The Finance Bill 2023 is presented and many changes has been proposed in in Direct as well as indirect tax. Here I am presenting the extracts of the GST related Amendments proposed in the Finance Bill, 2023 (Budget 2023-24), presented by the Union MoF Mrs. Nirmala Sitharaman in the Loksabha on 01/02/2023.
Amendments proposed in the Finance Bill, 2023, except those in clause 142, will take effect on the date they are notified, as far as possible concurrently with the corresponding amendments to similar Acts passed by the States and Union territories with legislature. Amendments made in the Finance Bill, 2023, under clause 142, will take effect retrospectively from July 1, 2017.
So, here we have analyzed clause by clause changed in proposed in finance bill 2023 giving reference of relevant section of GST Act.
Snapshot of Proposed amendment in Finance Bill, 2023
| Finance Bill Clause | Amendment in Section | Content |
| 128 | 10 | Now Composition Taxpayer can also supply through E-Commerce |
| 129 | 16 | Reversal of ITC for non-payment within 180 days to be shown in Table 4 instead of adding in output tax liability. |
| 130 | 17 | Now Exempt turnover will include Sales from Custom bonded warehouse for the purpose of reversal under rule 42.
ITC on CSR expenditure is now ineligible ITC under section 17(5). |
| 131 | 23 | Now Section 23 will start with non-obstacle clause. |
| 132/133/134/ 135 | 37/39/44/52 | An time frame of 3 years given for filing GSTR-1/GSTR- 3B/GSTR-9 & GSTR-7. |
| 136 | 54(6) | Provisionally credit removed to align with existing provision. |
| 137 | 56 | Interest calculation rationalized. |
| 138 | 122 | Penal provision inserted for E-Commerce operator. |
| 139 | 132 | Decriminalizing certain offences. |
| 140 | 138 | Compounding Limit reduced. |
| 141 | 158A | Consent of taxpayer for sharing of information of GST. |
| 142 | Schedule III | Para 7 & 8 will be effective from 01-07-2017. |
| 143 | 2(16) | Amendment in definition of Non-taxable online recipient. |
| 144 | 12(8) | Change in place of supply for transportation of goods. |
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|
Finance Bill Clause |
Proposed Changes in Section | Particular | |
| 128 | 10 | Proposed Changes in the Bill | In the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the Central Goods and Services Tax Act), in section 10,–
(a) in sub-section (2), in clause (d), the words “goods or” shall be omitted; (b) in sub-section (2A), in clause (c), the words “goods or” shall be omitted. |
| Bare Act Before Changes | Section 10(2) (d) he is not 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.
Section 10(2A) (C) 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; Comment: – The Word “goods or” will be omitted in both section. |
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| Our Submission | Before this amendment a person who is supplying goods & Service through e-commerce portal are not allowed to registered in under composition scheme. After this amendment now composition taxpayer can also supply GOODS from e- commerce platform. Services still not allowed to supply under composition scheme from e- commerce platform. | ||
| 129 | 16 | Proposed Changes in the Bill | In section 16 of the Central Goods and Services Tax Act, in sub-section (2),–
(i) in the second proviso, for the words “added to his output tax liability, along with interest thereon”, the words and figures “paid by him along with interest payable under section 50” shall be substituted; (ii) in the third proviso, after the words “made by him”, the words “to the supplier” shall be inserted. |
| Bare Act Before Changes | Section 16(2) 2nd Proviso Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed Comment: – The above strikethrough word will be omitted and it will be substituted with “paid by him along with interest payable under section 50”.
Section 16(2) 3rd Proviso Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. Comment: – The above strikethrough word will be omitted and it will be substituted with “to the supplier”. |
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| Our Submission | This proviso say reversal of ITC where payment not made to the supplier within 180 days from the date of invoice. Such reversal was to be added in output tax liability. Now, after amendment this reversal need to be shown in GSTR-3B Table 4(B)(2) in ITC Table or can paid through DRC-03.
