The 53rd GST Council Meeting held significant deliberations resulting in several key amendments and clarifications across various facets of GST regulations. This article provides a comprehensive overview of the pivotal changes introduced, focusing on appeal filing procedures, electronic acknowledgements, corporate guarantees, and other pertinent updates.
Rules for filing of appeal before the Appellate Tribunal
→ Appeal would be filed online in APL-05 electronically only and the provisional acknowledgement would be issued
→ Appeal can be filed annually only if the Registrar issues a general or specific order to this effect
→ The same provision is applicable for memorandum of cross objections in APL-06
→ Final acknowledgement would be issued only upon removal of defects in the application if any
→ Self certified copy of the order is to be submitted within 7 days if the appeal is filed physically
→ Fees for filing would be 1000 for every Rs. 1 lakhs. However, the following would be the minimum and maximum amount:
• Minimum – Rs. 5000
• Maximum – Rs. 25000
→ The appeal can be withdrawn anytime before the issuance of order
→ If the final acknowledgement is issued, the withdrawal would be subject to the approval of the Appellate Tribunal
(Notification no. 12/2024-CT dated 10th July 2024)
Electronic acknowledgement in DRC-04 against payment made in DRC-03
→ Upon making payment in DRC-03, the proper officer would be required to electronically issue acknowledgement in DRC-04
(Notification no. 12/2024-CT dated 10th July 2024)
Acknowledgement of payment / submission in DRC-01A
→ Upon receipt of reply in DRC-01A, there is no official mechanism to determine if the officer has accepted / rejected the submissions / payment against it.
→ To circumvent this, upon receipt of reply / payment against DRC-01A, the proper officer may issue an intimation in Part-C of FORM GST DRC-01A, accepting the payment or the submissions or both, as the case may be, made by the said person
(Notification no. 12/2024-CT dated 10th July 2024)
Setting of DRC-03 against the outstanding demand
→ Where a person makes a payment through DRC-03 under ‘voluntary’ or ‘others’ category without selecting the option to set off demand in Electronic Liability ledger, the liability on the electronic credit ledger remains open
→ Instead of crediting the said amount in the electronic liability register in FORM GST PMT –01 against the debit entry created for the said demand, the said person may file an application in FORM GST DRC-03A electronically on the common portal
→ The amount so paid and intimated through FORM GST DRC-03 shall be credited in Electronic Liability Register in FORM GST PMT –01 against the debit entry created for the said demand
→ Where an order in FORM GST DRC-05 has been issued in terms of sub-rule (3) concluding the proceedings, in respect of the payment of an amount in FORM GST DRC-03, an application in FORM GST DRC-03A cannot be filed
(Notification no. 12/2024-CT dated 10th July 2024)
Recovery Till Tribunal is established
→ Stay would be granted against the demand pending after first appeal upon the following compliances:
• Make the payment of predeposit and set off against pending demand
• File an undertaking with jurisdictional officer that he intends to file an appeal
• File the appeal before the Tribunal within the time lines prescribed when established
→ For pre-deposit, File DRC-03A, if payment made in DRC-03 and not set off against outstanding demand
→ Till DRC-03A becomes functional, mere intimation to the officer that payment made in DRC-03 would suffice
(Circular no. 224/18/2024-GST dated 11th July 2024)
Amendment / clarification on corporate guarantee
→ New Valuation rule had been prescribed for corporate guarantee w.e.f 26/10/2023 under Rule 28(2). The value was deemed to be one per cent of the amount of such guarantee offered, or the actual consideration, whichever is higher.
→ This rule has been retrospectively amended from 26/10/2023 as follows:
-
- Where the recipient is eligible for full ITC, any value declared in the invoice would be deemed the said value of supply. The restriction of 1% would not be applicable. One can also state that even if no value is assumed, NIL would be deemed as the open market value.
- Where full ITC is not eligible, then the said value would be based 1% of guarantee offered per annum (newly inserted) or the actual consideration whichever is higher.
