Gist of changes in GST from 1st October 2022

Gist of changes in GST from 1st October 2022

The CBIC by issuing Notification No. 18/2022-Central Tax dated 28.09.2022, has appointed 1st October, 2022 to be the date for applicability of changes proposed by the Hon’ble Finance Minister in her Budget Speech announced on 01.02.2022 in relation to Goods and Service Tax Act. In accordance to this,

Section 100 to section 114 (except clause (c) of Section 110 and section 111) of the Finance Act, 2022 (6 of 2022) shall be applicable w.e.f. 01.10.2022.

The gist of changes are discussed as under:

1.Input Tax Credit:

• Insertion of Clause (ba) in section 16(2) to restrict the amount of ITC, on the basis of eligibility or otherwise as per amended/ new FORM GSTR-2A/2B of the recipient under section 38 of the CGST Act.
• Omission of Section 42, 43 and 43Ae., matching, reversal, reclaim of ITC, reclaim of reduction in output tax liability and the procedure for furnishing return and availing ITC.
• Extension of Date for availment of ITC by substituting Section 16(4) and Section 34: Availment of Input Tax Credit, Issuance of Credit Note and any rectification in return can be done till 30thNovember of subsequent year or Annual Return whichever is earlier.

Earlier, the last date to avail ITC, to avail tax benefit as per credit note(s) issued as well as to rectify errors or omission in return furnished under Section 37 (Form GSTR-1), Section 39 (Form GSTR-3B) & Section 52 (Form GSTR-8 for TCS) is earlier of –

a. Due date of furnishing of return for the month of September following the relevant financial year; or

b. Date of furnishing of relevant annual return.

Now, relaxation is provided in last dates of all the above by extending last date from erstwhile due date of furnishing of return for the month of September (which was 20th October) to 30th November of next financial year.

• Substitution of Section 38, to impose restrictions on availment of input tax credit on inward supplies: This provides for amended/new Form GSTR-2A/2B where details of inward supplies is communicated to the taxpayer with a bifurcation as to which ITC is admissible to the taxpayer and what all ITC cannot be taken by a taxpayer owing to reasons, such as –

a. Vendor/Supplier has defaulted in payment of output taxes; or,

b. Output tax shown by vendor/supplier in its GSTR-1 exceeds by output tax shown in GSTR3B by a prescribed limit; or,

c. Vendor has availed ITC more than what is admissible to him, by a prescribed limit.

• Substitution of section 41:to provide that input tax credit can be availed on self-assessed basis, subject to conditions that tax is paid by the supplier. Further, it is amended to bring provision for reversal of ITC (with interest) in case where tax thereon is not deposited by the supplier/vendor with Government exchequer and re-availment thereof in future upon supplier/vendor depositing the tax with Government exchequer.

Earlier, as per Section 41 of the CGST Act, the ITC was availed ‘provisionally’ in E-credit ledger on self-assessment basis.

2. Filing of Returns:

• Insertion of new Clause 4 under Section 37: Restriction from filing of return in FORM GSTR-1 for a month/quarter, if return in FORM GSTR-1 for any of the previous month/quarter is not filed.
• Amendment in Section 39(5): Due date for furnishing the return by a non-resident taxable person shall be 13th of the next month. Earlier to this, return to be filed by 20th of the next month.
• Substitution of Proviso to Section 39(7): An option is provided to the taxpayer to pay either the self-assessed or an amount as may be prescribed in order to file return in FORM GSTR-3B. Presently, GSTR-3B cannot be filed by a taxpayer till the time the self-assessed tax as per GSTR-3B is not paid by such taxpayer to Government exchequer.
• Insertion of new proviso to Section 39(10): Restriction has been added, for filing return in FORM GSTR-3B for a particular period cannot be filed until the return in FORM GSTR-1 of that month/quarter is not filed.

3. GST Registration:

Amendment in scenarios wherein proper officer can cancel the GST registration of a taxpayer under Section 29(2)(b) and (c):

The Proper officer can proceed to cancel the registration if the composition taxpayer did not file the return in FORM GSTR-4 for a financial year beyond 3 months from the due date of furnishing of the said return.

In case of persons other than paying tax under composition scheme, GST registration can be cancelled by the proper officer for the continuous tax period as may be prescribed. Prior to this, GST registration can be cancelled when no GST return is filed by such assesses for a continuous period of 6 months.

4. GST Refund:

Amendments & insertion in refund provisions relating to time line, withholding, sanction of refund – Section 54(10), clause 2(ba) of explanation to section 54, Section 55.

• Refund of balance in E-cash ledger: Due to non-availability of any mechanism and column in GSTR-3B, refund applications under this category are being filed and processed through a separate refund application in Form RFD-01 (i.e., similar to other applications) and not through GSTR-3B and thus, this amendment is brought to rectify the statute.
• Time period for filing refund under sub-section (2) of Section 54 i.e. Refund claimed by a specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55 extended from six month to 2 years.
• Power to withhold refund application of a taxpayer which was erstwhile available only in case of refund filed under sub-section (3), i.e. in cases of refund of accumulated ITC on account of ‘zero rated supplies’ and ‘inverted duty structure’ has now been extended to all refund applications

However, the proper officer will now be empowered to either withhold refund application of a taxpayer or deduct an amount from the refund sought/admissible, in case of all refund applications, irrespective of the category under which such refund is filed by the taxpayer.

• Specific ‘relevant date’ for the purpose of filing refund claim defined for cases wherein zero-rated supply is made to SEZ unit or developer. Presently, it falls under residual sub-clause (h), i.e. last date of filing refund in case of zero rated supplies to SEZ is two years from the ‘date of payment of tax’.

However, now the last date of filing refund in case of zero rated supplies to SEZ shall be two years from the ‘the due date of furnishing GSTR-3B in which such supplies was made.

5. Late Fees:

Introduction for delay in filing the GSTR-8 i.e. TCS Return as well under Section 47(1):

Imposition of late fee for delayed filing of return viz. GSTR 8 under section 52 of the CGST Act, 2017.

Late fees as per Section 47(1) is Rs. 100 per day (of CGST & SGST each) subject to a maximum of Rs. 5,000/- (of CGST & SGST each)