The Finance Budget 2024 introduces several significant amendments to the Goods and Services Tax (GST) regime, aimed at improving compliance, clarifying existing provisions, and addressing industry practices. Key changes include exclusions under Section 9(1), the introduction of Section 74A for determining tax discrepancies, and modifications to ITC claims and penalties. These amendments reflect the government’s ongoing efforts to refine GST regulations and enhance the efficiency of tax administration.
– Under Section 9(1) the un-denatured extra neutral alcohol or rectified spirit used for manufacture of alcoholic liquor, for human consumption is excluded.
– Section 74A is introduced after amendment of Section 10. Under Sub-Section (5), section 74A shall be inserted to determine tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to the Financial Year 2024-25 onwards.
– Section 74A- Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to Financial Year 2024-25 onwards
– As per the new Section 74A, if any tax is unpaid, underpaid, erroneously refunded, or if the input tax credit is wrongly availed or utilized, notice is to be served by the proper officer under subsection (1) within forty-two months from the due date for furnishing of annual return for the relevant financial year. No notice to be served if amount in question for a financial year is less than Rs one thousand.
Penalty in this case shall be equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, in cases other than fraud or willful misstatement or suppression of facts.
For the reason of fraud or any willful-misstatement or suppression of facts to evade tax, shall be equivalent to the tax due from such person.
Order to be issued within twelve months from the date of issue of notice.
The time limit for the taxpayers to avail the benefit of reduced penalty, by paying the tax demanded along with interest, is being increased from 30 days to 60 days.
– Insertion of new section 11A to to empower the government to waive the recovery of GST not levied or short-levied due to a generally prevalent practice in trade. It also aims at regularizing non-levy or short levy of central tax due to any general practice prevalent in trade.
– Section 13(3) is proposed to be amended for the time of supply in case the invoice is issued by the recipient of supply to be the date of invoice.
– Amendment to Section 16 of the Central Goods and Services Tax Act (CGST Act) Effective July 1, 2017
Introduction of New Sub-sections (5) and (6)
Sub-section (5):
Notwithstanding the provisions in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the invoices or debit notes for for past financial years (2017-18 to 2020-21), ITC can be claimed in any return filed under section 39 upto November 30, 2021. This retrospective amendment offers relief to by extending the timeline for availing ITC.
Sub-section (6):
If a registered person’s registration is canceled under section 29 and later reinstated through section 30 or by an order from the Appellate Authority, Appellate Tribunal, or court, they are allowed to claim ITC on invoices or debit notes that were not restricted by sub-section (4) at the time of the registration cancellation. The conditions for claiming ITC are:
1. ITC can be claimed under section 39 by either November 30 following the financial year to which the invoice or debit note pertains or by filing the relevant annual return, whichever is earlier OR
2. The ITC can be claimed for the period from the date of registration cancellation to the date of reinstatement, provided the return is filed within thirty days from the order revoking the cancellation.
These amendments ensure that taxpayers can claim their input tax credit even if their registration was temporarily canceled, as long as they meet the specified conditions.
– Section 17 is amended, which adds that ITC is not allowed on taxes paid under section 74, in respect of any period up to Financial Year 2023-24.
– A provisio to Section 30(2) is inserted stating the conditions & restrictions for revocation of cancellation of Registration, which will be prescribed on later dates.
– The amendments to Section 31 introduce to provide a time limit, for compliance under clause (f) and clarify that a “supplier who is not registered” includes those registered solely for TDS under GST, under section 51.
– Section 39(3) is amended to state that GSTR-7 for TDS under GST shall be filed whether or not any deductions have been made during the said month.
– Section 54(15) have been added to state that no GST refund of unutilized ITC or IGST shall be allowed on account of zero rated supply of goods, subjected to export duty.
– Section 70(1A) has been added & says that all persons summoned under sub-section (1) must comply with the summons by attending either in person or through an authorized representative, as directed by the officer.
– Section 73 deals with the cases where there is no invocation of fraud/suppression/mis-statement etc. Section 74 deals with cases where the provisions related to fraud/suppression/mis-statement etc. are invoked.
Section 73 has been amended & Sub-section 12 has been inserted to restrict the applicability of this section for determination of tax pertaining to the period upto Financial Year 2023-24. Similarly, Section 74 (12) has been added to restrict the applicability of section 74, for FY up to 2023-24.
– Amendment of Section 107 & 112 to Reduce the Maximum Amount of Pre-Deposit for Filing Appeals with the appellate authority from Rs. 25 Crore to Rs. 20 Crore. The amount of pre-deposit is reduced, for filing an appeal with the Appellate Tribunal from 20% with a maximum amount of Rs. 50 Crore of central tax to 10% with a maximum of Rs. 20 Crore of central tax. Additionally, the time limit for filing appeals before the Appellate Tribunal is being modified w.e.f. 1st August 2024 to avoid the appeals from getting time-barred.
– Section 128A is inserted for conditional waiver of interest or penalty or both relating to demands raised under section 73, for the financial years 2017-18 to 2019-20, in case the full tax liability is paid by the taxpayer. This provides an opportunity to settle past disputes without any additional financial burden.
Conclusion: The proposed amendments to GST in the Finance Budget 2024 bring substantial changes to the taxation landscape, providing clarity and flexibility for taxpayers. By addressing issues such as tax discrepancies, ITC claims, and procedural compliance, these changes aim to streamline the GST framework and support the ease of doing business. As businesses adapt to these updates, they can expect a more transparent and efficient tax system that aligns with contemporary economic practices.
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