Budget Update: Highlights of Key Changes in GST for FY 2024-25

The GST updates for FY 2024-25 include several significant changes aimed at simplifying compliance and adjusting penalties vide Budget 2024. Section 128A introduces waivers of interest and penalties for non-fraudulent demands from FY 2017-18 to 2019-20 if certain conditions are met, though it excludes erroneous refunds and does not provide refunds for previously paid amounts. The time limit for availing Input Tax Credit (ITC) has been extended under Section 16, allowing claims until 30 November 2021 for FY 2017-18 to FY 2020-21. For tax determination from FY 2024-25 onwards, Section 74A of CGST Act, 2017 mandates proper officers to issue orders within 12 months from notice, extendable by six months. Penalties have been restructured: 10% for non-fraud cases and up to 100% for fraud cases, with reductions based on timely payments. Pre-deposit requirements for appeals have been reduced, and monthly TDS returns must now be filed electronically. Changes in the time of supply for reverse charge services and exclusions of certain alcohol-related items from GST are also noted. New sections have been introduced to address registration revocations, ITC refund restrictions, and the role of authorized representatives. Transitional credit provisions under Section 140 and adjustments to non-supply transactions under Schedule III further refine the GST framework.

Waiver of Interest & Penalty

• Section 128A: Introduced for waiver of interest or penalty (or both) for demands under section 73 (Non-Fraud Cases) for FY 2017-18, 2018-19, 2019-20.
  • Applies if :
    • notice issued but no order passed, or
    • order passed by the proper officer but not by the Appellate Authority, or
    • order passed by the Appellate Authority but not by the Tribunal.
  • Waiver not available for erroneous refunds.
  • No refund for already paid interest and penalty for the mentioned financial years.

Extension of Time Limit to Avail ITC

• Section 16(5): Time limit to avail Input Tax Credit (ITC) extended till 30 November 2021 for FY 2017-18 to FY 2020-21 if relevant GSTR-3B filed by then. No refund for tax paid or reversed ITC before this insertion.
• Section 16(6): Extended ITC availment time in case of cancelled and subsequently restored GSTIN to the later of 30 November of the subsequent year or 30 days from the revocation order.

Determination of Tax for FY 2024-25 Onwards

• Section 74A: Introduced for tax determination (unpaid, short-paid, erroneously refunded, wrongly availed/utilised ITC) for FY 2024-25 onwards.
  • Same period for issuing demand notices/orders irrespective of fraud charges.
  • Proper officer to issue order within 12 months from notice date, extendable by six months.

Penalty Provisions

• Non-Fraud Cases:
  • Penalty: 10% of tax due or Rs. 10,000, whichever is higher.
  • No penalty if payment with interest before notice.
• Fraud Cases:
  • Penalty: 100% of tax due.
  • Reduced penalties if payment with interest at different stages (15% before notice, 25% within 60 days of notice, 50% within 60 days of order).

Reduction in Pre-Deposit Amount

• Appellate Authority: Reduced from Rs. 50 crores to Rs. 40 crores (CGST + SGST or IGST).
• GSTAT: Pre-deposit amount reduced from 25% to 10% of disputed tax, with maximum reduced from Rs. 100 crores to Rs. 40 crores (CGST + SGST or IGST).

Mandate for Monthly TDS Returns

• Electronic furnishing of return required for each month by registered persons deducting tax at source, irrespective of deductions made.

Time of Supply for Reverse Charge Services

• Earlier of:
  • Date of payment in recipient’s books or bank debit date.
  • 60 days from invoice date.
  • Invoice issue date by recipient (if applicable).

Changes in Levy & Collection

• Before amendment – within GST Purview:
  • Extra neutral alcohol, rectified spirit for alcohol manufacture.
• After amendment- Out of GST Purview:
  • Extra neutral alcohol, rectified spirit for alcohol manufacture.

New Sections and Amendments

• Section 11A: Non-recovery of GST not levied due to prevalent general trade practice.
• Section 30: Enabling conditions and restrictions for registration revocation.
• Section 54(15): No refund of unutilized ITC or integrated tax on zero-rated supply goods subjected to export duty or supplied to SEZ.
• Section 70(1A): Authorized representative can appear for summoned persons.
• Section 73 & 74: Redundant for periods from FY 2024-25.
• Section 75(2A): Penalty for non-fraud cases if fraud charges not sustained by Appellate Authority or Tribunal.
• Section 112(1) & 112(6): Empower Government to notify appeal filing dates and revised time limits.

Transitional ITC

• Section 140: Enable transitional credit for eligible CENVAT credit for input services by ISD, effective from 1 July 2017.

Schedule III

• Non-Supply Transactions:
  • Co-insurance premium apportionment by lead insurer.
  • Services by insurer to reinsurer with ceding/reinsurance commission deduction.