Key GST Changes Proposed in Union Budget 2023

Key GST Changes Proposed in Union Budget 2023

The Finance Minister Nirmala Sitharaman has presented the Union Budget 2023, by the budget speech. The budget proposed minor changes to tax policies, allocation of government spending, and initiatives aimed at boosting the economy and addressing social issues. The budget is an important move for the central government in light of the impending elections.

Among many measures in favour of salaried employees and the middle-class in the Direct tax-verse, some changes were also proposed to be introduced to the Goods and Services Tax Act, which include: –

Decriminalization of offenses

Section 132 and Section 138 of CGST Act were proposed to be amended, inter alia, to – raise the minimum threshold of tax amount for launching prosecution under GST from one crore Rupees to two crore Rupees, except for the offense of issuance of invoices without supply of goods or services or both;

Reduction in the compounding amount from the present range of 50 per cent to 150 percent of tax amount to the range of 25 per cent to 100 percent;

Decriminalization of certain offenses specified under clause (g), (j) and (k) of sub-section (1) of section 132 of Central Goods and Services Tax Act, 2017, which are obstruction or preventing any officer in discharge of his duties; deliberate tempering of material evidence;failure to supply the information were also proposed.

Facilitate e-commerce for micro-enterprises

Amendments are proposed to be made to Sections 10 and 122 of the CGST Act to enable unregistered suppliers and composition taxpayers to make the intra-state supply of goods through E-Commerce Operators (ECOs), subject to certain conditions.

Amendment to Schedule III of CGST Act, 2017

Paras 7, 8 (a) and 8 (b) were inserted in Schedule III of CGST Act, 2017 with effect from 01.02.2019 to keep certain transactions/ activities, such as supplies of goods from a place outside the taxable territory to another place outside the taxable territory, high sea sales and supply of warehoused goods before their home clearance, outside the purview of GST. In order to remove the doubts and ambiguities regarding taxability of such transactions/ activities during the period 01.07.2017 to 31.01.2019, provisions are being incorporated to make the said paras effective from 01.07.2017. However, no refund of tax paid shall be available in cases where any tax has already been paid in respect of such transactions/ activities during the period 01.07.2017 to 31.01.2019.

Return filing under GST

Sections 37, 39, 44 and 52 of CGST Act, 2017 are being amended to restrict filing of returns/ statements to a maximum period of three years from the due date of filing of the relevant return/statement.

Input Tax Credit for expenditure related to CSR

Section 17(5) of CGST Act is being amended to provide that input tax credit shall not be available in respect of goods or services or both received by a taxable person, which are used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013.

Sharing of information

A new section 158A in CGST Act was proposed to be inserted to enable sharing of the information furnished by the registered person in his return or application of registration or statement of outward supplies, or the details uploaded by him for generation of electronic invoice or E-way bill or any other details on the common portal, with other systems in a manner to be prescribed.

Amendments in section 2 clause (16) of IGST Act, 2017

Clause (16) of section 2 of IGST Act is suggested to be amended to revise the definition of “non-taxable online recipient” by removing the condition of receipt of online information and database access or retrieval services for purposes other than commerce, industry or any other business or profession so as to provide for taxability of OIDAR service provided by any person located in non-taxable territory to an unregistered person receiving the said services and located in the taxable territory. Further, it also seeks to clarify that the persons registered solely in terms of clause (vi) of Section 24 of CGST Act shall be treated as unregistered persons for the purpose of the said clause.

Online information and database access or retrieval (OIDAR) services

Clause (17) of section 2 of IGST Act is being amended to revise the definition of “online information and database access or retrieval services” to remove the condition of rendering of the said supply being essentially automated and involving minimal human intervention.

Place of supply in certain cases

Proviso to sub-section (8) of section 12 of the IGST Act is being omitted so as to specify the place of supply, irrespective of the destination of the goods, in cases where the supplier of services and recipient of services are located in India.