Recent GST Notifications/Circulars Issued Pursuant to Decisions Taken at 39th GST Council Meeting

CBIC has recently issues 20 GST Notification and 2 GST Circulars  in pursuant to the decisions taken at the 39th GST council meeting. Author has analysed Important provisions related to these Notifications and Circulars.

I. DUE DATES

Return filing due dates already prescribed for the period April – September 2020 vide different notifications shall be amended in days to come as per the recent COVID – 19 relaxations. Because of COVID – 19 the return filing due dates and the due dates for making the payment have been extended for the months of February, March & April 2020 as under:

Taxpayer Period Due Dates Remarks
Composition supplier Quarter ended 31th March, 2020 Last week of June. No interest, late fees or penalties if the tax is paid and returns are filed within the extended due dates. Further date for opting for composition scheme for FY 2020-21 is extended till the last week of June, 2020.
Having aggregate annual turnover of less than INR 5cr. February, March&April 2020 Staggered due dates all falling in the last week of June. No interest, late fees or penalties if the tax is paid and returnsare filed within the extended due dates.
Others (i.e. having aggregate annual turnover exceeding INR 5cr. February, March & April 2020 Staggered due dates all falling in the last week of June. Interest would apply at the reduced rate of 9% if payment of tax is not done within 15 days from the original due date. As an example, the due date for making the payment for the month of March would be 20th April. Revised date for making the payment now would be 5th May (15 days from the normal due date). If payment is not done within the said revised due date interest @ 9% would apply from the revised date. There shall be no late fees or penalties if payments and returns are filed by the revised due dates for filing the returns (i.e. last week of June 20).

It is also apparent that the return for the month of May 2020 shall be filed only post the filings till the month of April 2020 are over in the last week of June 2020.

GST inscription on wooden alphabet over white background with selective focus

II AADHAR AUTHENTICATION WHILE OBTAINING THE REGISTRATION

Notification No. 18/2020 – Central Tax and Notification No. 19/2020 – Central Tax both dated 23.03.2020 have been issued appointing 1st April as the notified date from which Aadhar authentication shall be mandatory for authorised signatory of all types, Managing and Authorised partners of a partnership firm, Karta of an Hindu undivided family and individual proprietors in order to obtain GST registration. If Aadhaar number is not assigned to the said persons, he shall be offered alternate and viable means of identification which shall include physical verification of the principal place of business within 60 days from the date of application. However, vide Notification No. 17/2020 – Central Tax Aadhar authentication shall not apply to a person who is not a citizen of India.

III COMPUTATION OF ITC REVERSAL UNDER RULE 43 FOR CAPITAL GOODS

Vide Notification No. 16/2020 – Central Tax dated 23.03.2020 revised mechanism has been prescribed under Rule 43 to calculate the ITC reversal for situations wherein capital goods used exclusively for non-business purpose or for exclusively making exempted supplies or for exclusively making taxable supplies are subsequently used in making exempted as well as taxable supplies (mixed use). In a nutshell the ITC attributable for the period (calculated @ 5% per quarter) for which the given capital goods were used exclusively in making exempted/non-business supplies shall be added to the output tax while allowing the credit of full ITC for such capital goods when brought for the mixed use (i.e. for exempted as well as taxable supplies). Further provisions of Sec. 18(4) of the CGST Act, 2017 shall not apply for such capital goods to avoid double reversal.

IV FORM– 9C EXEMPTION FOR FY 2018-19

Vide Notification No. 16/2020 – Central Tax dated 23.03.2020 Rule 80 has been amended to the effect that registered persons whose aggregate turnover during the financial year 2018-2019 is INR 5 crore or less shall be exempted from filing GST Audit Report in FORM GSTR – 9C.

V RE-CREDIT OF EXCESS OR WRONGLY PAID TAX

Vide Notification No. 16/2020 – Central Tax dated 23.03.2020 sub-rule (4A) has been inserted in Rule 86 to provide for refund of any amount paid as tax wrongly paid or paid in excess from the electronic credit ledger. Said refund amount shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03.

VI. CAPPING TURNOVER WHILE ALLOWING REFUND OF ACCUMULATED ITC ON ACCOUNT OF ZERO-RATED SUPPLIES

The definition of “Turnover of zero-rated supply of goods” under Rule 89(4) has been amended vide Notification No. 16/2020 – Central Tax dated 23.03.2020 to the effect that it shall be the actual transaction value of zero-rated supplies made under LUT or the value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier, whichever is less. Therefore in a nutshell if the actual export value is let us say INR 160 but the value of the like goods domestically supplied by the same or similarly placed supplier is let us say INR 100, the value of exports for calculating the eligible refund amount of the accumulated ITC shall be INR 150 and not the actual export value of INR 160. It is also important to note that the domestic value of goods has to be declared by the supplier who is seeking the refund. It therefore remains to be seen whether the said declaration shall be accepted, or refunds will be delayed for the want of any other information at the end of the department.

