Measures for GST streamlining compliances: 50th GST Council Meeting

Measures for streamlining compliances in GST

GST Council meetings hit the half-century on 11 July 2023. Various recommendations were made in the 50^th GST Council meeting to streamline and enhance the existing procedures and practices. In this regard, this article highlights the various recommendations of the council concerning proposed measures to streamline GST compliance.

The first point under deliberation is that the Council has recommended inserting rule 138F in CGST and SGST Rules, 2017, to mandate the requirement of generation of e-way bills for intra-State movement of gold and precious stones under Chapter 71 within their States. However, a notification in this regard is awaited to make this amendment effective for implementation.

A quick update as detailed below was provided to introduce amendments to the GST law with respect to capacity-based taxation and Special Composition Scheme. However, a notification will make the procedures clearer and more compliant.

• issuance of notification under section 148 of CGST Act, 2017 prescribing a special procedure to be followed by the manufacturers of tobacco, pan masala & other similar items for registration of machines and for filing of special monthly returns;
• insertion of section 122A in CGST Act, 2017 providing for special penalty for non-registration of machines by such manufacturers;
• provisions of section 123 of Finance Act, 2021, amending section 16 of IGST Act, to be notified with effect from 01.10.2023 and notification to be issued under section 16(4) of IGST Act, 2017 to provide for restriction of IGST refund route in respect of exports of tobacco, pan masala & other similar items as well as mentha oil.

Further, the Council has also recommended strengthening the registration process to effectively deal with fraudulent registrations in GST:

• Amendment in rule 10A to provide that the details of bank account, in name and PAN of the registered person, to be required to be furnished within 30 days of the grant of registration or before the filing of a statement of outwards supply under section 37 of CGST Act in FORM GSTR-1/ IFF, whichever is earlier.
• Amendment in rule 21A(2A) to provide for system-based suspension of the registration in respect of such registered persons who do not furnish the details of valid bank account under rule 10A within the time period prescribed under the said rule.
• Insertion of 3^rdproviso in rule 21A(4) to provide for automatic revocation of such system-based suspension upon compliance with provisions of rule 10A.
• Amendment in rule 59(6) to provide that where a registered person has not furnished details of a valid bank account under rule 10A, the said registered person may not be allowed to furnish the details of outward supplies in FORM GSTR-1 or using IFF.
• Amendment in rule 9 and rule 25 to do away with the requirement that the physical verification of business premises is to be conducted in the presence of the applicant and also to provide for physical verification in high-risk cases even where Aadhaar has been authenticated.

The Council has now recommended the insertion of Rule 142Bin the CGST Rules, 2017 and FORM GST DRC-01D to provide for the manner of recovery of the tax and interest in respect of the amount intimated under rule 88C that deals with the excess outward liability declared in GSTR-1 compared to payment made in GSTR-3B which has not been paid and for which no satisfactory explanation has been furnished by the registered person.

A system-based mechanism to deal with differences in ITC between FORM GSTR-2B and FORM GSTR-3B will be introduced to reduce and maintain track of ITC mismatches. It is recommended to insert rule 88D and FORM DRC-01C in CGST Rules, 2017, along with an amendment in rule 59(6) of CGST Rules, 2017 for streamlining the ITC facility in GST.

Various system-based notices are to be in place to ensure timely compliance by the taxpayers. FORM GSTR-3A is to be amended to provide for the issuance of notice to the registered taxpayers for their failure to furnish Annual Returns in FORM GSTR-9 or FORM GSTR-9A by the due date.

As part of ensuring check of compliance by the taxpayers Rule 64 and FORM GSTR-5A of CGST Rules, 2017 to be amended to require OIDAR service providers to provide the details of supplies made to registered persons in India. This is introduced to recover any due payment of tax on a reverse charge basis by such registered persons in India in respect of supplies received from OIDAR service providers.

Furthermore, with reference to ITC reversal in relation to exempt supplies explanation 3 is to be inserted after rule 43 of CGST Rules, 2017 to prescribe that the value of supply of goods from Duty-Free Shops at arrival terminals in international airports to the incoming passengers to be included in the value of exempt supplies for the purpose of reversal of input tax credit.

These were the major highlights of the 50^th GST Council meeting conducted recently and the same would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law, till then it is suggested to be aware and analyze the possible changes that will impact the existing procedures and the tax implication to the respected taxpayers.