Did you know, the Central Government has recently issued multiple Notifications to make several changes in GST law. We understand that it is necessary for you to stay up-to-date with these changes and therefore we have combined all of them at one place in the form of this article.
Read this full blog to know each and every change made by the Central Government, in full detail.
A. Amendment in the Central Goods and Services Tax Act, 2017 (‘CGST Act’)
Time limit to avail Input Tax Credit on Debit Notes:
For purpose of computing time limit to avail Input Tax Credit (‘ITC”) on Debit Notes, linkage of Debit Notes with original Tax Invoices has been removed. Accordingly, taxpayers can avail ITC on Debit Notes till September of succeeding Financial Year (‘FY’) or annual return of FY in which Debit Notes are issued, whichever is earlier.
Registration
- Proper Officer is being empowered to cancel / suspend registration of voluntarily registered persons in specified situations similar to normal registered persons.
- For delay in filing application for revocation of cancellation of registration by taxpayer, Additional / Joint Commissioner and thereafter Commissioner have been empowered to condone delay of 30 days each.
Offences and Penalties:
Enabling provisions are enacted to penalize person who retains benefit of following transactions or on whose instance such transactions are conducted:
- Supply of goods or services without issuance of Invoice or issuance of incorrect or false Invoice;
- Issuance of Invoice or Bill of Supply without supply of goods or services;
- Claim of ITC without actual receipt of goods or services;
- Improper availability / distribution of ITC under ISD mechanism
Penalty would be equivalent to tax evaded or ITC availed or passed on in such cases.
B. Amendment in the CGST Rules
Restriction on unmatched ITC reduced to 5 percent of matched ITC (from 10 percent)
- Rule 36(4) of the CGST Rules restricts availability of ITC on un-uploaded Invoices and Debit Notes to 10 percent of ITC on uploaded Invoices and Debit Notes. This has now been reduced to 5 percent.
- Further, only Invoices and Debit Notes where suppliers have furnished (filed) GSTR-1 will be considered instead of uploaded Invoices and Debit Notes.
Payment of minimum 1 percent liability through Electronic Cash Ledger
- Rule 86B is inserted in the CGST Rules restricting taxpayers from using more than 99 percent ITC for discharging output GST liability. In other words, taxpayers will need to pay minimum 1 percent of their GST liability in cash.
- This restriction will apply to taxpayers whose value of taxable supply (other than exempt and zero-rated supply) in a month exceeds Rs. 50 Lakhs.
- Taxpayer or whose Managing Director, Wholetime Director, any of two partners have paid Income Tax exceeding Rs. 1 Lakh in the preceding 2 financial years;
- Taxpayer received refund of unutilized ITC exceeding Rs. 1 Lakh in preceding financial year;
- Taxpayer who discharged output tax liability in cash exceeding 1 percent of total liability in a financial year (when applied cumulatively); and
- Government Department, Public Sector Undertaking, Local Authority or Statutory Body.
Restriction on filing GSTR-1 where GSTR-3B is not filed:
- Facility to file GSTR-1 will be blocked where taxpayer has not filed GSTR-3B for preceding two tax periods. Similar restriction would be imposed on taxpayer filing quarterly returns.
- This change is effective from December 22, 2020.
Reduction in validity of E-Way Bill:
Validity of E-Way Bill is narrowed to one day for 200 kms compared to earlier prescribed limit of one day for 100 kms.
Cancellation of registration in certain cases:
Additional circumstances have been laid out which can trigger cancellation of registration viz:
- If taxpayers avail ITC in contravention of Section 16 of the CGST Act or corresponding Rules;
- If details of outward supplies declared in GSTR-1 exceed than corresponding figures in GSTR-3B of same month for one or more tax periods; and
- Violation of Rule 86B.
This change is effective from December 22, 2020.
Suspension of registration:
Proper officers have been empowered to suspend registration where there are significant differences or anomalies between:
- GSTR-1 and GSTR-3B;
- ITC availed in GSTR-3B and data available in GSTR-2A / GSTR-2B; and
- Such other analysis as recommended by GST Council.
- Proper officer can suspend taxpayer’s registration even without according an opportunity of hearing to taxpayer.
- Proper officer needs to issue Form GST REG-31 to intimate taxpayers of aforesaid discrepancies and give show cause to taxpayer why its registration should not be cancelled.
- No refund will be granted to the taxpayer during the period of suspension of registration.
- This change is effective from December 22, 2020.
Want to know in detail about these changes or have any doubts about the same, then feel free to ask us by sending an email to contactus@webtel.co.in or by simply commenting on this article.