Major Recent Updates in GST

It is expected by various agencies that GDP may fall in majority of major economies amid covid crisis. In Q2 of 2020-21, India may be one of the slowest growing economies. In Q1, India’s growth has fallen the steepest among G-20 nations.

Although markets have responded positively to the vaccine news, rising cases of Covid in second /third was can have an adverse impact. However, increase in e-way bills and GST collections defy such a belief, as of now. According to Dr. C. Rangarajan, noted economist and former RBI Governor, economy may be back on pre-Covid levels by 2021-22 end as the signs of economic recovery are visible after series of unlock down phases.

MOF also expects economy to pick-up and it may also announce next tranche of stimulus. India stands poised to re-cover at a fast pace and reach pre-Covid levels by the end of the year- barring the incidence of second wave that may be triggered by the fatigue with social distancing.

On Compensation Cess, Pondicherry, West Bengal, Kerala and Rajasthan have accepted the proposal of borrowing as per Central Government proposal – Option-1. With this, 25 States and 3 UT’s have given nod for option-I for meeting GST Compensation Cess shortfall. States like Punjab, Jharkhand and Chhattisgarh are yet not decided on this. The centre has already borrowed and transferred Rs. 24000 crore in four tranches to opting states and 3 UT’s.

CBIC had issued a series of Notifications on 10.11.2020 (from Nos. 81 to 88) and Circular No. 143, all dated 10.11.2020. Notification Nos. 81 to 84 relate to implement the scheme of quarterly return filing alongwith monthly payment of taxes (QRMP scheme). A clarificatory circular has been issued to clarify the issues of eligibility, options, furnishing of details of outward supplies u/s 37 of CGST Act, 2017, monthly payment of tax, quarterly filing of Form GSTR-3B,applicability of interest and late fees. Further, time limit for filing of form GST ITC-04 has been extended to 30.11.2020. E-invoicing has been made mandatory from 01.01.2021 for every taxpayer whose aggregate turnover in any financial year from 2017-18 exceed Rs. 100 crores.

While no new notifications has been issued in last 10 days, Corrigendums were issued to Notification Nos. 82 and 86, both dated 10.11.2020. GSTN has been issuing clarifications and updates on various GSTN functionalities and procedures such as e-invoicing for taxpayers with Rs. 100 crore turnover, FAQ’s on e-invoicing, blocking of e-way bills (EWB) generation facility from December, 2020, auto population of e-invoice details in GSTR-1 etc. The drive to detect fake invoices and wrong ITC continues with more and more cases being booked and arrests being made.

On GST collections, post lock-down due to Covid, economy has started opening up and so the tax collections are also on a rise. GST collections started rising from July, 2020 onwards and have been in a range of Rs. 87000 – 105000 crores. In October 2020, GST collected crossed Rs. one lakh crore and was Rs. 105155 crore. While November, 2020 GST collections may also show + 1 lakh crore due to festive demand push, it may be difficult to sustain it in near future.

For effective growth, one should look at YoY growth. If all estimates and growth prediction indicate a contraction of 10-12%, the GST collections in 2020-21 are likely to be lower only. The next wave of Covid entering India is also a course of worry, though our economy has been recovering at a reasonable pace. E-invoicing which was introduced from October 1, may also help in enhanced taxes in subsequent months.

Recently 15th Finance Commission’s Chairman has stated that GST in India is not a perfect tax system though a path breaking reform and it requires changes alongwith rates rationalization. He has also suggested for getting rid of exemptions and improving quality of technology and invoice matching.

Effective date of amendments in section 39 of CGST Act, 2017

The Central Government has appointed the 10th day of November, 2020, as the date from which amendments in the provisions of section 39 (1, 2 and 7) made by Finance Act, 2019 of Act shall come into force. These amendments relate to furnishing of returns under QRMP Scheme.

