Recent Developments & Amendments in Goods and Services Tax

Self Certification basis instead of Annual Return / Reconciliation:

Through amendment in Section 44 of the CGST Act, the requirement for certification of reconciliation statement (GSTR-9C) by a Chartered accountant/ Cost accountant has been removed. It is provided that the annual return, which shall include reconciliation statement, will be filed on self-certification basis. Consequently, Section 35(5) of the CGST Act is also proposed to be omitted, which requires certification of reconciliation statement by a Chartered accountant/ Cost accountant.

Interest on Net Cash liability:

Sec 50 of CGST Act, 2017 has been amended to levy interest on unpaid taxes only to the extent of that portion paid in Cash i.e., through the Electronic Cash ledger. A clinical move for the taxpayers to reduce their tax and compliance burden wherein they were earlier supposed to pay interest on the entire portion of tax without allowing ITC.

ITC to be availed basis outward supplies uploaded by supplier

Insertion of a new clause (aa) in Section 16(2) of the CGST Act, to provide that ITC on invoice/ debit note may be availed only when the details of such invoice or debit note have been furnished by the supplier in the statement of outward supplies.

Zero Rated Supplies and Changes in Refund provisions

In this section now supply of goods or services is to be used for authorised operations only then refund will be given and he will be eligible under this section.

A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or LUT in accordance with the provisions of section 54 of CGST Act or rules made thereunder. Now, the option of payment route is now being discontinued except for certain category of person to be notified by government. The payment route of IGST was beneficial for exporters as the refund of credit on capital goods was allowed which is not allowed under LUT method.

• The foreign exchange remittance in case of export of goods would be linked with refunds claimed on such supplies.

Changes in E-way related Provisions:

1. With effect from 1 January 2021, the validity of an e-way bill has been reduced insofar as the erstwhile limit of 1 day validity for a distance of up to 100 kms has now been increased to 200 kms.

2. The GST portal will restrict e-waybill generation, if the businesses have not furnished the return whether in Form GSTR 1 or Form GSTR 3B for the consecutive two tax periods (instead of earlier two months).

Notifications:

E-invoicing – Notification No. 05/2021 – Central Tax dated 08^th March 2021:

E-invoicing provisions shall now be applicable for registered persons (other than SEZ Units and other specified persons) whose aggregate turnover exceeds INR 50 crores in any of the preceeding financial year commencing from 2017-18. This notification shall come into force w.e.f 01^st April 2021.

Mandatory HSN Code – Notification No. 78/2020- Central Tax dated 15.10.2020:

Under this amended Proviso, Notification No. 78/2020- Central Tax dated 15.10.2020 has been issued to make HSN code mandatory up to 4 digits in the B2B invoices with effect from 01.04.2021 issued by taxpayers whose aggregate turnover in the preceding financial year is upto Rs. 5 crores. For the taxpayers whose turnover in the preceding financial year is more than Rs. 5 crores, HSN code is mandatory up to 6 digits in invoices with effect from 01.04.2021.

Filing of Returns – Notification No. 82/2020 – Central Tax dated 10^th November 2020:

• Amendment in Rule 59 of CGST Rule :- Quarterly GSTR-1 Filer may file details of the invoices for 1st and 2nd month of quarter up to Cumulative value 50 lakh rupees through Invoice Furnishing Facility (IFF) up to 13th day of the following month.
• Amendment in Rule 60 of CGST Rule :- Details of Outward supplies IFF filed by suppliers shall be available in GSTR2A.
• GSTR 2B shall be available after the due date of furnishing the details of GSTR-1 and IFF Facility.

Extension of time limits – Notification No. 83/2020- Central Tax dated 10.11.2020:

• The time limit for furnishing details of outward supplies in FORM GSTR-1 of the CGST rules, 2017 for each tax periods extended till 11th day of the succeeding month.
• The time limit for furnishing the outward supplies in FORM GSTR-1 of CGST Rules, 2017 for the class of registered person to furnish quarterly return under the proviso to section 39(1) of CGST Act, 2017 extended till 13th day of month succeeding the such tax period.
• This notification shall come into force with effect of 1st January, 2021.

Availment of ITC on debit notes – Notification No. 92/2020 – Central tax dated 22.12.2020:

• Section 16(4) of the CGST Act has been amended to delink availment of ITC on debit notes with reference to the date of issuance of the original invoice.
• This would mean that the time limit for availing Input Tax Credit in case of debit notes shall not be required to be ascertained with reference to the date of the original invoice and the same shall be required to be calculated independently in accordance with the provisions of Section 16(4) of CGST Act, 2017.

Restriction on Availment of ITC – Notification No. 94/2020 – Central tax dated 22.12.2020:

Restriction on availment of Input Tax Credit (ITC) as per rule 36(4) of CGST Rules 2017 (limited to 105% of the matched credit w.e.f. 1st Jan 2021. The claim of ITC in respect of invoices not furnished by the corresponding vendors has now been reduced to 5% from the existing 10%.

Rule 86 (B) -If taxable value of supplies (other than exempt supply and zero-rated supply) is more than INR 50 Lacs in a month, then we cannot use the amount available in the Electronic Credit Ledger to discharge output tax in excess of 99% of such tax liability.

However, Rule 86 (B) shall not be applicable in such cases where

• Businesses / stakeholders have paid more than INR 1 lacs as IT liability in the preceding 2 years;
• taxpayers (registered under GST) who have received a refund of more than INR 1 lacs on account of unutilised input tax credit in the preceding financial year;
• businesses where at least more than 1% of the total output tax liability has been paid in cash in the current year applied cumulatively, up to the said month in the current financial year;
• Where registered person is a Government Department, PSU, local authority or statutory body.

Inclusion of Instances where a GST registration can be cancelled

• Material amount of excess Input Tax credit has been availed
• Outward supplies declared in Form GSTR 1 for one or more tax periods is in excess as declared in Form GSTR 3B.
• Registered person has violated the provisions of Rule 86B.