The amendment in Third proviso by inserting the word ‘to the supplier’ means the payment should be made to the supplier and not to third party on instruction of supplier. Let’s understood with an example Suppose ‘A’ supplied some material to ‘B’ of Rs.1,00,000/ including GST. ‘A’ has purchase this material from ‘X’. ‘A’ Instructed to ‘B’ to make the payment to ‘X’ instead to me. So here ‘B’ indirectly made the payment to ‘A’. This will not consider as payment made to the supplier as per amended third proviso. |
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| 130 | 17 | Proposed Changes in the Bill | In section 17 of the Central Goods and Services Tax Act,-
(a) in sub-section (3), in the Explanation, for the words and figure “except those specified in paragraph 5 of the said Schedule”, the following shall be substituted, namely:– “except,– (i) the value of activities or transactions specified in paragraph 5 of the said Schedule; and (ii) the value of such activities or transactions as may be prescribed in respect of clause (a) of paragraph 8 of the said Schedule”; (b) in sub-section (5), after clause (f), the following clause shall be inserted, namely:– “(fa) 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;”. |
| Bare Act Before Changes | (3) The value of exempt supply under sub-section
(2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. [Explanation.—For the purposes of this sub-section, the expression ‘‘value of exempt supply’’ shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule.] Comment: – The above strikethrough word will be omitted and it will be substituted with “except,– (i) the value of activities or transactions specified in paragraph 5 of the said Schedule; and (ii) the value of such activities or transactions as may be prescribed in respect of clause (a) of paragraph 8 of the said Schedule”; A New Clause will be inserted Clause (fa) “(fa) 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;”. |
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| Our Submission | As per rule 42 a person who is supplying taxable as well as exempt supply are need to reverse the common ITC proportionately. For this purpose, exempt turnover earlier include only sale of land & building now after this amendment sale of goods from bonded warehouse will also be consider for the calculation of exempt turnover.
There was lot of disputes on availment of ITC on CSR expenditure. Department used to say since it not in the course or furtherance of business ITC will not be allowed, whereas Taxpayer contention is that it is eligible credit since it is for advancement of business and need to made to meet legal obligation. Now in Finance bill it is proposed as ineligible credit by inserting new clause under section 17(5). |
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| 131 | 23 | Proposed Changes in the Bill | For section 23 of the Central Goods and Services Tax Act, the following section shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July, 2017, namely:-
“23. Notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section 24,- (a) the following persons shall not be liable to registration, namely:– (i) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act, (ii) an agriculturist, to the extent of supply of produce out of cultivation of land; (b) the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, specify the category of persons who may be exempted from obtaining registration under this Act.”. |
| Bare Act Before Changes | (1) The following persons shall not be liable to registration, namely: —
(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act; (b) an agriculturist, to the extent of supply of produce out of cultivation of land. (2) The Government may, on the recommendations of the Council, by notification, specify the category of persons who may be exempted from obtaining registration under this Act. The Section 23 earlier start without non obstante clause. In the proposed amendment the section start with notwithstanding, which means now section 23 is superior section it will have the overriding effect to other provisions. |
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| Our Submission | Suppose where a person engaged in supplying of goods and services not liable to tax or wholly exempted from tax under GST however in case procurement of services under which recipient is liable to pay tax on RCM basis (Say advocate services) such person are required to take registration by virtue of applicability of Section 24.
Now after this amendment section 23 will override the section 24 and no registration will be required even though I am availing any services on which tax is payable under RCM. |
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| 132/133/ 134/135 | 37/39/44/ 52 | Proposed Changes in the Bill | New sub-section has been proposed to be inserted to Section 37 / 39 / 44 / 52 of the CGST Act to introduce a outer time limit of three years rom the respective due date of filing the return upto which the details of outward supplies under Section 37(1) in Form GSTR-1, return under Section 39 in form GSTR-3B, annual return under Section 44 in form GSTR-9, ) and statement under Section 52 (4) i.e. TCS return in form GSTR-8 of the CGST Act for a tax period can be furnished by a registered person.
