GST Schedule-IV and Schedule-V (Latest Changes)

There have been many changes in GST Schedule IV and Schedule V. In our previous article, we have already written about the latest changes and revisions in GST Schedule III. This Article on GST Changes was contributed by CA Anand Sharma. In GST Schedule V, there are total of 5 new changes which need to be taken into consideration.

GST Schedule-IV and Schedule-V (Latest Changes)

Changes in GST Schedule IV:

In the previous GST Law, Schedule IV specified the activities or transactions in respect of which the Central Government, a State Government or any Local Authority shall not be regarded as a taxable person.

However, in the revised GST Law, Schedule IV specified activities or transactions undertaken by the Central Government, State Government or any local authority which shall be treated neither as supply of goods nor supply of services.

Although, the heading of the Schedule has been changed but it does not has significant impact with the only difference that earlier government was not considered as taxable person for certain activities while now the transactions will not be considered as supply of goods/services.

It appears that the earlier language indicated that for certain transactions, government will not be taxable person but since there is concept of reverse charge mechanism, there was possibility of confusion. The new law removes the probability of any confusion as regards statutory functions performed by the government.

In the earlier GST draft Law, in case of ‘assignment of right to use any natural resource’ when such right was assigned by the Government or Local authority, onetime charges paid were made exempt but an explanation was provided wherein it was mentioned that the periodic payments made every year for the assignment of right to use any natural resource shall be liable to tax.

This explanation has been removed from the revised law. Deletion of this explanation does not bring any change in taxability of the periodic payments as it is very much clear from the proviso itself that only one time charges shall be exempt. The explanation was merely for clarification purpose and removing the same does not bring any sort of change.

No other change has been made in the revised draft in context of this schedule and it has been kept identical to earlier law. Also it is worthwhile to mention that the provisions mentioned in these schedules are exactly parallel to current Service Tax Laws.

Changes in GST Schedule V

In the previous GST draft law, the persons to be registered were specified in schedule III but in revised GST law, these have been transferred to schedule V. Changes made therein are discussed hereunder:-

1. In the revised GST Draft Law, there is substantial relaxation in the threshold limit for getting registered under GST Law. In earlier GST draft law, the limit for registration was nine lakh rupees which have been increased to twenty lakh rupees. It is an appreciable step from Government’s side. As already told by us in our earlier GST updates, this limit has been enhanced by GST council which is reflected in this revised GST update also.

2.  In revised GST draft law a new proviso has been inserted which reads as under:-

“PROVIDED that where such person makes taxable supplies of goods and/or services from any of the States specified in sub-clause (g) of clause (4) of Article 279A of the Constitution, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees.”

The insertion of this proviso reduces the threshold of registration if the taxable supplies are made from states of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand. The threshold of registration would be ten lakh rupees only instead of twenty lakh rupees.

3. In new GST draft law the need of registration has been divided into two categories which is special category states and non special category states. For non special category the registration limit is as mentioned in above points and for the special category states the limit is ten lakh rupees.

The government in earlier GST draft had explicitly specified that for the NE states including Sikkim the registration limit shall be four lakh rupees, but in new GST draft law though the limit for special category states has been increased but it is nowhere mentioned that special category states shall be North Eastern states including Sikkim. Hence, in future there is a possibility that government may specify a new list of states for this threshold limit.

4. In the list of persons who are required to get registered irrespective of the threshold limit following entries have been added:-

a. Persons who are required to pay tax under sub-section (4) of section 8, irrespective of the threshold specified under paragraph 1;

b. Persons who are required to collect tax under 56, whether or not separately registered under the Act;

c. Every person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person.

Hence these people have to get registered even if they are not crossing the threshold limit. Looking into each entry separately:-

a. The persons covered under section 8(4) are the electronic commerce operators supplying specified services.

b. Every electronic commerce operator who is not an agent is required to collect tax at source and deposit it to government. Such operator is required to be registered under the GST Law without any threshold limit.

c. A foreigner providing services of online information and database access services to a person in India shall also be required to register under this act. It is pertinent to mention that recently a similar provision was bought into current Service Tax laws. Therefore by bringing the parallel change in GST law government removes scope of any ambiguity.

5. Lastly the entry relating to aggregator providing services under his brand name or his trade name has been removed from the list of person requiring registration irrespective of the threshold limit. Hence he shall not be required to get registered if threshold limit does not exceed the specified turnover.


These Changes in GST Schedule IV and V are not exclusive. We have only listed only the important and substantial changes.