Arjuna: Krishna many people celebrate Diwali by bursting firecrackers. GST is in the air, after completion of the income tax audit. So how one can relate GST and firecrackers?
Krishna: Arjuna, Diwali is the festival of joy and happiness. There is high regard for Dhanateras, Lakshmipujan, etc. we celebrate Diwali by bursting crackers. Similarly, every year government bursts some new types of crackers. This year also government have busted firecrackers by issuing various notifications, circulars, provisions, advisory in GST before Diwali. Let’s discuss some key important GST firecrackers which will help taxpayers in better compliance with GST law.
Arjuna: Krishna, so tell me about “Rocket”, firecracker, which flies high and brightens the sky in seconds. Is there something in GST like rocket?
Krishna: Arjuna, just like a rocket soar quickly and lights up the sky, the new Section 128A Amnesty Scheme offers a fast and impactful way for taxpayers to settle past demands notice/orders of FY 2017-18, 2018-19, 2019-20. Effective from 1st November 2024, this scheme allows taxpayers to resolve dues by waiving penalties and interest if they settle their tax liabilities by 31st March 2025 of the period mentioned. It’s like launching a rocket—brightening the sky momentarily before it disappears. This amnesty helps taxpayer’s clear past dues in a flash, leaving a clean chit without penalty or interest burdens.
Arjuna: Krishna, what about the “Jameen chakkar”, the ground spinner that dazzles as it rotates? Is there something similar in GST that revolves around different stages?
Krishna: Yes, Arjuna! The new Invoice Management System (IMS) is like the Jameen chakkar of GST, rotating around key actions that keep taxpayers engaged at every step. Just as the Jameen chakkar spins, lighting up the ground, IMS revolves around the options of Accept, Reject, or Leave Pending for invoices uploaded by suppliers in their GSTR-1/1A/IFF. This structured rotation brings visibility and control over Input Tax Credit (ITC), reducing errors and ensuring compliance. IMS keeps taxpayers grounded in accurate record-keeping, making GST compliance smoother and more transparent. This system is effective from 15th October 2024.
Arjuna: Krishna, what about the “Full Jadi”, the firecracker that silently sparkles and brings a smile to everyone’s face? Is there any provision in GST with a similar effect?
Krishna: Absolutely, Arjuna! The new provisions under Sections 16(5) and 16(6) are just like the Full Jadi, the firecracker that silently sparkles and brings joy to everyone watching. These provisions bring quiet but significant powerful relief to taxpayers facing delayed ITC claims issues due to Section 16(4) timeline for the period 2017-18 to 2020-21. Effective from 1st November 2024, this new provision allows taxpayers who inadvertently claimed ITC outside Section 16(4)’s timeline as valid claim if they now meet the criteria of new provisions. ITC for the stated period can be claimed in any return filed up to November 2021. Like the Full Jadi, which brightens the scene quietly but effectively, this provision enables taxpayers to resolve past errors with clarity and move forward confidently.
Arjuna: What about “Garland Crackers”, where one cracker sets off the next? Is there a similar chain reaction in GST?
Krishna: Absolutely, Arjuna! Starting from January 2025, the GST portal will implement hard-locking of GSTR-3B for any liabilities auto-populated from GSTR-1, GSTR-1A, or IFF. If taxpayers need to correct their tax liability, they must do it through GSTR-1A, as there will be no option to modify it in GSTR-3B. This new measure ensures consistency and accuracy, like a series of crackers going off in perfect sequence.
Arjuna: Krishna, what about the “Atom Bomb”, firecracker, the one that bursts with a loud explosion and fills the sky with intense light? Has there been any recent GST judgment with a similar impact?
Krishna: Indeed, Arjuna! The Safari Retreats judgment is just like the Atom Bomb, shaking up the real estate sector with a powerful impact on ITC claims related to construction activities. In this landmark judgment, the court ruled that Input Tax Credit (ITC) is allowable on inputs used to construct immovable property, provided the property is ultimately used for leasing or renting purposes. The purpose will determine the classification as “Plant” or “Building”. If it is plant, then ITC is allowed. This judgment has been a game-changer, especially for the real estate sectors. Just like an Atom Bomb lights up with its powerful burst, this judgment has illuminated a previously uncertain area of GST law, providing relief to numerous businesses in the real estate sector.
Arjuna: Krishna, what about the “Lasun Bomb or Chitput”, the firecracker known for its sharp, quick bursts that grab everyone’s attention? Is there any GST amendment with a similar impact?
Krishna: Yes, Arjuna! The recent notifications introducing the Reverse Charge Mechanism (RCM) for both property rentals and metal scrap supply act just like a Lasun Bomb, shaking up compliance requirements across sectors. Effective from 10th October 2024, registered recipients renting non-residential property from unregistered suppliers must now bear the GST liability under RCM. Similarly, RCM for the metal scrap sector, where registered buyers must self-assess and pay GST on purchases from unregistered suppliers. This step, aimed at plugging tax evasion.
Arjuna: Krishna, what lesson should taxpayers take from this?
Krishna: Arjuna, Diwali is a festival of lights and joy, a time to celebrate with brightness and hope. If every Indian taxpayer follows the law, it brings light to the entire nation, fostering prosperity and growth. In other words, when we comply with the rules, it’s a true Diwali—but without compliance, we risk facing Diwale (bankruptcy).
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