Further, a proviso has been inserted in all the aforesaid cases empowering the Government, to extend the said time limit by way of notification, on the recommendation of the Council, for any registered person or a class of registered persons, subject to such conditions and restrictions, as may be prescribed. |
| Our Submission | Prior to purpose amendment no outer time limit was specified under the law for filing the returns/ statement in form GSTR-1, GSTR-3B, GSTR-5, GSTR-6, GSTR-7, GSTR-8 and GSTR-9 and GSTR-9C. Now by insertion of time limit of three year from the due date of respective return said return cannot be filed beyond of period of three year. However government has power to extend the said time limit by way of notification. | ||
| 136 | 54 | Proposed Changes in the Bill | In section 54 of the Central Goods and Services Tax Act, in sub-section (6), the words “excluding the amount of input tax credit provisionally accepted,” shall be omitted. |
| Bare Act Before Changes | Notwithstanding anything contained in sub- section (5), the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent. of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant. | ||
| Our
Submission |
The concept of provisional input tax credit no longer exist hence the provision of section 54 (6) is suitably modified by omitting the words “excluding the amount of input tax credit provisionally accepted,” to align with the existing provisions. | ||
| 137 | 56 | Proposed Changes in the Bill | In section 56 of the Central Goods and Services Tax Act, for the words “from the date immediately after the expiry of sixty days from the date of receipt of application under the said subsection till the date of refund of such tax”, the words “for the period of delay beyond sixty days from the date of receipt of such application till the date of refund of such tax, to be computed in such manner and subject to such conditions and restrictions as may be prescribed” shall be substituted. |
| Bare Act
Before Changes |
If any tax ordered to be refunded under sub- section (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under sub-section (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax.
Comment: – The above strikethrough word will be omitted and it will be substituted with “for the period of delay beyond sixty days from the date of receipt of such application till the date of refund of such tax, to be computed in such manner and subject to such conditions and restrictions as may be prescribed”. |
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| Our
Submission |
The proposed amendment basically provides for enabling provision for interest, “to be computed in such manner and subject to such conditions and restrictions as may be prescribed” | ||
| 138 | 122 | Proposed Changes in the Bill | In section 122 of the Central Goods and Services Tax Act, after sub-section (1A), the following sub- section shall be inserted, namely:-
“(1B) Any electronic commerce operator who– (i) allows a supply of goods or services or boththrough it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply; (ii) allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or (iii) fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act, shall be liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.”. |
| Bare Act Before Changes | A New subsection introduced. | ||
| Our
Submission |
Certain penalties has been purposed on Electronic Commerce Operators in the following cases:
If ECO allows an unregistered person other than those explicitly exempted for supply of goods or services or both through it If ECO allow ineligible persons to entered into inter- state supply on its portal If ECO fails to furnish the details of outward supplies of goods or services or both effected through it. Penalty would be higher of following: • Rs 10,000; or • Amount of tax involved had such supply been made by a registered person (other than a composition dealer). |
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| 139 | 132 | Proposed Changes in the Bill | In section 132 of the Central Goods and Services Tax Act, in sub-section (1),-
(a) clauses (g), (j) and (k) shall be omitted; (b) in clause (l), for the words, brackets and letters “clauses (a) to (k)”, the words, brackets and letters “clauses (a) to (f) and clauses (h) and (i)” shall be substituted; (c) in clause (iii), for the words “any other offence”, the words, brackets and letter “an offence specified in clause (b),” shall be substituted; (d) in clause (iv), the words, brackets and letters “or clause (g) or clause (j)” shall be omitted. |
| Our Submission | An amendment is proposed to Section 132(1) of the CGST Act whereby Following offences will not be punishable with imprisonment and fine under GST law:
