“Finance Bill 2023 GST updates: Enhanced composition scheme eligibility, ITC amendments, and stricter penalties for ECO violations. Key changes aim for clarity and compliance ease in GST framework.”
Central Goods and Services Tax
Clause 128 seeks to amend Section 10(2)(d) and Section 10(2A)(c) to remove the restriction imposed on registered persons engaged in supplying goods through electronic commerce operators from opting to pay tax under the composition levy.
Analysis – Now, persons making intra-state supply of goods through ECO who is required to collect TCS, can opt for composition levy u/s 10(2) or Section 10(2A). Inter-state supply of goods is still not allowed u/s 10(2)(c) and 10(2A)(b).
Clause 129 seeks to amend 2nd provisos to Section 16(2) – for the words “added to his output tax liability, along with interest thereon”, the words and figures “paid by him along with interest payable u/s 50” shall be substituted to align it with Rule 37.
It also seeks to amend 3rd provisos to Section 16(2) – after the words “made by him”, the words “to the supplier” shall be inserted to make it more specific.
Clause 130 seeks to amend Explanation to Section 17(3) to restrict availment of ITC in respect of paragraph 8(a) of Schedule III by including the value of such transactions in the value of exempt supply.
It also seeks to insert Section 17(5)(fa) to provide that ITC shall not be available in respect of 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.
Analysis – ITC related to supply of warehoused goods to any person before clearance for home consumption is now part of value of exempt supply u/s 17(3) for the purpose of ITC reversal under Rule 42 and Rule 43. And ITC on expense incurred for the CSR purpose under the Companies Act, 2013 will now come under the purview of blocked ITC.
Clause 131 seeks to substitute, with effect from the 1st July, 2017, Section 23 relating to persons not liable for registration to provide overriding effect over Section 22(1) and Section 24.
Clause 132 seeks to insert a new Section 37(5). There will be time limit of 3 years from the due date of furnishing of GSTR 1, upto which the details of outward supplies in GSTR 1 for a tax period can be furnished by a registered person. It further seeks to empower the Government, on the recommendation of the Council, to extend by notification, the said time limit for a registered person or a class of registered persons, subject to certain conditions and restrictions.
Clause 133 seeks to insert new Section 39(11). There will be time limit of 3 years from the due date of furnishing the returns u/s 39 (GSTR 3B, GSTR 5, GSTR 4, etc.), upto which the return for a tax period can be furnished by a registered person. It further seeks to empower the Government, on the recommendation of the council, to extend by notification, the said time limit for a registered person or a class of registered persons, subject to certain conditions and restrictions.
Clause 134 seeks to insert new Section 44(2). There will be time limit of 3 years from the due date of furnishing of Annual return (GSTR 9 & 9C), upto which the annual return for a FY can be furnished by a registered person. It further seeks to empower the Government, on the recommendation of the Council, to extend by notification, the said time limit for a registered person or a class of registered persons, subject to certain conditions and restrictions.
Clause 135 seeks to insert new Section 52(15). There will be time limit of 3 years from the due date of furnishing of GSTR 8, upto which the GSTR 8 for a month can be furnished by an ECO. It further seeks to empower the Government, on the recommendation of the Council, to extend by notification, the said time limit for an operator or a class of operators, subject to certain conditions and restrictions.
Clause 136 seeks to amend Section 54(6) by removing reference to the provisionally accepted ITC to align the same with the availment of self-assessed ITC as per Section 41(1).
Clause 137 seeks to amend Section 56 to provide by rules the manner of computation of period of delay for calculation of interest on delayed refunds.
Clause 138 seeks to insert new Section 122(1B) to provide for penal provisions applicable to electronic commerce operators in case of contravention of provisions relating to supplies of goods or services made through them by unregistered persons or composition taxpayers.
Any electronic commerce operator who
(i) allows supply of goods or services or both through it by an unregistered person (other than person exempted from registration)
(ii) allows an inter-State supply of goods or services or both through it by a person who is not eligible to make inter-State supply or
(iii) fails to furnish the correct details in GSTR 8 related to any outward supply of goods effected through it by a person exempted from obtaining registration shall be liable to pay a penalty of Rs. 10,000, or amount of tax involved if such supply had been made by a registered person (other than a person paying tax under composition levy), whichever is higher.
Clause 139 seeks to amend Section 132(1) so as to decriminalize offences specified in clauses (g), (j) and (k)
Clause (g) obstructs or prevents any officer in the discharge of his duties under this Act.
Clause (j) tampers with or destroys any material evidence or documents.
Clause (k) fails to supply any information which he is required to supply or supplies false information.
And to increase the monetary threshold from Rs. 1 Cr to Rs. 2 Cr for launching prosecution except for the offences related to issuance of invoices without supply of goods or services or both (fake invoices).
Clause 140 seeks to amend first proviso to Section 138(1) to exclude the persons involved in offences relating to issuance of invoices without supply of goods or services or both (fake invoices) from the option of compounding of the offences.
It further seeks to amend Section 138(2) to rationalize the amount for compounding of various offences by reducing the minimum as well as maximum amount for compounding.
For the words “Rs. 10,000 or 50% of the tax involved, whichever is higher, and the maximum amount not being less than Rs.30,000 or 150% of the tax, whichever is higher”, the words “25% of the tax involved and the maximum amount not being more than 100% of the tax involved” shall be substituted.
Clause 141 seeks to insert a new section 158A to provide for the manner and conditions for sharing of the information furnished by the registered person in his application for registration or in his return filed or in his statement of outward supplies, or the details uploaded by him for generation of electronic invoice or E-way bill or any other details on the common portal.
Clause 142 seeks to amend Schedule III to give retrospective applicability to paragraphs 7 and 8 and the Explanation 2 with effect from the 1st July, 2017 to reduce the litigation as paragraphs 7 and 8 and the Explanation 2 were inserted on 1st Feb, 2019. No refund allowed for taxes, if paid.
Integrated Goods and Services Tax
Clause 143 seeks to amend Section 2(16) by omitting certain words therein, to restrict the meaning of the term “non-taxable online recipient” to mean any unregistered person receiving online information and database access or retrieval services located in the taxable territory.
The persons registered u/s 24(vi) of the CGST Act (i.e, persons who are required to deduct TDS) shall be treated as unregistered person for the purpose of Section 2(16).
It also proposes to amend Section 2(17) by removing certain words therein to remove the condition of “essentially automated” and “involving minimal human intervention” and to increase the scope of definition of OIDAR services.
Clause 144 seeks to omit the proviso to Section 12(8) so as to remove the confusion regarding availment of ITC. PoS will be outside India in case of transportation of goods where goods are transported to a place outside India and recipient in India due to proviso and recipient in India cannot claim the ITC of IGST as PoS is outside India.
Now POS will be
(a) if person is registered = location of such person
(b) if person in not registered = location at which such goods are handed over for their transportation.
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