VII CLARIFICATION ON RULE 96(10)

Said Rule prohibits a person from seeking refund of IGST paid on export of goods or services if such person inter alia has claimed the benefits of exemption in the form of Advance Authorization while making the procurements. However, there was confusion as to whether the said restriction shall also apply to situations wherein the person has only claimed the benefits with respect to the basic duties (e.g. Custom duties) and not with respect to IGST. In other words, a person who has paid IGST on procurements should be allowed to export the goods with payment of IGST and seek refund thereof. Said position has now been clarified vide Notification No. 16/2020 – Central Tax dated 23.03.2020 by adding an explanation to the Rule 96(10) w.e.f. 23.10.2017 (when the said restrictions came into operation) to the effect that the benefit of the notifications mentioned therein shall not be considered to have been availed only where the registered person has paid Integrated Goods and Services Tax and Compensation Cess on inputs and has availed exemption of only Basic Customs Duty (BCD) under the said notifications.

VIII RECOVERY OF REFUND OF UNUTILISED ITC OR INTEGRATED TAX PAID ON EXPORT OF GOODS WHERE EXPORT PROCEEDS NOT REALISED

Rule 96B has been added vide Notification No. 16/2020 – Central Tax dated 23.03.2020 to provide that in the situations wherein the sale proceeds in respect of export of goods have not been received within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), including any extension of such period, the refund claimed by such person of either accumulated ITC or IGST paid on said exports shall have to be deposited back to the Government to the extent of non-realization of sale proceeds, along with applicable interest within thirty days of the expiry of the said period or, as the case may be, the extended period. Said recovery would not be made in situations wherein RBI writes off the requirement of realization of sale proceeds on merits. Also, when the sale proceeds are eventually realized (after the period allowed under FEMA but still permitted by RBI) the person who has deposited the refund back can claim it again provided the application is made within a period of three months from the date of realization of sale proceeds.

IX. ANNUAL RETURN FOR FY 18-19

Vide Notification No. 15/2020 – Central Tax dated 23.03.2020 the time limit for furnishing of the annual return for FY 2018-19 has been eztended till 30.06.2020

X. E-INVOICING AND QR CODE

The mandatory requirement for E-invoicing for registered persons whose aggregate turnover in a financial year exceeds INR 100 crores shall now apply from 01.10.2020 vide Notification No. 13/2020– Central Tax dated 23.03.2020. Also, the requirement for capturing dynamic QR code for registered persons whose aggregate turnover in a financial year exceeds INR 500 crores while making supplies to unregistered persons shall now apply from 01.10.2020 vide Notification No. 14/2020– Central Tax dated 23.03.2020.

XI. COMPOSITION SUPPLIERS

Vide Notification No. 12/2020 – Central Tax dated 21.03.2020 the registered person who have opted for composition scheme for FY 2019-20 and who have furnished GSTR – 3B for the said period shall be exempted from furnishing FORM GSTR- 1 as well as FORM GST CMP-08.

XII. SPECIAL PROCEDURE FOR CORPORATE DEBTORS UNDER THE PROVISIONS OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016

Vide Notification No. 11/2020 – Central Tax dated 21.03.2020 special procedure for compliance under the GST laws has been proscribed for a corporate debtor from the date of the appointment of the IRP/RP till the period they undergo the corporate insolvency resolution process. Circular No. 134/04/2020-GST dated 23.03.2020 has also been issued to clarify certain aspects related to compliance for companies under Insolvency and Bankruptcy Code, 2016.

XIII. SPECIAL PROCEDURE – DAMAN AND DIU & DADRA AND NAGAR HAVELI

On merger of the given UT’s w.e.f. 26.01.2020 special procedure has been prescribed vide Notification No. 10/2020 – Central Tax dated 21.03.2020 for enabling the transfer of balance of input tax credit (ITC) of registered persons who were till 25.01.2020 registered with both the UT’s. Further the transition date shall be 31st day of May, 2020 and till the said date the registered persons are required to pay the appropriate applicable tax in the returns to be filed for the period till the transition date.

XIV. CLARIFICATION IN RESPECT OF APPEAL IN REGARD TO NON-CONSTITUTION OF APPELLATE TRIBUNAL

Circular no. 132/2/2020 – GST dated 18.03.2020 has been issued to clarify that the prescribed time limit of three months (six months in case of appeals by the Government) to make application to appellate tribunal will be counted from the date on which President or the State President enters office and not from the date of communication of order due to  non-constitution of Appellate Tribunal till date. This shall apply to the orders communicated before the date on which President or the State President enters office.

XV. CLARIFICATION IN RESPECT OF APPORTIONMENT OF INPUT TAX CREDIT (ITC) IN CASES OF BUSINESS REORGANIZATION

Circular No.133/03/2020-GST dated 23.03.2020 has been issued to clarify certain aspects related to the calculation and the manner for apportionment and transfer of ITC on account of business reorganization in the nature of de-merger or transfer of business.

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