• Obstructing/ preventing any officer from discharging their duties under the CGST Act (clause g). • Tampering or destruction of any material evidence/ documents (clause j). • Failure to furnish information or furnishing false information summoned under the CGST Act (clause k). • Abetment in commission of any of the aforesaid offences. Further, an amendment is proposed in clause (iii) of sub-section (1) of Section 132 to restrict the punishment under the said clause to an offence relating to issuance of fake invoice without supply. • Prosecution will not be initiated for offences where the tax evaded or ITC wrongly availed or utilised or the amount of refund wrongly taken does not exceed Rs. 2.5 crores. • Person accused of issuing invoice or bill without supply of goods and / or services leading to wrongful availment or utilization of ITC or refund of tax exceeding Rs. 1 crore but not exceeding Rs. 2 crore will be punishable with imprisonment for a term which may extend to one year and fine. |
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| 140 | 138 | Proposed Changes in the Bill | In section 138 of the Central Goods and Services Tax Act,–
(a) in sub-section (1), in the first proviso,– (i) for clause (a), the following clause shall be substituted, namely:– “(a) a person who has been allowed to compound once in respect of any of the offences specified in clauses (a) to (f), (h), (i) and (l) of sub-section (1) of section 132;”; (ii) clause (b) shall be omitted; (iii) for clause (c), the following clause shall be substituted, namely:– “(c) a person who has been accused of committing an offence under clause (b) of sub-section (1) of section 132;”; (iv) clause (e) shall be omitted; (b) in sub-section (2), for the words “ten thousand rupees or fifty per cent. of the tax involved, whichever is higher, and the maximum amount not being less than thirty thousand rupees or one hundred and fifty per cent. of the tax, whichever is higher”, the words “twenty-five per cent. of the tax involved and the maximum amount not being more than one hundred per cent. of the tax involved” shall be substituted. |
| Our
Submission |
An amendment is proposed to Section 138(a) of the CGST Act to provide that following offences cannot be compounded more than once:
• Acquisition/ Possession of any goods which are liable for confiscation. • Receipt or an association in any manner, in respect of a supply which is made in contravention of the GST Laws. • Attempt to commit or abetment in commission of an offence which is liable for prosecution under Section 132 of the CGST Act. • Issuance of fake invoice leading to availment/ utilization of ITC. The existing provision of section 138 (1) (c) restricts the benefit of compounding to those cases where an offence under GST Law is also an offence under any other law. The proposzed amendment shall extend the benefit of compounding even in such cases where an offence under GST Law is also an offence under any other law, except for offence wherein the person is involved in supplying of invoices without supplying goods or services i.e. Fake invoices cases. It is proposed to reduce the minimum amount to be paid for compounding of offence from higher of 50% of tax involved or Rs. 10,000 to 25% of tax involved. Similarly, it is proposed to reduce the Maximum amount to be paid for compounding offence from higher of 150% of tax involved or Rs. 30,000 to 100% of tax involved. |
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| 141 | 158A | Proposed Changes in the Bill | After section 158 of the Central Goods and Services Tax Act, the following section shall be inserted, namely:
“158A. (1) Notwithstanding anything contained in sections 133, 152 and 158, the following details furnished by a registered person may, subject to the provisions of subsection (2), and on the recommendations of the Council, be shared by the common portal with such other systems as may be notified by the Government, in such manner and subject to such conditions as may be prescribed, namely:– (a) particulars furnished in the application for registration under section 25 or in the return filed under section 39 or under section 44; (b) the particulars uploaded on the common portal for preparation of invoice, the details of outward supplies furnished under section 37 and the particulars uploaded on the common portal for generation of documents under section 68; (c) such other details as may be prescribed. (2) For the purposes of sharing details under sub- section (1), the consent shall be obtained, of — (a) the supplier, in respect of details furnished under clauses (a), (b) and (c) of sub-section (1); and (b) the recipient, in respect of details furnished under clause (b) of sub-section (1), and under clause (c) of sub-section (1) only where such details include identity information of the recipient, in such form and manner as may be prescribed. (3) Notwithstanding anything contained in any law for the time being in force, no action shall lie against the Government or the common portal with respect to any liability arising consequent to information shared under this section and there shall be no impact on the liability to pay tax on the relevant supply or as per the relevant return.”. |
