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Major changes in GST by Budget 2022

 

1. More Restrictions imposed for availing ITC

[Clause 99 & 103 of Finance Bill 2022]

[Section 16 & 38 of CGST Act]

Clause (ba) is being inserted in section 16(2) to provide additional condition for claiming ITC by a buyer that ITC with respect to an invoice can be availed by buyer only if such ITC has not been restricted in the details communicated to buyer in the form of auto generated statement (i.e. GSTR-2B) u/s 38 of CGST Act.

Also, section 38 has been substituted to provide that now, the auto generated statement of ITC (i.e. GSTR-2B) shall consist of two below major components.

(a) details of ITC which may be availed; and

(b) details of ITC which cannot be availed in respect of invoices furnished u/s 37(1) -

i) by any registered person within such period of taking registration as may be prescribed; or

ii)  by any registered person, who has defaulted in payment of tax and where such default has continued for such period as may be prescribed; or

iii) by any registered person, the output tax payable by whom in accordance with the statement of outward supplies furnished by him under the said subsection during such period, as may be prescribed, exceeds the output tax paid by him during the said period by such limit as may be prescribed; or

iv) by any registered person who, during such period as may be prescribed, has availed credit of input tax of an amount that exceeds the credit that can be availed by him in accordance with clause (a), by such limit as may be prescribed; or

v) by any registered person, who has defaulted in discharging his tax liability in accordance with the provisions of sub-section (12) of section 49 subject to such conditions and restrictions as may be prescribed; or

vi) by such other class of persons as may be prescribed.

The Main intention behind this amendment is to break the fraudulent ITC chain of dealers causing great loss to the nation. However this amendment is going to bring lot of difficulties to genuine buyers also where their supplier does not discharge his GST liability properly.

In a number of judgments, it has been held that recipient cannot be held responsible for the default of supplier in paying his taxes, if the transaction is a genuine one. So the proposed amendment shall cover these cases also and shall have adverse effect on genuine buyers / recipients.

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2. Extension of time limit for availing ITC.

[Clause 99 of Finance Bill, 2022]

[Section 16 of CGST Act]

Section 16(4) is being amended to provide time limit for availing ITC in respect of invoices or debit note pertaining to a Financial Year upto 30^th November of the following financial year.

Earlier the time limit was due date of September month i.e. 20^th October / 22^nd October / 24^th October as the case may be.

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3. Tightening the provisions for cancellation of Registration by officer

[Clause 100 of Finance Bill, 2022]

[Section 29 of CGST Act]

For Composite Dealer

Section 29(2)(b) is being amended to provide for cancellation of registration of a composite dealer if he fails to furnish return for a financial year beyond 3 months from the due date.

Earlier the registration was liable to be cancelled if dealer does not furnish return for three consecutive tax periods. This amendment is being made because earlier composite dealers was liable to file return on quarterly basis but now they are liable to file return on annual basis. So 3 tax period would literally mean 3 years and this was not the intention of legislatures. Therefore this amendment was necessary.

For other than composite dealer

Earlier the registration was liable to be cancelled if dealer does not furnish return for a continuous period of six months.

Now, section 29(2)(c) is being amended to provide for cancellation of registration of dealer if he fails to furnish return for such continuous period as may be prescribed. (Therefore it seems, government is planning to reduce this period of six months to a lower figure say 2 or 3 months).

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4. Extension of time limit for issuing credit note.

[Clause 101 of Finance Bill, 2022]

[Section 34 of CGST Act]

Section 34(2) is being amended to provide time limit for issuing credit note in respect of supplies made in a Financial Year upto 30^th November of the following financial year.

Earlier the time limit was the same as the return filing for September month of the following financial year.

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5. Amendment in the procedure for filing return of outward supply.

[Clause 102 of Finance Bill, 2022]

[Section 37 of CGST Act]

(i) Section 37(3) is being amended to provide extended time limit upto 30^th November of the following financial year for rectification of errors in respect of outward supplies furnished u/s 37(1) i.e. GSTR-1.

(ii) Section 37(2) is being omitted to remove the requirement of acceptance or rejection of invoices furnished and communicated to recipient.

