Important changes made in GST rules

A number of important changes in the goods and services tax (GST) laws have taken effect from the beginning of this month. Some of these relate to import and export. 

Merchanting trade, when an Indian buys goods from a foreign country and then sells these to a buyer in another country, without bringing the goods into India, will not attract GST.  Further, sale of goods when still in a Customs bonded warehouse would also not attract GST — this would be paid upon clearance of such goods by the buyer. High seas’ sale transactions also would not attract GST. 

These situations were earlier covered through departmental circulars or advance rulings. Now, all doubts have been removed through inclusion of these activities in Schedule III of the Central GST Act that lists what is to be treated neither as supply of goods or as supply of services.

Earlier, the place of supply of services in respect of goods that are required to be made physically available in order to provide the services was the location of the supplier of such  services. Accordingly, GST was payable when a person in India carried out any job-work on goods supplied by a foreign party. However, in the case of services supplied in respect of goods temporarily imported into India for repair and re-exported after repair, no GST was payable. Section 13 (3) of the Integrated GST Act has been suitably amended to treat repair and job-work done on imported goods at par. 

Accordingly, in the case of services supplied in respect of goods which are temporarily imported into India for repair or for any other treatment or process, the place of supply of service is the place of location of the recipient of service outside India; so, this will not attract GST. The only condition is that the goods be re-exported after such repair or treatment or process, without being put to any use in India other than that required for such repair, treatment or process. In summary, no GST is payable if a person in India imports goods for job-work and returns these once the work is done to the foreign party outside India. 

The provision requiring Special Economic Zone units and developers to take separate registration has been moved from the Central GST Rules to the Central GST Act. The concept of separate business verticals has been done away with. 

Now on, different places of business of an entity in the same state may also obtain separate registrations. The input tax credit balance available with the single registration may be distributed among all units for which separate registrations are being obtained, in the ratio of value of total assets of each of such units as on the date of seeking registration.  

Input tax credit will be available for a van or a bus of a company, having seating capacity of more than 13, for transportation of its personnel, and for insurance, repair and maintenance services in respect of such vehicles.  A consolidated debit note and credit note on the several invoices pertaining to a financial year can be issued.

These are some of the many useful changes put in place. 

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