To increase the revenue collection of the government ,to grant a bull like power to the department and to further make difficult for the taxpayers and the professionals the Government has issued 3 Notifications out of which 2 are very critical as the same will have an extra effect on the working capital of the business thereby increasing the compliance burden of the taxpayer and making GST a GOD SAVE TAX for the taxpayers.
In this article an attempt is made to know the amendments and understand the same.
1st we will understand the 2 critical notification.
a. Notification No. 92/2020 – Central Tax which makes the amendments in the act.
b. Notification No. 94/2020 – Central Tax which makes the amendments in the rule.
Notification No. 92/2020-Central Tax dated 22nd December, 2020
The Central Government provides the effective date for the sections 119, 120, 121, 122, 123, 124, 126, 127 and 131 of the Finance Act, 2020 as 1st January 2021.
For ease of understanding all the sections of Finance Act 2020 are analyzed as under
| Section of Finance Act 2020 | Section of GST In which Amendment is Made / Section Main Heading | Analysis |
| 119 | 10 / Composition Scheme | This provision has curtailed the eligibility for composition scheme . The persons now cannot be eligible for composition scheme if
i. he is engaged in making any supply of goods or services which are not leviable to tax under this Act; ii. he is engaged in making any inter-State outward supplies of goods or services; iii. he is engaged in making any supply of goods or services through an electronic commerce operator who is required to collect tax at source under section 52; |
| 120 | 16(4) / Max. time to avail ITC | Now Section 16(4) allows the registered persons to claim ITC of the debits notes relating to the previous year issued in current year even after the due date of Sept GSTR 3B or Annual return which-ever is earlier. |
| 121 | 29(c) / Cancellation [or suspension] of registration | The law now allows a registered person to cancel the registration (voluntarily) even while running the business |
| 122 | 30 / Revocation of cancellation of registration. | The Additional / Joint Commissioner can now condone the delay in filling application for revocation of registration for max. 30 days and Commissioner can further condone the delay for 30 days. |
| 123 | 31 / Tax Invoice | The government can now specify the categories of services or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed |
| 124 | 51 / Tax deduction at source | Certificate will be issued in form specified, further no late fees will be charged if the government fails to issue TDS Certificate |
| 126 | 122 / Penalty for certain offences | Any person who retains the benefit of a transaction and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on |
| 127 | 132 / Punishment for certain offences. | The government wants to screw and penalize even the persons who retains the benefit intentionally or unintentionally the benefit or at whose instance such transaction is conducted or fraudulently avails input tax credit without any invoice or bill |
| 131 | Schedule II | Have removed the word whether of not for a consideration from the transfer of assets. |
Moving on to the other critical notification
Notification No. 94/2020-Central Tax dated 22nd December, 2020
This is making amendments in CGST Rules. The amendments are as follows
| Rule No. / Rule Name | Effective Date | Analysis |
| 8(4A) / Application for registration | To be notified later | Now to apply a new registration the taxpayer has to undergo |
| (a) biometric-based Aadhaar authentication and taking photograph, , if he has opted for authentication of Aadhaar number or | ||
| (b) taking biometric information, photograph and verification of such other KYC documents, if he has opted not to get Aadhaar authentication done + physical verification | ||
| along with the verification of the original copy of the documents uploaded with the application in FORM GST REG-01 at one of the Facilitation Centres notified by the Commissioner and the application shall be deemed to be complete only after completion of the process laid down. | ||
| This means that the registration must only be done at the Facilitation Centres notified by the Commissioner & biometric based information & taking the photograph which will again add on the cost of registration for the applicant . | ||
| 9 / Verification of the application and approval | 22/12/2020 | Now for a new registration the department will be taking 7 days instead of 3 days (if Aadhar Authentication is done) else 30 days after physical verification. |
| The Physical verification can now even be done by the proper officer when he deems it fit to carry out physical verification of places of business, and then the registration shall be granted within thirty days of submission of application, after physical verification of the place of business in the presence of the said person, and can verify any other document he wants too. | ||
| Increase in time limit will again add on to the delay in starting of business further will be adding on to the litigation. | ||
| 21/ Registration to be cancelled in certain cases | 22/12/2020 | The registration will be even cancelled if |