- The 1% would become proportionate to the number of years / months for which guarantee is being offered.
- The valuation in Rule 28(2) would be applicable only on services to the related person located within India
- For exports / imports outside India, the general valuation rules would be applicable for related parties.
→ For the period before 26/10/2023, it was still taxable and the general valuation rules would still be applicable for the same. If full ITC was available, then any value (including NIL) can be considered for the same.
→ The valuation of 1% would be based on the guaranteed amount and not merely the actual loan disbursed. The ITC would also be eligible accordingly.
→ No impact on GST on mere takeover of existing loan, unless there is issuance of fresh corporate guarantee or there is a renewal of the existing corporate guarantee
→ In cases where multiple related entities are providing corporate guarantee, the valuation would be aggregate consideration by each of the guarantors or 1% per annum (on proportionate basis) whichever is higher
→ It is clarified that in cases where domestic corporates issue intra-group guarantees, GST is to be paid under forward charge mechanism
→ where such guarantee is provided by the foreign/ overseas entity for a related entity located in India, then GST would be payable under reverse charge mechanism
(Notification no. 12/2024-CT dated 10th July 2024)
(Circular no. 226/20/2024-GST dated 11th July 2024)
Interest on amount lying in electronic cash ledger at the time of filing of return
→ Amendment in rule 88B of CGST Rules to provide that an amount, which is available in the Electronic Cash Ledger on the due date of filing of return in FORM GSTR-3B, and is debited while filing the said return, shall not be included while calculating interest under section 50 of the CGST Act in respect of delayed filing of the said return.
(Notification no. 12/2024-CT dated 10th July 2024)
New authentication mechanism upon registration
Following mechanisms of authentication would be required for every new registration application for all the states in order to control fake invoicing:
a) Biometric based Aadhaar Based Authentication – This would being rolled out in a phased wise manner across the country. It is applicable only when a person opts for Aadhaar Authentication, and the GST portal requires the same based on data analysis and risk parameters. It would require the following:
i) Taking photo of the applicant / key management of the entity
ii) Biometric authentication
iii) Verification of original copy of documents uploaded on portal
b) Non-biometric based Aadhaar based authentication – If a person opts for aadhaar authentication and the portal does not require biometrics, then the OTP based validation and submission of KYC documents online would suffice.
c) Non-aadhaar based authentication – If a person does not opt for aadhaar based authentication, the following steps would still be needed at one of the facilitation centres:
i) Taking photo of the applicant / key management of the entity
ii) Verification of original copy of documents uploaded on portal
(Notification no. 12/2024-CT dated 10th July 2024)
(Notification no. 13/2024-CT dated 10th July 2024)
New form GSTR-1A prescribed through rules
→ It is an additional facility provided to add any particulars of current tax period missed out in reporting in FORM GSTR-1 of current tax period or amend any particulars already declared FORM GSTR-1 of current tax period
→ The FORM will be available on the portal after due date of filing of FORM GSTR -1 or the actual date of filing of FORM GSTR -1 ,whichever is later, till filing of corresponding FORM GSTR-3B of the same tax period
→ The particulars declared in FORM GSTR-1A along with particulars declared in FORM GSTR-1 shall be made available in FORM GSTR-3B
→ Amendment of a document which is related to change of Recipient‘s GSTIN shall not be allowed in GSTR-1A.
→ In addition to the GSTR-2B already generated, GSTR-2B shall also consist of all the supplies declared by the respective suppliers in GSTR-1A. However, supplies declared or amended in FORM GSTR-1A shall be made available in the next open FORM GSTR-2B.
→ The additional details or the amendments of the details of outward supplies of goods or services or both furnished in FORM GSTR-1A may, as per the requirement of the registered person, include the –
(a) invoice wise details of –
(i) inter-State and intra-State supplies made to the registered persons; and
(ii) inter-State supplies with invoice value more than one lakh rupees made to the unregistered persons;
(b) consolidated details of –
(i) intra-State supplies made to unregistered persons for each rate of tax; and
(ii) State wise inter-State supplies with invoice value upto one lakh rupees made to unregistered persons for each rate of tax;
(c) debit and credit notes, if any, issued during the month for invoices issued previously.
