Quick Answer
Effective August 30, 2018, the CGST and IGST Act 2017 amendments introduced the bill-to-ship-to concept for services. By adding an explanation to Section 16(2) of the CGST Act, registered persons are now deemed to have received services provided to third parties on their direction, enabling the seamless flow of Input Tax Credit.
Much awaited changes in the CGST and IGST Act 2017 has become effective from 30th August 2018. One of such important amendment is Section 16(5) is Bill to ship to concept for Services which were earlier denied ITC credit due to absense of Bill to Ship to concept for Services
One of the conditions for availing GST ITC is the receipt of goods or services by him. In the case of “bill-to-ship to” situations, for the purposes of availing of ITC on goods by the registered person, a deeming provision is present for goods. By virtue of this deeming provision, the registered person would be deemed to have received the goods, even
when the same were delivered to any other person. Now this benefit has been allowed for services as well by including an explanation to Section 16(2) of CGST Act.
Extract of Amendment is produced below
In section 16 of the principal Act, in sub-section (2),––
(a) in clause (b), for the Explanation, the following Explanation shall be
substituted, namely:—
“Explanation.—For the purposes of this clause, it shall be deemed that
the registered person has received the goods or, as the case may be, services––
(i) where the goods are delivered by the supplier to a recipient or
any other person on the direction of such registered person, whether
acting as an agent or otherwise, before or during movement of goods,
either by way of transfer of documents of title to goods or otherwise;
(ii) where the services are provided by the supplier to any person
on the direction of and on account of such registered person.”;
Conclusion:
Concept of Bill to ship to in service was the need of the hour as many service providers were not able to transfer the input, this amendment puts a end to such situations and allows senseless flow of Input Credit, to know more about GST Registration contact us
The changes to the CGST and IGST Act 2017, which include the bill-to-ship-to concept for services, became effective on August 30, 2018. This amendment was highly anticipated and allows for the seamless flow of Input Tax Credit by recognizing the deemed receipt of services.
The primary benefit is that it allows registered persons to claim Input Tax Credit even when services are provided by a supplier to another person on the registered person's direction. Previously, this was denied because the bill-to-ship-to concept was only applicable to goods, hindering the flow of input credit.
The amendment was made to Section 16(2) of the CGST Act. By substituting an explanation within clause (b) of sub-section (2), the law now establishes a deeming provision where the registered person is considered to have received the services provided to a third party on their account.
Yes, following the amendment effective August 30, 2018, you can claim Input Tax Credit for services provided to any person on your direction and on your account. This deeming provision ensures that the registered person is treated as having received the services, facilitating a seamless flow of credit.
Under the new amendment to Section 16(2) of the CGST Act, if services are provided by a supplier to any person based on the direction of a registered person, the law deems that the registered person has received those services, thereby allowing them to avail of the relevant Input Tax Credit.