Indirect Tax(IDT) Amendments 2019 | CA Intermediate IDT Amendments 2019 for CA Intermediate

Dear Students, Professionals & Teachers;

We have complied all the GST amendment relevant for CA Intermediate NOV 2020 Attempt. This will serve as important GST Notes for everyone. This GST study material would immensely help you in deeper understanding of the new provisions and recent updates in GST relevant for Nov 2020 Exams. We have provided the GST amendments with our analysis and along with GST lecture links. If you find any typing error or mistakes in the document please contact and let us know at 9228446565 or yash@konceptca.com

Happy Reading…… and remember in CA exams amendments have weightage of about 30%-40%. The following document will help you to gain these crucial 10 - 15 marks.

1. Amended - Definition of term “BUSINESS” [Section 2(17)(h) of the CGST Act]

 

Earlier

Now

As per section 2(17)(h) of the CGST Act, the term business includes services provided by a race club by
(1) way of totalisator or

(2) a licence to book maker in such club.

 

Clause (h) of said sub-section has been substituted to provide that business includes activities of a race club including by

(1) way of totalisator or

(2) a licence to book maker or

(3) activities of a licensed book maker in such club.

 

Hence now the activities of a licensed book maker in such club will also be within the scope of business. Thus, the scope of term ‘business’ has widened.

2. Clarification - Definition of term “SERVICE” [Section 2(102) of the CGST Act]

There has been a clarification in the definition of ‘service’. The expression service does include “facilitating or arranging transactions in securities.”

Since securities are excluded from the definition of both ‘goods’ and ‘services’ in the CGST Act, they are neither goods nor services. However, facilitating or arranging transactions in securities is liable to GST. Inference: If some service charges or service fees or documentation fees or broking charges or such like fees or charges are charged in relation to transactions in securities, the same would be a consideration for provision of service and chargeable to GST.

So remember- if you purchase securities worth Rs. 20,000 paying brokerage fees of 1%. – part of this transaction is not covered in GST and part is covered in GST.

1. Purchasing the security for RS. 20,000 – not covered in GST as securities are neither goods nor services.

2. Brokerage of 1% - covered in GST as per the clarification issued.

 

3. Import of service without consideration from a related party/establishment outside India in course of furtherance of business to be deemed to be supply even if such service is received by a person other than a taxable person [Schedule I of the CGST Act]

 

Earlier

Now

Import of service by Taxable person from related party for furtherance of business was deemed to be supply. Consideration doesn’t matter.

Import of service by Any person from related party for furtherance of business is deemed to be supply. Consideration doesn’t matter.

 

Earlier it was just by taxable person only, now it can be by any person.

 

4. Circular No. 57/31/2018 and Circular No. 73/47/2018 - Clarification on scope of principal and agent relationship under Schedule I of CGST Act, 2017 in the context of del-credere agent (DCA)

This is a long topic, and we have made a video explaining this complete topic.

 

 

Who is DCA?

In commercial trade parlance, a DCA is a selling agent who is engaged by a principal to assist in supply of goods or services by contacting potential buyers on behalf of the principal. The factor that differentiates a DCA from other agents is that the DCA guarantees the payment to the supplier.

In such scenarios where the buyer fails to make payment to the principal by the due date, DCA makes the payment to the principal on behalf of the buyer (effectively providing an insurance against default by the buyer), and for this reason the commission paid to the DCA may be relatively higher than that paid to a normal agent.

DCA is an agent who guarantees the payment to the principal supplier. In order to guarantee timely payment to the supplier, the DCA can resort to various methods-

  1. Extending short-term transaction-based loans to the buyer
  2. Paying the supplier himself and recovering the amount from the buyer with some interest at a later date.


Issue of valuation of supply

This loan is to be repaid by the buyer along with an interest to the DCA at a rate mutually agreed between DCA and buyer. Concerns have been expressed regarding the valuation of supplies from principal to recipient where the payment for such supply is being discharged by the recipient through the loan provided by DCA or by the DCA himself. Issues arising out of such loan arrangement have been examined and the clarifications on the same are as below:

Issue: Whether a DCA falls under the ambit of agent under Para 3 of Schedule I of the CGST Act?

Clarification:

  • In case where the invoice for supply of goods is issued by the supplier to the customer, either himself or through DCA, the DCA does not fall under the ambit of agent.
  • In case where the invoice for supply of goods is issued by the DCA in his own name, the DCA would fall under the ambit of agent.


Issue:
 Whether the temporary short-term transaction-based loan extended by the DCA to the recipient (buyer), for which interest is charged by the DCA, is to be included in the value of goods being supplied by the supplier (principal) where DCA is not an agent under Para 3 of Schedule I of the CGST Act?

Clarification:
 In such a scenario following activities are taking place:

  1. Supply of goods from supplier (principal) to recipient;
  2. Supply of agency services from DCA to the supplier or both;
  3. Supply of extension of loan services by the DCA to the recipient.


It is clarified that in cases where the DCA is not an agent under Para 3 of Schedule I of the CGST Act, the temporary short-term transaction based loan being provided by DCA to the buyer is a supply of service by the DCA to the recipient on principal to principal basis and is an independent supply.

Therefore, interest being charged by the DCA would not form part of the value of supply of goods supplied (to the buyer) by the supplier.

Issue: Whether DCA is an agent under Para 3 of Schedule I of the CGST Act and makes payment to the principal on behalf of the buyer and charges interest to the buyer for delayed payment along with the value of goods being supplied, whether the interest will form part of the value of supply of goods also or not?

Clarification: In such a scenario following activities are taking place:

  1. Supply of goods by the supplier (principal) to the DCA;
  2. Further supply of goods by the DCA to the recipient;
  3. Supply of agency services by the DCA to the supplier or the recipient or both;
  4. Extension of credit by the DCA to the recipient.


It is clarified that in cases where the DCA is an agent under Para 3 of Schedule I of the CGST Act, the temporary short-term transaction based credit being provided by DCA to the buyer no longer retains its character of an independent supply and is subsumed in the supply of the goods by the DCA to the recipient. It is emphasized that the activity of extension of credit by the DCA to the recipient would not be considered as a separate supply as it is in the context of the supply of goods made by the DCA to the recipient.

It is further clarified that the value of the interest charged for such credit would be required to be included in the value of supply of goods by DCA to the recipient as per section 15(2)(d) of the CGST Act.

 

5. Service by way of grant of alcoholic liquor licence is neither a supply of goods nor a supply of service Circular No. 121/40/2019 GST dated 11.10.2019 –