The Central Government has issued the following three (03) notifications giving effect to changes in law and procedures that were proposed as part of the Finance (Bill) Act 2022

1. Notification No: 18/2022 –CT, dated: 28-09-2022

2. Notification No: 19/2022 –CT, dated: 28-09-2022

3. Notification No: 20/2022 –CT, dated: 28-09-2022 (with Corrigendum)

A detailed analysis will make us comprehend the following very important changes to be carefully abided.

Analysis of 10 Important key changes in GST notified with effect from 1st October 2022

1. New restrictions on the claim of Input Tax Credit

From 01st October 2022 Government can can restrict the Taxpayer’s ITC if his vendor has:

  • Defaulted in paying tax for such a period or Short paid taxes by a certain percentage
  • Availed excess ITC by such limit or Utilized ITC to pay taxes in excess of the maximum allowable limit
  • Taken registration within such period
  • Other cases as may be prescribed

The period, limit and percentage of such restriction are yet to be finalized & fixed and may be done in due course of time. Thus availment of ITC now needs an extra caution. Safeguard to choose a vendor with proper established credentials alone will help in enjoying the facility of ITC without litigations.

2. Extension of Time Limit to avail ITC

This is a path breaking relaxation as it gives and additional elbow room for Taxpayers to avail their genuine ITC with additional time. For any particular financial year, the following can be done up to 30th November of the succeeding financial year:

1. Avail ITC for any invoice/debit note of a financial year

2. Issuance of credit notes for supplies made in a financial year

3. Rectification of errors in respect of GSTR 1, GSTR 3B and GSTR 8

The Central Government now has notified what ws proposed under Section 100 of Finance Act 2022 effective from 1.10.2022. Section 100 of the Finance Act 2022 amends Section 16 of the CGST Act 2017 as follows:

The due date for taking input tax credit for a Financial Year shall be 30th November of following Financial Year or date of filing Annual Returns, whichever is earlier. Generally, the Annual Returns are to be filed by 31st December of the succeeding Financial Year. The time limit to issue credit note is also extended to 30th November of next Financial Year. The mute question now is Whether these change is applicable for FY 2021-22 as it is made effective only from 1.10.2022 and the benefit of extended time lines upto 30th November can be availed for 2021-22 .

Let us understand that as per the legal precedents and principles of interpretation, the new clause effectively substitutes the existing clause. In general, any amendment in time limit is considered as procedural only. Earlier in case of debit note amendment also, CBIC clarified that it would apply for DNs issued for earlier periods also. Similar situation should prevail here in this amendment also. Hence, there should not be any difficulty for the Financial Year 2021-22. However, for the sake of better understanding, if a clarificatory circular is issued, by which several infructuous litigations leading us nowhere can be avoided.

So to sum up, one can conclude that, the extension of time limit would apply for ITC and credit notes attributable to Financial Year2021-22 also though the changes have come into force w.e.f. 01-10.2022.

3. Cancellation of GST Registration for non-filing of Return

On notified situations the Tax officers have been vested with powers to suo moto cancel registration if

1. A composite taxpayer didn’t file return for a financial year beyond three months from the due date

2. A Regular Taxpayers didn’t file return for such a continuous tax period as may be prescribed.

Please note that as it stands, Rule 21 says that if monthly return filler does not file return for a continuous period of 6 months or if quarterly return filler does not file return for a continuous period of two tax periods then registration can be cancelled.

The current change will ensure disciplined compliance as so many facilities including ITC availability are now linked to filing of returns.

4. Changes in Statement of Outward Supply – GSTR 1

It is now compulsory that the Statement of outward supply (known as GSTR-1 Return) must be filed in chronological order. This means sequencing of returns is mandatory. Unless the earlier return is not filed current month return cannot be filed. Further Government can prescribe conditions/restrictions in filling of details of outward supply and subsequent communication to recipient.

5. Other Changes in GST Returns

Similarly all returns are now sequenced like,

1. Restricts filling of GSTR 3B of current period if GSTR 1 of previous period is not filled.

2. Due date for filling of GSTR 5 and GSTR 5A is now 13th of next month

3. Late fee for delay in filling of TCS Return has being introduced.

6. Claiming Input Tax Credit on Self-Assessment basis

Every Taxpayer’s self-assessed ITC will be credited to GST PMT-02 i.e., the electronic credit ledger. The concept of Provisional ITC which has been creating a lot of confusions has been omitted now. Further if one’s supplier didn’t pay taxes to the Government then ITC shall be reversed along with Interest. This makes all the more reason to ensure that the procurements are made only from suppliers of established integrity.

7. Refund GST more facilities

As a further facility in refund process,

1. Refund application is to be filled if you want to claim a refund of excess balance in GST-PMT-03 i.e., Electronic Cash Ledger.

2. For supplies to SEZ Developer/SEZ Units, refund is to be filled within 2 years from the due date on which GSTR 3B is filed or ought to have been filed. There were lots of confusions on this matter especially with reference to the relevant date. Now the situation has been clarified and things are clear.

3. A specialised agency of the UNO, Consulate, Embassy etc. can claim a refund of tax on inward supply within 2 years. Earlier, at the time of introduction of GST it was Six months which was extended to 18 months and now it is further made as 2 years from the last day of the quarter in which the supply was made in line with other refunds.

8. Consequences of not paying the vendor in time under GST

The Taxpayer need to pay tax along with interest from now on, if one have availed ITC but failed to pay the supplier within 180 days from Invoice date. Earlier there were recommendations to impose interest for delayed payment beyond 180 days by the buyer to the vendor if ITC has been availed . But it was not notified. Now with new changes in place, the interest liability also accrues. This means that though the buyer can reclaim the credit after making the payments, the interest would become a cost.

9. Two way communication and matching concepts are omitted

As made very clear, during the presentation of budget and that the forms GSTR-2 and GSTR-3 have never been notified, the matching concept and the two-way communication process in return filing etc. is now omitted. However, newly inserted provisions under Section 16(2) will take care of self-policing mechanism for genuine ITC availments.

10. QRMP dealers

QRMP optees can now pay taxes on a self-assessment basis or in an alternate way that the government will prescribe later.

Before bidding adieu….

Although lot of changes have been brought in, time and again, these are all done only in the best interest of Trade and industry from the varies experiences gained over the period and also taking suggestions and opinions from stake holders as a mark of ease of legislative compliance.

Progressive………………

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