| Our
Submission |
A new Section 158A in the CGST Act is proposed to be inserted to share the following information by the common portal with such other systems, as may be notified, subject to prescribed consent and conditions
• Particulars furnished in registration application, Form GSTR-3B, Form GSTR-4, Form GSTR-5, Form GSTR-6, Form GSTR-7 and Annual Return in Form GSTR-9; • Particulars uploaded on the portal for preparation of invoice, details of outward supplies furnished in Form GSTR-1 and particulars uploaded on common portal for generating e-way bill; and • Such other particulars as may be prescribed. |
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| 142 | Schedule
III |
Proposed Changes in Finance Bill | (1) In Schedule III to the Central Goods and Services Tax Act, paragraphs 7 and 8 and the Explanation 2 thereof (as inserted vide section 32 of Act 31 of 2018) shall be deemed to have been inserted therein with effect from the 1st day of July,2017 (2) No refund shall be made of all the tax which has been collected, but which would not have been so collected, had subsection (1) been in force at all material times. |
| Our
Submission |
Schedule III of GST Act has been amended w.e.f 01.02.2019 to given the effect that the high sea sales, supply of warehoused goods before clearance for home consumption and Third- country exports (i.e. out and- out sales) shall neither be treated as supply of goods nor supply.
Now a clarification has been inserted stating that the said amendment will be applicable with retrospective effect from July 1, 2017. It is further proposed that refund shall not be granted in respect of GST collected on such transactions undertaken during 1st July 2017 to 31st January 2019. |
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| 143 | Proposed Changes in Finance Bill | In the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the Integrated Goods and Services Tax Act), in section 2,–
(a) for clause (16), the following clause shall be substituted, namely:– ‘(16) “non-taxable online recipient” means any unregistered person receiving online information and database access or retrieval services located in taxable territory. Explanation.–For the purposes of this clause, the expression “unregistered person” includes a person registered solely in terms of clause (vi) of section 24 of the Central Goods and Services Tax Act, 2017’; (b) in clause (17), the words “essentially automated and involving minimal human intervention and” shall be omitted. |
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| Our Submission | The Exclusion of the term ‘essentially automated and involving minimum human intervention’ will enhance the scope of OIDAR services. This will eliminate the scope of possible litigation as earlier the degree of ‘essentially automation’ and minimum human intervention’ are subject matter of individual interpretation.
In addition, the non-resident supplier will be liable to GST for all unregistered recipients, whether or not the services are used for business or commerce |
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| 144 | 12(8)
IGST Act |
Proposed Changes in Finance Bill | In section 12 of the Integrated Goods and Services Tax Act, in sub-section (8), the proviso shall be omitted. |
| Bare Act
Provision |
The place of supply of services by way of transportation of goods, including by mail or courier to,—
(a) a registered person, shall be the location of such person; (b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation. 1[Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods.] |
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| Our
Submission |
The proposed amendment suggest that the place of supply of services for transportation of goods in case where the goods are being transported to a place outside India, shall either be:
• in case of registered person, the location of such person or • in case of person other than registered person, the location where such goods are handed over for transportation. |
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Disclaimer
- The list of proposals are only highlights and it is only for general understanding of budget.
- This does not contain any expert view or opinion on any budget
documents. Please refer Budget Documents for detailed information. - In this booklet, we have highlighted our understanding for some of the important Budget Proposals.
- We request readers to seek professional advice before arriving at any decision /conclusion after reading of this booklet. We are not responsible for any loss arising to anyone after referring and relying on this booklet.
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