(Source: Notification No. 81/2020-Central Tax dated 10.11.2020)

Amendment in CGST Rules, 2017

Following amendments have been made in CGST Rules, 2017 in relation to returns (Rule 59, 60, 61, 61A and 62)

GSTR-1 related

• Quarterly return filers can file their *first and second month B2B invoices* in Invoice Furnishing Facility (IFF) on or before 13th of 1st month in next quarter
• Total value for such B2B invoices is capped to 50 lakhs per month
• No need to report invoices again in GSTR-1 if already reported in IFF
• Due date of GSTR-1 for quarterly filers is 13th of 1st month in next qtr
• HSN/SAC codes shall be mentioned mandatorily in GSTR-1* ( <5Cr- 4 digit, >5Cr- 6 digit)

GSTR-2 related Amendment/Changes

The invoices reported in IFF shall be made available to recipient in their GSTR-2A/2B

GSTR-3B related Amendment/Changes

• Rule 61(6) was inserted to provide due date for filing GSTR-3B for the months of October, 2020 to March, 2021 as 20th  of next month if TO > 5 Crores
• Quarterly return filers shall deposit tax in electronic cash ledger on or before 25th of next month for first and second months

(Source: Notification No. 82/2020-Central Tax dated 10.11.2020)

Extension of due dates for GSTR-1

New due dates for filing form GSTR-1 have been notified w.e.f. 01st January, 2021

(Source: Notification No. 83/2020-Central Tax dated 10.11.2020)

Class of persons for QRMP Scheme

• A registered person whose aggregate turnover crosses five crore rupees during a quarter in a financial year shall not be eligible for furnishing of return on quarterly basis from the first month of the succeeding quarter.
• Taxpayers who have furnished the return for the tax period October 2020 on or before 30th November 2020, it shall be deemed that they have opted under sub-rule (1) of rule 61A of the said rules for the monthly or quarterly, as follows:

√ Turnover upto 1.5 cr and GSTR-1 on Quarterly basis in CFY- Quarterly

√ Turnover upto 1.5 cr and GSTR-1 on Monthly basis in CFY- Monthly

√ Turnover more than 1.5 crore rupees and up to 5 crore rupees in the preceding financial year- Monthly

The registered person may change the default option electronically, on the common portal, during the period from the 5th day of December, 2020 to the 31st day of January, 2021.

This is effective from 01.01.2021.

(Source: Notification No. 84/2020-Central Tax dated 10.11.2020)

Special procedure for making payment under QRMP Scheme

• Taxpayer who have opted to furnish a return for every quarter, shall deposit 35% of the tax liability paid by debiting the electronic cash ledger in the return for the preceding quarter where the return is furnished quarterly, or the tax liability paid by debiting the electronic cash ledger in the return for the last month of the immediately preceding quarter where the return is furnished monthly.
• However, no such amount may be required to be deposited-

(a) for the first month of the quarter, where the balance in the electronic cash ledger or electronic credit ledger is adequate for the tax liability for the said month or where there is nil tax liability;

(b) for the second month of the quarter, where the balance in the electronic cash ledger or electronic credit ledger is adequate for the cumulative tax liability for the first and the second month of the quarter or where there is nil tax liability:

• Registered person shall not be eligible for the said special procedure unless he has furnished the return for a complete tax period preceding such month.
• This is a effective from 01.01.2021.

(Source: Notification No. 85/2020-Central Tax dated 10.11.2020)

Rescission of Notification No. 76/2020 –CT dated 15.10.2020

Notification No. 76/2020- Central Tax dated 15.10.2020 relating to GSTR-3B for October, 2020 to March, 2021 has been rescinded w.e.f. 10.11.2020.

(Source: Notification No. 86/2020-Central Tax dated 10.11.2020)

Extension of due date for Form ITC-04

The time limit for furnishing the declaration in FORM GST ITC-04, in respect of goods dispatched to a job worker or received from a job worker, during the period from July, 2020 to September, 2020 has been extended till the 30th day of November, 2020.

The Notification No. 87/2020-Central Tax shall be deemed to have come into force with effect from the 25th day of October, 2020.

(Source: Notification No. 87/2020-Central Tax dated 10.11.2020)

Amendment in requirement of e-invoicing

Amendment has been made in Notification No. 13/2020-Central Tax dated 21.03.2020 relating to GST e-invoicing vide which the requirement of GST e-invoicing has been extended to tax payers having aggregate turnover exceeding Rs 100 Crore in any of the last three financial years, viz FY 2017-18, 2018-19 or 2019-20.

This will be applicable with effect from 1st January, 2021.