(iii) Section 37(4) is being inserted to mandate the chronological monthly filing of return of outward supply. E.g. Return of October month cannot be filed, if return of September month is not filed.

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6. Amendment in provisions for furnishing of Return u/s 39.

[Clause 104 of Finance Bill, 2022]

[Section 39 of CGST Act]

(i) Section 39(5) is being amended to reduce the time limit for filing GSTR-5 by Non Resident taxable person by 13^th of the following month instead of 20^th of the following month.

(ii) Section 39(7) is being amended to provide an option to taxpayers furnishing return under proviso to sub-section (1), to pay taxes either on actual self assessment basis (as being done till now) or in an alternate way that will be prescribed by government later.

(iii) Section 39(9) is being amended to provide for an extended time up to 30th November of the following financial year, for rectification of errors in the return furnished u/s 39.

Earlier the time limit was the same as the return filing for September month of the following financial year.

(iv) Section 39(10) is being amended to provide that return u/s 39 of a particular period cannot be filed by taxpayer unless the return u/s 37 is filed for that period.

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7. ITC reversal and interest payment by buyer in respect of supplies on which supplier defaults in making payment.

[Clause 105 of Finance Bill, 2022]

[Section 41 of CGST Act]

(i) Changing concept ITC claim by buyer from provisional basis to self assessed basis.

(ii) Newly replaced Section 41 also provides for interest liability on buyer along with ITC reversal in respect of supplies on which his supplier does not pay taxes.

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8. Removal of two way acceptance and rejection communication process for invoices and credit notes under GST.

[Clause 106 of Finance Bill, 2022]

[Section 42, 43 & 43A of CGST Act]

Section 42, 43 & 43A are being omitted to remove the two way acceptance and rejection communication process for invoices and credit notes under GST.

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9. Levy of late fee on GSTR-8

[Clause 107 of Finance Bill, 2022]

[Section 47 of CGST Act]

(i) Section 47(1) is being amended to provide for penalty for delay in filing GSTR-8 u/s 52.

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10. Payment of taxes

[Clause 109 of Finance Bill, 2022]

[Section 49 of CGST Act]

(i) Section 49(10) is being amended to allow transfer of any amount of tax, interest, penalty, fee etc. available in electronic cash ledger a registered person to the electronic cash ledger of a distinct person registered under same PAN.

(ii) Section 49(12) is being inserted to provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger. It means the balance liability has to be discharged in cash.

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11. No Interest on wrong ITC availment if not utilized by taxpayer.  

[Clause 110 of Finance Bill, 2022]

[Section 50 of CGST Act]

Section 50(3) is being substituted w.r.e.f. 01.07.2017 to provide that interest to be levied in cases where ITC has been wrongly availed and utilized by taxpayer. That means if taxpayer has mistakenly availed wrong ITC but not utilized it then interest shall not be levied. The same view has been taken by various courts also. Therefore this amendment has been made to stop the further litigation in court of law.

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12. Extension of time limit for rectification of errors in return furnished in GSTR-8

[Clause 111 of Finance Bill, 2022]

[Section 52 of CGST Act]

Section 52(6) is being amended to provide an extended time limit up to 30th November of the following financial year for rectification of errors in the return furnished in Form GSTR-8 u/s 52(4).

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13. Refund of Tax

[Clause 112 of Finance Bill, 2022]

[Section 54 of CGST Act]

(i) Refund Application by specialized agency of UNO - Section 54(2) is being amended to provide the time limit for claiming refund of tax paid on inward supplies u/s 55, as two years instead of six months.

(ii) Relevant date notified as the due date of for furnishing of return u/s 39 in case of zero-rated supply to a Special Economic Zone developer or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies themselves, or as the case may be, the inputs or input services used in such supplies.

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14. Amendment in Notification No. 13/2017 – Central Tax dated June 28, 2017

[Clause 115 of Finance Bill, 2022]

[Section 50 of CGST Act]

Notification is being amended to notify the rate of interest u/s 50(3) of CGST Act as 18% instead of 24% w.r.e.f. 01.07.2017.

Similar amendment is being made in Notification No.6/2017 – Integrated Tax & Notification No.10/2017 – Union Territory Tax also.

 

:

Budget Changes

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