Preliminary

The finance minister, Smt. Nirmala Sitharaman introduced the first budget of the decade on 1st February 2020. With this write-up, we have summarized the impact of budget on biggest tax reform of India- Goods & Services Tax (GST). As mentioned by honourable FM, Goods and Services Tax (GST) has been the most historic in our country. True to this vision for the historic structural reform, the Goods and Services Tax has been gradually maturing into a tax that has integrated the country economically. It has consolidated numerous taxes and cesses to one tax and facilitated formalization of economy.

During this phase of maturing, GST did face certain challenges. This was natural as transition was daunting. GST Council has been proactive in resolving issues during transition

Goods and services Tax

General

  • A simplified GST return shall be implemented from the 1st April, 2020. It will make return filing simple with features like SMS based filing for nil return, return pre-filling, improved input tax credit flow and overall simplification.
  • Dynamic QR-code is proposed for consumer invoices. GST parameters will be captured when payment for purchases is made through the QR-code.
  • Aadhaar based verification of taxpayers is being introduced. This will help in weeding out dummy or non-existent units.
  • A system of cash reward is envisaged to incentivise customers to seek invoice.

Amendments to Central Goods & Service Tax Act 2017

1. Ladakh has been included under the definition of union territory – Section 2(114)

2. Restriction imposed for supplier of services under composition scheme, in line with existing restrictions for supplier of goods- Section 10(2)

It has been proposed to exclude from the ambit of the Composition scheme certain categories of taxable persons, engaged in making-

(i) supply of services not leviable to tax under the CGST Act, or

(ii) inter-State outward supply of services, or

(iii) outward supply of services through an e-Commerce operator

3. Delinking of the date of issuance of debit note from the date of issuance of the underlying invoice for purposes of availing input tax credit- Section 16(4)

Time limit for claiming Input tax credit (return of September of subsequent year or annual return, whichever is earlier), in respect of a debit note issued by a supplier shall be reckoned from the date of debit note.

For instance, let’s assume that a taxpayer has ITC for Rs. 10,000 in invoice dated 20th August 2019 and a debit note issued for the said invoice on 10th April 2020 bearing ITC Rs. 4,500. Time limit for availing credit in this case:

a) For Invoice with ITC Rs. 10,000 – Return for September 2020 or date of filing of annual return of FY 2019-20 whichever is earlier

b) For Debit note with ITC Rs. 4,500 – Return for September 2021 or date of filing of annual return of FY 2020-21 whichever is earlier. Earlier, the time limit for such debit note was also reckoned as per date of corresponding invoice.

4. Amendment has been made to provide for cancellation of registration which has been obtained voluntarilySection 29(1)

5. Empowering jurisdictional tax authorities to extend the date for application of revocation of cancellation of registration in deserving cases- Section 30

Period for filing an application for revocation of cancellation is at present 30 days from the date of service of cancellation order. However, it has been proposed for extending such period on sufficient cause by Assistant commissioner or Joint commissioner for another 30 days, and by further 30 days by the commissioner.

6. Provisions to be introduced for prescribe manner for issue of tax invoice, and the cases wherein taxpayers may not be required to issue a tax invoice- Section 31

7. New procedures proposed to be issued for issuing of TDS certificate and late fees for non-issuance of TDS certificate has been omitted- Section 51

8. Amendment has been given to bring the provision for Appellate Tribunal under the CGST Act in the Union territory of Jammu and Kashmir and Ladakh- Section 109

9. Penalty to be levied equivalent of tax evaded or input tax credit availed in following cases: Section 122

a) supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply

b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made there under

c) takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made there under;

d) takes or distributes input tax credit in contravention of section 20, or the rules made there under;

10. Amendment has been made to make the offence of fraudulent availment of input tax credit without an invoice or bill a cognizable and non-bailable offence, and to make any person who commits, or causes the commission and retains the benefit of transactions arising out of specified offences liable for punishment- Section 132

11. Amendment to be made with effect from 01.07.17, to prescribe the manner and time limit for taking transitional creditSection 140

12. Amendment has been made to make provisions for enabling the jurisdictional commissioner to exercise powers under sub-section (5) of section 66 and second proviso to sub-section (1) of section 143- Section 168

13. Amendment has been made to make provision for enabling issuance of removal of difficulties order for another 2 years, i.e. till five years from the date of commencement of the said Act- Section 172. Similar changes are also being made in the IGST Act, 2017 (section 25), the UTGST Act, 2017 (section 26) and the GST (Compensation to States) Act, 2017 (section 14).

14. Schedule II of CGST Act 2017- Entries at 4(a) & 4(b) in Schedule II of the CGST Act is being amended with effect from 01.07.2017 to make provision for omission of supplies relating to transfer of business assets made without any consideration from Schedule II of the said Act.

Retrospective amendments to give effect to the recommendations of the GST Council

 S.No  Retrospective amendment in the Goods and Service Tax rate and refund provisions
1 Exemption from Central Tax, Union Territory Tax and Integrated Tax is being given on fishmeal [HS 2301], for the period 01.07.2017 to 30.09.2019. However, GST paid on supply of fishmeal during the period shall not be refunded
2 Concessional 12% rate of Integrated Tax and 6% Central Tax and 6% Union Territory Tax during the period 01.07.2017 to 31.12.2018, on pulley, wheels and other parts (falling under heading 8483) and used as parts of agricultural machinery of headings 8432, 8433, and 8436. However, GST paid at any other rate (higher than 12%) shall not be refunded.
3 The refund of accumulated credit of compensation cess on tobacco products arising out of inverted duty structure in Compensation Cess has been disallowed with effect from 01.10.2019 vide notification No. 3/2019- Compensation Cess (Rate) dated 30.9.2019. This notification is being given retrospective effect from 1.7.2017 onwards. Accordingly, no refund on account of inverted duty structure shall be admissible on tobacco products for any period.

Author can be reached @ casimrankatyal@gmail.com

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