(Source: Notification No. 88/2020-Central Tax dated 10.11.2020)

Blocking of E-Way Bill (EWB) generation facility, after 1st December, 2020

• In terms of Rule 138E (a) and (b) of the CGST Rules, 2017, the E-Way Bill (EWB) generation facility of a taxpayer is liable to be restricted, in case the taxpayer fails to file their FORM GSTR-3B returns / Statement in FORM GST CMP-08, for tax periods of two or more.
• W.e.f. 1st December, 2020 and onwards, the blocking of EWB generation facility would be made applicable to all the taxpayers (irrespective of their Aggregate Annual Turnover (AATO)) In terms of Rule 138 E (a) and (b) of the CGST Rules, 2017, on the EWB Portal.
• Thus, on 1st December 2020, the System will check the status of returns filed in Form GSTR-3B or the statements filed in Form GST CMP-08, for the class of taxpayers to whom it applies, and restrict the generation of EWB in case of:
  • Non filing of two or more returns in Form GSTR-3B for the months up to October, 2020; and
  • Non filing of 02 or more statements in Form GST CMP-08 for the quarters up to July to September, 2020.
  • Not applicable to assessees not registered on the EWB portal.

[Source: GSTN dated 13.11.2020]

Updates of E-invoicing for turnover > Rs. 100 crores

• From 1-1-2021, Government has mandated e-invoicing for the taxpayers with aggregate turnover exceeding Rs. 100 Cr. (in any preceding financial year from 2017-18 onwards). The notification dated 10-11-2020 issued in this regard can be accessed
• Testing for taxpayers with 100 Cr. + Turnover:
• For all the notified taxpayers, API sandbox/testing is enabled since 29th October, 2020.
• The trial e-invoice portal (https://einvoice1-trial.nic.in/) for testing the upload of invoices by notified taxpayers through offline utility (bulk generation tool) has been activated from 6th November 2020.
•  Taxpayers to note that the e-invoices/IRNs and e-way bills generated on trial e-invoice portal (https://einvoice1-trial.nic.in/) are for testing purpose only.
• They don’t have any legal validity and shall not be used for regular supplies, i.e. for actual movement of goods etc.
• As a facilitation measure, all the GSTINs pertaining to taxpayers with aggregate turnover above the prescribed limit (as per latest notification) have been enabled for testing on the trial portal.

This ‘enablement’ is primarily to ensure only the notified taxpayers (and not any taxpayer at their option) are able to register and test reporting of invoices on the portal. The enabled taxpayers however need to register again on the portal.

This listing of GSTINs is solely based on the turnover of GSTR-3B as per GST System. It may contain exempt entities or those for whom e-invoicing is not applicable for some other reason.

Note: The enablement status on trial portal or production portal (IRP) doesn’t mean that the taxpayer is supposed to do e-invoicing. If e-invoicing is not applicable to a taxpayer, they need not be concerned about the enablement status and may please ignore it.

• In case any registered person is required to start e-invoicing from notified date but not enabled for testing on trial portal, he/she may request for enablement at trail portal through the e-invoice Production Portal (https://einvoice1.gst.gov.in > Registration > e-invoice enablement.
• One can search the status of enablement of a GSTIN on e-invoice trial portal: https://einvoice1-trial.nic.in/ > Search > e-invoice status of taxpayer.
• The requested GSTIN will be updated on trial portal on the next day and after that the testing can be started. It may also be noted that the enablement of notified taxpayers (Rs. 100 Cr. +) on IRP, i.e. e-invoice Production Portal, will be done towards the end of December, 2020 so that they will be able to report e-invoices from 1-1-2021 onwards.
• Some businesses may not have their own ERP/Accounting Software or have few invoices to report. They can download the free offline utility (‘bulk generation tool’) from e-invoice portal. Using this, invoice data can be easily uploaded on IRP for generation of IRN.
• In case of errors, viz. ‘GSTIN is not active’ or ‘GSTIN is not present in e-invoice system”, facility is made available so that the GSTIN can be entered for checking on real time basis with GST portal and update the same.
• On GST portal (Log in > ‘Search Taxpayer’), a new facility has been added recently by which one can view the aggregate turnover slab for a taxpayer.
• Any technical issue may be report on GST Self-Service Portal (https://selfservice.gstsystem.in/)

[Source: GSTN dated 17.11.2020]