Impact on Service Providers with an amendment in GST Rule 62

Last updated on May 14th, 2021 at 11:14 am

Impact on Service Providers due to amendment in GST Rule 62

Overview

To reduce the compliance burden and pay lower rates of taxes, small taxpayers were provided with an option to register for composition levy u/s 10.

Only a specified class of taxpayers (i.e. traders, manufacturers with certain exceptions, and restaurants) can register to pay tax under the composition levy provided all the conditions stipulated u/s 10 are satisfied.

In order to extend the benefit of paying tax at concessional rates, CBIC notified those small taxpayers who did not qualify u/s 10 could also avail the benefit of paying tax at a concessional rate of 6%,  if all the conditions stipulated in CGST(Rate) notification no. 2/2019 dated 07.03.2019 were satisfied.

Read here >> Composition scheme for service providers

Read here>> How service providers can avail the benefit of paying tax at concessional rates?

What was the benefit of paying tax as per CGST (Rate) Notification no. 2/2019 dated 7th November 2019?

The only benefit was a relative reduction in compliance burden for small taxpayers who were otherwise required to furnish the monthly returns.

In my opinion, very few small taxpayers would have availed the benefit of paying tax @ 6% [3% CGST + 3% SGST] which was to be borne by them from their pocket. They were required to issue the bill of supply and not the tax invoice.

Note: CGST Rule 62 was amended to exclude the above taxpayers from filing the returns prescribed vide a CGST Notification no. 82/2020 dated 10th November 2020.

Which forms are prescribed under CGST Rule 62?

CGST Rule 62 prescribes two types of return

• Quarterly Statement providing the payment details of self-assessed tax in Form GST CMP-08. (Click here to check the upcoming due date for payment)

• A yearly return providing the invoice-wise details of inward supplies and consolidated details of outward supplies in Form GSTR-4. (Click here to check the upcoming due date)

Who can file returns and make payments as per CGST Rule 62?

There were two types of taxpayers who were permitted to furnish the return in Form GSTR 4 and make quarterly payments in GST CMP-08.

• A taxpayer who has registered for composition levy u/s 10.

• A taxpayer who was availing the benefit of paying tax as per CGST(Rate) Notification no. 02/2019 (Note 1) (Note 2)

Note 1: The benefit of return filing as per CGST Rule 62 has been withdrawn vide a CGST Notification no. 82 dated 10th Nov 2020.

Note 2: They may continue to pay tax @ 6 % but return filing will be the same as the regular taxpayer.

Which returns the taxpayers who were availing the benefit of paying tax as per notification 02/2019 had to file for the financial year 2020-21?

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Note 3: Filing GST Annual Return in Form GSTR 9 was made optional for FY 17-18, FY 18-19 & FY 19-20 for the taxpayers whose annual aggregate turnover was up to Rs 2 Crores.

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CA Ankita Khetan

Founder at Financepost.in

Chartered Accountant in practice, DipIFRS (from ACCA, UK), Post Graduate in Commerce, Certified Independent Director (from IICA), and holds a certification in Forex and Treasury Management course (by ICAI).

She can be contacted at info.financepost@gmail.com

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