Here are three important changes under GST law that have come into effect from 20th October 2023 that will affect your input tax credit availability.
Cab Rental Services for Passengers
In the services, the condition has been inserted via renting any motor vehicle designed to carry the passengers in which the fuel cost is been included in the consideration levied from the service receiver. In the below-stated two categories of service which could be supplied at two rates, another condition has been inserted –
- Cab + Fuel – 5% (no GST input tax credit (ITC) but Cab Rent carried from another operator) and 12% (complete ITC)
- Cab + Driver + Fuel → is 5% (no GST ITC but Cab Rent carried from another operator) and 12% (complete ITC)
A condition of 5% (2.5% CGST+ 2.5% SGST) rate category is been inserted by the government that shall come into force from 20-10-2023 and specified that in which the supplier of the input service in the identical line of business levies central tax at an exceeding rate compared to 2.5% credit of input tax levy on the input service in the identical line of the business above the tax filed or liable to get filed at a 2.5% rate does not get opted.
Illustration: ‘A’ engages ‘B’ for transport from New Delhi to Jaipur in a motor cab for Rs. 1000. ‘B’, for supplying the said service, leases a motor cab with the operator from ‘C’ for Rs. 800. ‘C’ charges ‘B’ central tax at the rate of 6% (Rs. 48). If ‘B’ levy ‘A’ central tax at 2.5% 2.5%, he will get qualified to take an input tax credit on the input service in the identical business line which is been provided via ‘C’only to the extent of Rs. 20 (2.5% of Rs. 800) and not Rs. 48.
Under Rule 42 of the CGST Rules, 2017 the Supplier ‘B’ in his return will reverse the credit, and state the reversal of Rs. 28 (48-20) in Table 4B(1) of Form GSTR-3B. and pay CGST of Rs. 5(Rs. 25 (2.5% of Rs. 1000) less Rs. 20 (ITC)) and an equal amount of reversal and GST shall be liable to get paid under SGST.
Under the reverse charge process, these services when furnished to the body corporate through any individual excluding the body corporate been counted. Given that such a provider shall not provide an invoice levying 12% GST to the receiver of service.
Section 54(3) for GST Refund of Credit on Inverted-rated Goods and Services
When the GST rate on the input is more compared to the GST rate on the output supply the same refund is been permitted. But within itself, the government has maintained its administration to limit the refund of unused goods or services since the same might notify.
In this period the government has limited the refund of the following-
- Case Services – Services specified in sub-item (b) of item 5 of schedule II of the CGST Act, 2017.
- Goods Case –
- Coal
- Rail locomotives, railway or tramway coaches;
- All edible oils like soya bean oil, groundnut oil, olive oil, and palm oil
The scope of services has been diminished by the government on which the refund shall be rejected. It has vide NN 15/2023-CTR dated 19-10-2023, with effect from 20-10-2023, remarked that on civil structure construction service, the refund of inverted duty structure is permitted.
Now the name of the services has been changed by the government on which refund of inverted duty structure shall get refused and removed the services of civil structure construction services and maintained words ‘building or complex construction service’ of sub-item (b) of item 5 of schedule II of the CGST Act, 2017 to draw such change.
GST Section 54(3): Rules on Refund of Unused Credit for Imitation Zari Thread or Yarn Made of Metallized Polyester Film or Plastic Film
From 20/10/2023 the government refused the GST ITC refund as the inversion on such goods available as per Sec 54(3). The same limitation has been introduced by the government since the same has specified that these goods shall get taxed at a 5% GST rate.