(Notification no. 12/2024-CT dated 10th July 2024)
Change in limit for B2C in GSTR-1
→ Invoice-wise declaration of B2C supplies were applicable only in case of inter-state supplies and the invoice value is above Rs. 250,000
→ From 1st August 2024, this limit has been revised to Rs. 100,000
(Notification no. 12/2024-CT dated 10th July 2024)
Registration cancelled if return not filed upon revocation of earlier cancelled registration
→ All returns due for the period from the date of the order of cancellation of registration till the date of the order of revocation of cancellation of registration is to be furnished by the said person within a period of thirty days from the date of order of revocation of cancellation of registration
→ Where the registration has been cancelled with retrospective effect, the registered person shall furnish all returns relating to period from the effective date of cancellation of registration till the date of order of revocation of cancellation of registration within a period of thirty days from the date of order of revocation of cancellation of registration
→ If this is done, then the registration cancellation which had been revoked earlier would not be valid. The registration would be liable for cancellation once again.
(Notification no. 12/2024-CT dated 10th July 2024)
ISD mechanism through rules
→ ISD mechanism was made compulsory through the Finance Act 2024 and the mechanism of such distribution was to be prescribed through the rules. The said mechanism has now been prescribed on similar lines.
→ ITC in respect of reverse charge is also to be distributed as common credit if the same is attributable to any other GSTIN. Such distribution would be only for RCM paid by another distinct person / branch registered in the same state as that of ISD.
→ It is imperative that all multi location entities should evaluate whether any branch is receiving invoice on behalf of another and determine their requirements to distribute ITC as ISD.
(Notification no. 12/2024-CT dated 10th July 2024)
Change in due date of GSTR-4
→ FORM GSTR-4 from FY 2024-25 onwards shall be required to be furnished by the registered person till 30th June of the following financial year
(Notification no. 12/2024-CT dated 10th July 2024)
Changes in GSTR-2B
→ In case of negative balance in forward charge, import of goods, ISD or RCM, the figures would be shown under reversal in 4B(2)
→ Reversal under Rule 37A i.e. where the supplier has not filed GSTR-1 but not GSTR-3B within the prescribed limit, it would be reflected in GSTR-2B for prompting ITC reversal on it.
(Notification no. 12/2024-CT dated 10th July 2024)
Changes in GSTR-3B
→ In GSTR-3B, any negative liability of previous tax period would be allowed to be adjusted in the current period’s GSTR-3B
(Notification no. 12/2024-CT dated 10th July 2024)
Summary of changes in GSTR-9
→ Supplies under 9(5) would be reported by the ecommerce operator and the supplier respectively in a separate column in the return
→ Non-GST supply is to be mandatorily reported in the relevant column in Table 5F
→ Table 8A would be autopopulated from GSTR-2B from FY 2023-24
→ ITC reversed in Previous year and reclaimed in current year would not be reported in Table 13
→ The limit for filing of Annual return would continue to be Rs 2 crores
(Notification no. 12/2024-CT dated 10th July 2024)
(Notification no. 15/2024-CT dated 10th July 2024)
Reduction of rate of TCS
→ The rate of TCS has been reduced in aggregate from 1% to 0.5%
(Notification no. 12/2024-CT dated 10th July 2024)
Refund of additional IGST on account of upward revision in export prices
→ Any person, claiming refund of additional integrated tax paid on account of upward revision in price of the goods subsequent to exports can make application in RFD-01 in any other category.
→ The refund is to be filed within 2 years from the date of export.
→ For the refund pending for the exports already made till date, 2 years would be from the date of notification of this rule.
