Analysis of Impact of Budget 2023 on GST

KEY HIGHLIGHTS OF PROPOSED CHANGES IN CGST & IGST ACT, 2017 As Per Finance Bill 2023

COMPOSITION SCHEME

• Finance Bill 2023 seeks to amend Clause (d) of sub-section (2) and Clause (c) of sub-section (2A) in Section 10 of the CGST Act is being amended so as to remove the restriction imposed on registered persons engaged in supplying of goods through electronic commerce operators from opting to pay tax under the Composition Levy. However, restriction shall continue for suppliers who engaged in supply of services and effective date for such exemption is yet to be notified by council.

INPUT TAX CREDIT

Amendment in Second proviso

• Proviso to Section 16(2) related to reversal under Rule 37 have been proposed to be amended to allow reversal as per rule prescribed for it i.e. where the payment has not been made to the supplier within 180Days the ITC is to be paid along with interest u/s 50 in such manner as may be prescribed(presently added to his output tax liability along with interest thereon)

Amendment in third proviso

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him to supplier of the amount towards the value of supply of goods or services or both along with the tax payable thereon.

• Explanation to Section 17(3) is being amended to include in the value of exempt supplies, the value of such activities or transactions as may be prescribed in respect of clause (a) of paragraph 8 of the said Schedule.
• Section 17(5)(fa) is being inserted to block ITC on goods or services or both received by a taxable person, which are used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013.

PERSON NOT LIABLE FOR REGISTRATION

• Section 23 is being amended by Finance Act 2023 retrospectively w.e.f 01.07.2017 to give it an overriding effect on the provisions of Section 22(1) & Section 24. The Person making exclusively exempt supplies or an agriculturist involved in the supply of produce out of cultivation of land will not have to take taken registration even if it falls under the criteria of compulsory registration under GST. i.e. whether engaged in the interstate supply or is liable to pay tax under reverse charge mechanism.

RETURN UNDER GST

• An Insertion of new clause in Section 37,39,44 an registered person shall not be allowed to filed such return for a tax period after the expiry of a period of three years from the due date of furnishing thesaid returns under GST.
• An Insertion of New Clause in Section 52 E-commerce operator shall not be allow to furnish a statement after the expiry of a period of three years from the due date of furnishing said statement.

REFUND  

• Section 54(6) has proposed to amended, refund of 90% of refund so claimed was earlier reduced by the ITC Provisionally accepted now the exclusion is removed . Hence 90% of refund in case of zero rated supplies made.

INTEREST ON DELAYED REFUND

• If any tax ordered to be furnished to any applicant is not refunded within 60 Days from the date of receipt of application, interest at such rate not exceeding 6% as may be specified, in the notification issued by the govt. on recommendation of GST Council shall be payable in respect of such refund for the period of delay beyond sixty days from the date of receipt of such application till the date of refund to be computed in such manner and subject to conditions and restrictions as may be prescribed.

Union Budget 2023- GST Updates

It is being amended in order for manner and conditions and restrictions shall be provided by way of rules.

PENALTY FOR E-COMMERCE OPERATOR

• A new sub section (1B) in section 122 of CGST Act is being inserted so as to provide for penal provision applicable to ECO in case of contravention provision relating to supplies of goods made through them by unregistered persons or composition taxpayer shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the amount of tax involved had such supply been made by registered person other than a person paying tax under section 10, which ever is higher.

DECRIMINALISATION OF OFFENCES

• 132(1)(iii) has been proposed to be amended so as to raise the minimum threshold of tax amount for launching prosecution under GST from one crore to two crore.

COMPOUNDING OF OFFENCES

• 138 has been proposed to be amended to exclude the persons involved in offences relating to issuance of invoices without supply of goods or services or both from the option of compounding of the offences and to reduce the compounding amount from the present range 50 to 150 percent of tax amount to range of 25 to 100 percent.

OTHER INSERTION OF SECTIONS & AMENDMENTS IN FINANCE BILL

• An Insertion of new Section 158A, which entails consent based sharing of information furnished by a taxpayer .

Only certain information based on consent of supplier and recipient and fulfillment of other conditions shall be disclosed.

• Retrospective Amendment to Para 7 & 8 of Schedule III to the CGST Act were Inserted by the Central Goods and Services Tax (Amendment) Act, 2018, w.e.f. 1-2-2019.

PARA7-( Supply of goods from a place in the non taxable territory to another place in the non taxable territory without such goods entering into India) PARA8-(Supply of goods from a place in the non taxable territory to another place in the non taxable territory without such goods entering into India)

• However, where the tax has been paid in respect of such transactions/ activities during the period from 01st July, 2017 to 31st January,2019, no refund of such tax paid shall be available.
• Clause (16) & (17) of Section 2 of the IGST Act are proposed to be amended t definition of “non-taxable online recipient” & “online information and database access or retrieval services”. In the definition of OIDR has been amended wherein “essentially automated and involving a minimal human intervention and” has been omitted.