| – he avails input tax credit in violation of the provisions of section 16 of the Act or the rules made thereunder; or
– furnishes the details of outward supplies in FORM GSTR-1 for one or more tax periods which is in excess of the outward supplies declared by him GSTR 3B; or – violates the provision of rule 86B.‖. |
||
| Power granted for the officers to cancel the registration even if minute deficiency is noticed | ||
| 21A / Suspension of Registration | 22/12/2020 | To suspend the notification the proper officer is not bound to give the opportunity of being heard. |
| Further the registration will be suspended after giving 30 days’ time to explain the reason when there is significant differences or anomalies in GSTR 1 & GSTR 3B & GSTR 2A | ||
| Refund will also be withheld when your registration is suspended | ||
| will be Adding to minute litigation issues | ||
| 36 / Documentary requirements and conditions for claiming input tax credit | 01/01/2021 | Now the ITC can even be availed based on the invoices uploaded or furnished on the Invoice Furnishing Facility (an option for those who opt for QRPM Scheme) |
| The 110% rule will now be changed 105% rule i.e., the maximum ITC which you can avail will be restricted to {a – ITC as per Books} or { 105% of the invoices reflected in GSTR 2A | ||
| will be Adding to the burden of the registered taxable person | ||
| 59 / GSTR 1 / Invoice Furnishing Facility (IFF) | 22/01/2020 | The registered person will not be allowed to furnish details of GSTR-1 or in IFF if |
| – He has not filed his GSTR-3B for preceding 2 Months – in case of monthly filers of GSTR 3B | ||
| – Has not filed GSTR-3B for preceding periods – in case of registered persons opting for QRMP | ||
| -he has not furnished GSTR 3B for the preceding month to whom rule 86B (99% rule – discussed latter) applies | ||
| 138 / Information to be furnished prior to commencement of movement of goods and generation of e-way bill |
01/01/2021 | The validity of the e-way bill has been shortened. Earlier for every100kms e-way bill would be valid for 1 day & now for every 200kms e-way bill will be valid for 1 day |
| The registered person now has to keep extending the validity of the eway bill else the e-way bill would expire and the same would lead to penalty & confiscation | ||
| 138E / Restriction on furnishing of information in PART A of FORM GST EWB-01 | 22/01/2020 | The registered person will not be able to generate e way bill if |
| – he has not furnished returns for 2 tax periods | ||
| – whose registration is suspended | ||
| Insertion of Form GST REG 31 | the government has introduced a new form naming “Intimation for suspension and notice for cancellation of registration” to save the proper officers from issuing incorrect notices. The contents of notice are very dangerous | |
Now lets discuss the most important rule in detail
Rule 86B : Restrictions on use of amount available in electronic credit ledger.-
- This rule prevails over all the other rules in the CGST Rule
- This rule will be effective from 01/01/2021
- It says that the registered person shall not use the amount available in electronic credit ledger to discharge his liability towards output tax in excess of 99% of such tax liability,
- This rule is not applicable
- When the value of taxable supply during a month is up to 50 lakhs (Value of taxable supply will not include exempt supply & zero rate supply)
- To the proprietor or Karta or the managing director or any of its two partners, whole-time Directors, Members of Managing Committee of Associations or Board of Trustees who,
- have paid more than one lakh rupees as income tax in each of the last two financial years for which the time limit to file return of income under subsection (1) of section 139 of the said Act has expired;
- Where the registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilised input tax credit under zero rated supplies made without payment of tax
- Where the registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilised input tax credit under inverted duty structure;
- the registered person has discharged his liability towards output tax through the electronic cash ledger for an amount which is in excess of 1% of the total output tax liability, applied cumulatively, up to the said month in the current financial year;
- the registered person is –
- Government Department;
- a Public Sector Undertaking;
- a local authority
- a statutory body:
The last but not the least
Notification No. 93/2020-Central Tax dated 22nd December, 2020
The late fee payable for FORM GSTR-4 for the Financial Year 2019-20, from the 1st day of November, 2020 till the 31st day of December, 2020 shall stand waived for the registered person whose principal place of business is in the Union Territory of Ladakh
From the above it is seen that the GST law is being complicated day by day, thereby making it difficult for a practitioner to practice and to comply. In this hard times to come its better you hire a good professional to look after the compliance burden else the cost of penalty & unstability of the brain will be at a different level all together.
For any further clarification, feel free to contact CA Ajay Kumar Mundada @ ajaymundada1998@gmail,com
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