→ Relevant documentation for such refund has also been revised
→ The excess refund should be deposited back in case of downward revision of prices
(Notification no. 12/2024-CT dated 10th July 2024)
Time limit for realization of consideration in case of export of services
→ Earlier the time limit for realization of consideration for export of services without payment of tax was 15 days after:
• Expiry of 1 year from the date of invoice or
• Such further period allowed by the Commissioner
→ The aforementioned time limit has been revised to be 15 days after the following period:
• Expiry of 1 year from the date of invoice or
• Period allowed under FEMA including any extension allowed by RBI
(Notification no. 12/2024-CT dated 10th July 2024)
Filing of Departmental Appeals
→ The limit for filing of Appeals by Department has been prescribed as follows:
• GSTAT – Rs. 20,00,000
• High Court – Rs. 100,00,000
• Supreme Court – Rs. 200,00,000
→ The mechanism of computation of this amount has been prescribed through the Circular
→ Also, the exceptions where this limit would not apply has also been prescribed
→ Merely if the Department has not filed an appeal, there is no presumption that the Department has accepted the decision on the disputed issue
(Circular No. 207/1/2024-GST dated 26th June 2024)
Place of supply to unregistered persons where billing and delivery address are different
→ In cases involving supply of goods to an unregistered person, where the billing address and delivery address are different, the supplier may record the delivery address as the address of the recipient on the invoice for the purpose of determination of place of supply of the said supply of goods
(Circular No. 209/3/2024-GST dated 26th June 2024)
Valuation of supply of import of services by related person where full ITC is available
→ In case of import of services without consideration from related person outside India, the recipient is liable to pay taxes under RCM
→ It is clarified that where full input tax credit is available to the said related domestic entity, the value of supply of services (including NIL value) declared in the invoice by the said related domestic entity may be deemed as open market value
(Circular No. 210/4/2024-GST dated 26th June 2024)
Time limit for RCM ITC availment from unregistered persons
→ At times, the recipient attempts to avail ITC on taxes paid under RCM after the time limit u/s 16(4). Such ITC would be available subject to the following:
• Supply received from unregistered person
• Self-invoice issued during the current period
• Tax paid under Section 73 and not 74
→ Time limit u/s 16(4) would be calculated corresponding to the date of issue of self-invoice
→ The above is not applicable if supply is received from unregistered person
(Circular No.211/5/2024-GST dated 26th June 2024)
Conditions for reduction of output tax upon issuance of discount credit note
→ One of the conditions for reducing value on discount provided is that the ITC should have been reversed by the recipient
→ There is no functionality on the GST portal to check this
→ To comply with this, a self certified certificate (where tax < Rs 500,000) or the certificate by CA / CMA (tax > Rs. 500000 in a year) can be taken from the recipient of supply confirming the ITC reversal on the credit note
→ This would be applicable even for the past period
(Circular No.-212/6/2024-GST dated 26th June 2024)
Time of supply under HAM models
→ Under HAM model, the time of supply would be based on the due date of payment applicable in case of continuous supply of services
→ Any interest component would also be included
(Circular No.-221/15/2024-GST dated 26th June 2024)
Taxability of extended warranty
→ If a customer enters into an agreement of extended warranty with the supplier of the goods at the time of original supply, then the consideration for such extended warranty becomes part of the value of the composite supply, the principal supply being the supply of goods, and GST would be payable accordingly
→ if the supply of extended warranty is made by a person different from the supplier of the goods, then supply of extended warranty will be treated as a separate supply from the original supply of goods and will be taxable as supply of services.
→ In case where a consumer enters into an agreement of extended warranty at any time after the original supply, then the same shall be treated as a supply of services distinct from the original supply of goods
(Circular No.-216/10/2024-GST dated 26th June 2024)
Conclusion: The 53rd GST Council Meeting has ushered in crucial amendments and clarifications aimed at enhancing transparency and compliance in GST practices. Stakeholders are advised to adapt to these changes promptly to ensure seamless adherence to the revised regulations.
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Author: Shubham Khaitan | B.Com (Hons), FCA, ACS, CFA DISA (ICAI) | Partner, S. Khaitan & Associates | Email: [email protected]
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