The Article below summarizes the changes proposed in the CGST Act, 2017 and IGST Act, 2017 vide the Finance Bill, 2020 (‘Budget’). Post the enactment of Finance Act, 2020, these changes shall be applicable only when a notification is issued regarding their applicability.
With the option to avail composition scheme being granted to service providers having a turnover of upto 50 lakh w.e.f 1 January 2020, the Budget seeks to deny the benefit of composition scheme to the following service providers engaged in:
These restrictions are in line with the current provisions that impose limitations to in respect of eligibility of composition scheme for a supplier of goods.
Presently, Section 16 imposes limitation on the availment of ITC of a debit note relating to an invoice upto the due date of filing of return of September following the end of financial year to which invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. An amendment is proposed by the Budget to delink the period of limitation of availment of ITC of a debit note from the date of invoice to which such debit note pertains. Instead, now the limitation period of availment of ITC of a debit note shall be calculated from the issue of debit note and shall be allowed upto the due date of filing GSTR-3B of September following the end of financial year in which such debit note is issued or the date of filing relevant annual return, whichever is earlier.
3.1 The Budget proposes an amendment to enable a person who had applied registration voluntarily to apply for cancellation of registration if he is no longer liable to obtain registration. Presently, a GST officer is empowered to cancel the registration on an application made by the supplier or on his own volition only under the following circumstances:
3.2 Presently, a registered person whose registration has been cancelled by the GST officer on his own motion, can file an application for revocation of cancellation within a period of 30 days from the date of service of cancellation order. The Budget proposes to extend the time limit of 30 days, on sufficient cause being shown, as follows:
Presently, only the taxable person who committed such offences could be penalized under the Act. It was often found that a kingpin who was the beneficiary or was causing such offences to be conducted was doing such transactions with the registered taxable person being his employees. The employees, in most cases, were untraceable or were oblivious to such transaction being conducted in their name. The Budget seeks to bring an amendment to also penalize the actual kingpin / mastermind behind such fraudulent transactions.
4.2 In line with the amendment to penalty provisions, the Budget also seeks to amend the prosecution provisions to extend their scope to the kingpin/ mastermind behind the aforementioned transactions.
4.3 Another amendment is proposed to be made to the prosecution provisions to make the availment of ITC without an invoice or bill a cognizable and non-bailable offence.
To reduce the compliance burden on tax deductors who are Government establishments, the Budget seeks to remove the requirement for issue of TDS certificate and the hence strike out the penal provisions for delay in issue of TDS certificate.
6.1 With the amendment made to the definition of Supply vide the CGST Amendment Act, 2018 the transactions mentioned in Schedule II were not de-facto considered as supply. A transaction had to fulfill the requirements of Section 7 which specified consideration as a pre-requisite for a transaction to be a supply or in the absence of consideration it had to be listed under Schedule I in order for it to qualify as a supply under the Act. Schedule II served the purpose of only classification of a transaction as a supply of goods or services. Even post this amendment, transfer of business assets carried out without consideration was classified to be a transaction in goods as per Schedule II even though the same was not even a supply under the amended definition of supply.
The budget proposes to bring a clarificatory amendment to remove the transaction of transaction of business assets carried out without consideration from Schedule II. Thus the proposed amendment seeks to bring Schedule II in line with the amended definition of supply.
The time limit for issue of Removal of Difficulty Order under the CGST Act, 2017 is proposed to be extended from the present period of 3 years to 5 years.
Post the enactment of the Finance Act, 2020 the following amendments shall have retrospective effect:
(The author is a practicing Chartered Accountant based in Delhi and can be reached at [email protected] or 9811933762)
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