The government has proposed new amendments to the GST (goods and service tax) act to be approved by the Parliament and the state legislatures. If implemented, employers will soon be able to claim input tax credit (ITC) on facilities like food, transport and insurance provided to employees under any law.

The amendments, among other things, provide for a modification of reverse charge mechanism, separate registration for companies having different business verticals, cancellation of registration, new return filing norms and issuance of consolidated debit/credit notes covering multiple invoices.

The proposal is to allow employers to claim ITC for the supply of food, beverages, health services, life insurance, travel benefits renting or hiring of motor vehicles, given to employees, provided it is obligatory for them under any law. In cities like Delhi, the state law requires companies (like BPOs) to provide cab facilities to women for a night shift. It further said that ITC will be available on motor vehicles with a capacity of over 13 passengers.

The proposal also clarifies that the ITC will not be available on the supply of food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, renting or hiring of motor vehicles, vessels and aircraft, life insurance and health insurance. Additionally, it would not be available on membership of a club, health and fitness centre, and travel benefits extended to employees on vacation such as leave or home travel concession.

The amendments also propose that e-commerce companies will not have to seek registration under GST provided their annual turnover is less than Rs 20 lakh and are not required to collect tax at source under Section 52. "This is a taxpayer-friendly measure. Small e-commerce operators who are not required to collect tax at source under section 52 would now be eligible for availing the threshold exemption limit benefit for registration purposes," the government said while giving a rationale for the amendment.

Stakeholders have been invited by the government to give their comments on the draft proposals for amending GST Laws by July 15, 2018. On finalization of the amendments by the revenue department, it will move to the GST Council for approval. The Parliament and state legislatures will then decide the fate of the proposed amendments of the GST law.

Inputs from PTI