Federation of Automobile Dealers Association welcomes amendment to CGST Act
The new rule which came into effect from March 29,2019 not only nullifies the impact from the changes brought in by the newly introduced Section 49A but even changes the provision regarding manner of credit utilisation existent before Feb 1, 2019, said Federation of Automobile Dealers Association (FADA) in a statement.
“After the 34th GST Council Meeting, CBIT had finally come out with a notification on March 29 with respect to the same,” said the statement.
As per the amendment, a new rule has been inserted as Rule 88A. The rule clearly states that Input of IGST has to be first used against output of IGST followed by set-off of IGST against either CGST or SGST as per one’s requirement. At the end, IGST credit has to be nullified.
The earlier amendment, which introduced a new section (49A), had changed the method of tax payment and could have therefore had a major impact on the cash flow of auto retail industry. According to that law, IGST credit had to be first utilised and when such credit is exhausted only then the credit of CGST and SGST if any, could be utilised against output tax liability.
Since a majority of auto dealers purchase vehicles from companies on IGST and sell them to the end customers on SGST, they would not have been able to set it off by utilizing the existing credits as according to the amended law IGST had to be used first for setting off IGST followed by CGST and the remaining for SGST. This anomaly has now been sorted out.
F A D A President, Ashish Harsharaj Kale said, “F A D A expresses its deep gratitude to the government for taking up this issue with such urgency and helping 15,000 Dealers across the country get immediate relief. The new amendment would have otherwise put the Dealers under huge financial burden but by providing an immediate solution, this has been avoided.”