“Stay updated on GST regulations! Analysis of 9 GST Circulars issued by CBIC on 17th July 2023. Key insights on interest charging, ITC, TCS liability, warranty replacement, and more.”
The Central Board of Indirect Taxes & Customs (CBIC) has issued a series of circulars numbered from 192/04/2023-GST to 199/11/2023-GST on 17th July 2023. These circulars address various areas in the Goods and Services Tax (GST) regime that required clarification. This article provides a summary and analysis of these important circulars.
Circular No. 192/04/2023-GST – Clarification on Charging of Interest for Wrong Availment of IGST Credit
This circular clarified the charging of interest under section 50(3) of the CGST Act, 2017, in cases of wrongly availed IGST credit and its reversal. The CBIC emphasized the role of rule 88B of the CGST Rules in the calculation of interest, including all heads of IGST, CGST, and SGST. However, the credit of compensation cess cannot be used for the calculation of interest.
Circular No. 193/05/2023-GST – Clarification on Input Tax Credit Availment in GSTR-3B and GSTR-2A
The CBIC addressed differences in Input Tax Credit (ITC) availed in FORM GSTR-3B and detailed in FORM GSTR-2A for the period 01.04.2019 to 31.12.2021. Rule 36(4) of CGST Rules allowed additional credit during specific periods under certain conditions. The changes in rule 36(4) and section 16 of the CGST Act from 01.01.2022 ensure that ITC can only be availed if reported by suppliers in FORM GSTR-1 or using IFF and communicated through FORM GSTR-2B.
Circular No. 194/06/2023-GST – Clarification on TCS Liability for Multiple E-commerce Operators
In this circular, the CBIC clarified the Tax Collected at Source (TCS) liability under Section 52 of the CGST Act for transactions involving multiple E-commerce Operators (ECOs). The ECO responsible for collecting TCS and ensuring compliance under Section 52 depends on whether the supplier-side ECO is also the supplier of the goods or services.
Circular No. 195/07/2023-GST – Clarification on ITC Availability for Warranty Replacement
The CBIC clarified the availability of Input Tax Credit (ITC) in the context of warranty replacement of parts and repair services. If no additional consideration is charged for these services, no additional GST is applicable. However, if any additional consideration is charged, GST becomes applicable.
In this circular, the CBIC clarified that shares held by a holding company in a subsidiary company are not considered goods or services under the definition of the CGST Act and therefore are not subject to GST.
Circular No. 197/09/2023-GST – Clarification on GST Refund Issues
The CBIC provided detailed clarification on various refund-related issues under the GST regime, including the refund of accumulated input tax credit, the undertaking in FORM RFD 01, the calculation of adjusted total turnover, and the admissibility of refunds for exporters complying with sub-rule (1) of rule 96A.
This circular clarified the applicability of e-invoice under rule 48(4) of the CGST Rules, 2017 for supplies made to Government Departments and PSUs registered for tax deduction at source. Such entities are considered registered persons under the GST law and e-invoicing is required for transactions with them.
The CBIC clarified the tax implications of services performed by an office of an organization in one state to the office of the same organization in another state. It highlighted the options for distributing Input Tax Credit (ITC) and the determination of the value of supply based on the open market value.
Conclusion: In summary, these circulars provide significant clarifications in various aspects of GST, ensuring uniform implementation of rules and preventing conflicting interpretations. They highlight the CBIC’s efforts to simplify and clarify the GST regime, thereby facilitating compliance and reducing disputes.
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