Gist of important changes made in the CGST Rules, 2017 vide Notification issued on December 22, 2020

Lot many changes have been made in the Central Goods and Services Tax Rules, 2017 (CGST Rules) vide Notification No. 94/2020-Central Tax dated December 22, 2020. This article summarises all the important changes made in the CGST Rules, for your easy digest:

S. No. Relevant Rule/ Sub-Rule of the CGST Rules Title of the Rule Summary of changes made
1. Rule 8(4A) substituted (effective from a date to be notified later) Application for registration Biometric based Aadhaar authentication/ verification process for GST registration

Introduced additional requirements for registration:

√ biometric based Aadhaar authentication and taking photograph unless specifically exempted à Where applicant has opted for authentication of Aadhaar number

√  taking biometric information, photograph and verification of such other KYC documents, as notified, unless specifically exempted à Where applicant has opted not to get Aadhaar authentication done

⇒ The application shall be deemed to be complete only after completion of the process laid down above.

2. Rule 9 amended (effective from December 22, 2020) Verification of the application and approval Time limit increased for grant of GST registration from 3 to 7 working days

√ Increased the time limit for verification of registration application and issue of notice in Form GST REG-03 from 3 working days to 7 working days.

√ Where the applicant does not do Aadhar Authentication or where the Department feels fit to carry out physical verification of places of business, time limit for grant of registration increased from 7 to 30 days.

3. Rule 21 amended (effective from December 22, 2020) Registration to be cancelled in certain cases Added new grounds for cancellation of registration

√ If input tax credit (“ITC”) is availed in violation of Section 16 of the CGST Act, 2017 (“CGST Act”) or rules made thereunder;

√ If outward tax liability declared in GSTR-3B is lesser than the outward tax liability declared in GSTR-1 for one or more tax periods;

√ If violates newly inserted Rule 86B of the CGST Rules.

4. Rule 21A amended (effective from December 22, 2020) Suspension of registration No opportunity of being heard to taxpayers for suspension of registration

No opportunity of being heard would be given to the taxpayer for suspension of registration.

√ If significant anomalies are found between GSTR-3B and details of outward supplies furnished in GSTR-1 or inward supplies derived based on the details of outward supplies furnished by his suppliers in their GSTR-1 à Serve SCN notice in Form GST REG 31 (New form introduced) – Rule 21A(2A)

√ No refund u/s 54 of the CGST Act during the period of suspension of registration.

√Allowed proper officer to revoke suspension of registration anytime during the pendency of the proceedings for cancellation.

5. Rule 22(3) and (4) amended (effective from December 22, 2020) Cancellation of registration Cancellation of registration under Rule 22 aligned with newly inserted sub-rule (2A) of Rule 21A

√ Registration can be cancelled within a period of 30 days from the date of reply to SCN issued under newly inserted sub-rule (2A) of Rule 21A

[i.e., in cases where comparison of the returns (GSTR-3B and GSTR-1) furnished by a registered person shows the significant differences or anomalies].

√ Drop the proceedings of cancellation of registration if satisfied by the reply of SCN issued under Rule 21A(2A) of the CGST Rules and pass order in Form GST REG-20.

6. Rule 36(4) amended (effective from January 1, 2021) Conditions for claiming ITC Reduction in ITC entitlement for invoices not furnished by supplier from 10% to 5%

Restriction of claim of ITC in respect of invoices/debit notes not furnished by the suppliers has now been reduced from 10% to 5% of the credit available in GSTR-2B.

7. Rule 59(5) inserted (effective from December 22, 2020) Form and manner of furnishing details of outward supplies Blocking of GSTR-1 in case of non-filing of GSTR-3B

√ Non-filing of GSTR-3B for preceding two months/ preceding tax period will result in blocking of GSTR-1

√ Registered person restricted to use ITC to discharge his liability towards tax in excess of 99% of such tax liability as per newly inserted Rule 86Bà cannot file GSTR-1 or use invoice furnishing facility (“IFF”), if he has not filed GSTR-3B for the preceding tax period

Note: Rule 59 of the CGST Rules is already substituted vide Notification No. 82/2020-Central Tax dated November 10, 2020, which is going to be effective from January 1, 2021. Therefore, there is apparent mistake or it is not clear that what will be correct provisions under Rule 59(5) of the CGST Rules, w.e.f. January 1, 2021.

8. New Rule 86B introduced (effective from January 1, 2021) Restrictions on use of amount available in electronic credit ledger Restricting use of ITC amount for discharging output tax liability in GST

√ Where taxable supply other than exempt supply and export, in a month exceeds INR 50 lakh.

√ Taxpayer is not allowed to use ITC in excess of 99% of output tax liability.

√ Specified certain exceptions provided to above restrictions.

9. Rule 138 amended (effective from January 1, 2021) Information to be furnished prior to commencement of movement of goods and generation of e-way bill Validity of e-way bill narrowed by increasing distance from 100 km. to 200 km. per day

√ E-way bill will now be valid for 1 day for every 200 km of travel, as against 100 km earlier, in cases other than Over Dimensional Cargo or multimodal shipment in which at least one leg involves transport by ship.

√ For every 200 km. or part thereof thereafter, one additional day will be allowed.

10. Rule 138E amended (effective from December 22, 2020) Restriction on furnishing of information in PART A of FORM GST EWB-01 Person whose registration has been suspended is now restricted from furnishing PART A of E-Way Bill

Person whose registration has been suspended would also not be allowed to furnish the information in PART A of FORM GST EWB-01.

√ Registered person other than a person paying tax under composition levy, has not furnished the returns for a consecutive period of two tax periods, then he shall not be allowed to furnish the information in PART A of FORM GST EWB-01.

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DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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  1. Mani Manickam says:

    Now I understand that ITC claim is restricted to auto populated GSTR 2 A that is generated on 12th of Next month. Can we claim the ITC that was not claimed in a month due to non-filing of GSTR 1 by the supplier before 12th. and return filed after the due date in the subsequent month GSTR 3B?

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