notices asking them to pay an amount equivalent to the amount of EC, SHEC and KKC that has been availed (through the GSTR TRAN-1) along with interest. However, it is to be seen if such demand of interest on the amount of credit availed in relation to such Cess is appropriate considering that it is only this retrospective amendment which makes such availment / utilisation of credit illegal. Further, there are a plethora of decisions wherein the courts have ruled that no assessee can be penalized in case of retrospective amendments to the taxing statutes.
Schedule III of the CGST Act:

Activities / transactions not considered as a supply under GST
The scope of the Schedule has been increased to include-
  • Supply of goods from a place in a non-taxable territory to another place in the non-taxable territory without such goods entering into India.
  • Supply of goods to any person in a customs bonded warehouse before effecting clearance for home consumption;
  • High seas sale.
All such amendments have been made to put an end to the confusion created by a slew of contradictory circulars that were issued. In Circular No 46 /2017 – Customs dated 24 November 2017 a supply made in a customs bonded warehouse was said to be subject to IGST and payable at the time when it is made. Subsequently Circular No 3/1/2018-IGST dated 25 May 2018 clarified that the IGST on the such supply will be collected only once at the time of clearance of the goods and this was to be made effective from 1 April 2018.
Section 12(8) of the IGST Act:

Place of supply of services in case of transportation of goods to a place outside India
A proviso has been inserted to clarify that the place of supply in case where services were being provided in relation to transportation of goods to a place outside India shall be the destination of the goods even if supplier and recipient are located in India.

This amendment is in line with the erstwhile service tax provisions.
Section 13(3)(a) of the IGST Act:

Place of supply in case of other processes / treatments being administered on goods temporarily imported into India
By way of amendment the place of supply in case of goods which are temporarily imported into India for treatment or process other than repairs and maintenance and are exported without being put to any use in India has been fixed to be outside India.

This amendment has been made in recognition of the fact that repair and maintenance services performed on goods temporarily imported cannot be distinguished from other processes and treatments.

Another interesting point to be noted is that during the 28th GST Council Meeting (held on 21 July 2018) while approving the amendments to be made to the GST laws, certain decisions were taken and amendments mirroring all but one of the decisions have been made. There has been no amendment made to put into effect the decision to do away with the interest that would be payable at the time of reversing the ITC availed by the recipient in respect of services, when payment has not been made within 180 days from the date of issue of invoice. It is to be seen if this relaxation will be brought about by way of a notification under the general powers given to the Government under the CGST Act in the absence of an express provision therein.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions