Union Budget 2022 Proposed Amendments in GST Law

CA Palash Sharma

Article explains Changes in GST Proposed by Union Budget 2022 related to Section 16: Input Tax Credit, Section 29: Cancellation or suspension of registration, Section 34: Credit and debit notes, Section 37: Furnishing details of outward supplies, Section 38: Furnishing the details of Inwards supplies, Section 39: Furnishing of Returns, Section 41: Availment of Input Tax Credit, Section 47: Levy of Late Fees, Section 48: Goods and Services Tax Practitioners,  Section 49: Payment of tax, interest, penalty and other amounts, Section 50: Interest on delayed payment of tax, Section 52: Collection of tax at source, Section 54: Refund of tax,  Section 168: Power to issue instructions or directions, Amendment in Notification No. 9/2018 – Central Tax, dated the 23rd January, 2018 and Retrospective exemption from, or levy or collection of, central tax in certain cases.

Section 16: Input Tax Credit

• A new clause 2(ba) has been proposed to be inserted in section 16 of the CGST Act to provide that input tax credit with respect to a supply can be availed only if such credit has not been shown as restricted in the communication to the taxpayer. Currently, this communication is in the form of GSTR-2A and 2B.
• Presently, credit with respect to the supply is available upto the due date of filing GSTR-3B of September of following financial year. The said time limit has been proposed increased upto 30^th November of the following financial year.

(In this regard amendments have been done in section 16(4) of the CGST Act.)

Section 29: Cancellation or suspension of registration

• Presently, as per section 29 of the CGST Act, the registration of a person is liable to be cancelled if:
• He is a composite tax payer and he fails to file his return for 3 consecutive tax periods; or
• He is regular tax payer and he fails to file his return for a continuous period of 6 months.
• In regards to the above, now the following has been proposed that the registration of person will be liable to be cancelled if:
• He is a composite tax payer and has not furnished the return for a financial year beyond three months from the due date of furnishing of the said return.
• He is regular tax payer and he fails to file his return for such continuous period as may be prescribed.

(In this regards, amendments have been made in section 29(2)(b) and (c) of the CGST Act.

Section 34: Credit and debit notes

• Currently, a registered supplier who issues a credit note in relation to a supply of goods or services or both has to declare the details of such credit note in its GSTR-1 but not later than September of the following year.
• Now the above time limit has been proposed to be increased up to 30^th November of the following financial year.

(In this regard, amendment has have been made in section 34(2) of the CGST Act.)

Section 37: Furnishing details of outward supplies

Section 37 of the CGST Act has been proposed to be amended so as to:

(1) Provide for prescribing conditions and restrictions for furnishing the details of outward supply and for communication of such details of such outward supplies to concerned recipients;

(2) (ii) Two-way communication process in return filing which was present in the GST law since inception, now has been proposed to be done away

(3) Time limits for making amendments in GSTR-1, is September of the following year. Now, the same has been proposed to be increased up to 30^th November of the following financial year November of the following financial year

(4) It has also been proposed that if GSTR-1 of any tax period is pending then the GSTR-1 for any subsequent tax period cannot be filed. This has been proposed to ensure tax period-wise sequential filing of details of GSTR-1.

(In this regard, amendment has have been made in section 37(1), (2), (3) and (4) of the CGST Act.)

Section 38: Furnishing the details of Inwards supplies

• Section 38 of the CGST Act is being substituted for prescribing the manner as well as conditions and restrictions for communication of details of inward supplies and input tax credit to the recipient by means of an auto-generated statement and to do away with two-way communication process in return filing.
• It has been proposed that the above auto generated statement shall consists of the following details

(1) Inward supplies in respect of which credit of input tax may be available to the recipient

(2) Inward supplies in respect of which credit of input tax shall not be available to the recipient due to the reason that his supplier filing the corresponding GSTR-1, has not paid the tax or has short paid the due tax or paid the tax using ineligible ITC or has not filed any of its GSTR-1 or due to any other reason as may be prescribed.

(In this regard, entire section 38 of the CGST Act has been substituted.)

Section 39: Furnishing of Returns

• Section 39 of the CGST Act has been proposed to be amended so as to:

(1) Provide that the non-resident taxable person shall furnish the return for a month by 13^th day of the following month. Currently, the non-resident are required to file the said return within 20 days of the following month;

(2) Every registered person filing the GST return, except Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 will be provided with an option to pay either the self-assessed tax or an amount that may be prescribed;

(3) The time limit for provide for rectification of errors in the return furnished under section 39 an extended time upto 30^th November of the following financial year,

(4) It has also been proposed that unless the return of outward supplies (i.e. GSTR-1) is not furnished, GSTR-3B for the said tax period also cannot be furnished.

Section 41: Availment of Input Tax Credit

• Section 41 of the CGST Act has been proposed to be substituted with the new section which states that the registered person (i.e. recipient) shall, subject to such conditions and restrictions as may be prescribed, be entitled to avail the credit, as self-assessed, in his return and such amount shall be credited to his electronic credit ledger.
• However, if the tax for the said credit has not been paid by its supplier then the recipient shall have to reverse the credit along with interest.
• Further, the said credit can be re-availed by the recipient when supplier will pay the tax for the same.

Section 47: Levy of Late Fees

Section 47 of the CGST Act has been proposed to be amended so as to provide for levy of late fee for delayed filing of return under section 52 (i.e. the return to be filed for TDS by Electronic Commerce Operator). Further, reference to section 38 is being removed consequent to the amendment in section 38 of the CGST Act.

(In this regard, amendment has been proposed u/s 47(1) of the CGST Act.)

Section 48: Goods and Services Tax Practitioners

Consequent to the substitution of section 38, corresponding amendment has been proposed to be made in section 48 of the CGST Act. As per the proposed amendment, Goods and Services Tax Practitioners cannot be appointed for furnishing the details in return u/s 38 of the CGST Act.

(In this regard, amendment has been proposed u/s 48(2) of the CGST Act.)

 Section 49: Payment of tax, interest, penalty and other amounts

• It has been proposed that restrictions may be prescribed for utilizing the amount available in the electronic credit ledger;
• It has been proposed to allow for transfer of amount available in electronic cash ledger under the CGST Act of a registered person to the electronic cash ledger under the said Act or the IGST Act of a distinct person. However, transfer to distinct persons cannot be done if such person has liability outstanding in its electronic liability ledger.
• Government has been proposed to be empowered for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger.

(In this regard, amendment has been proposed u/s 49(2), (4), (10) and (12) of the CGST Act.)

Section 50: Interest on delayed payment of tax

• Interest on wrongful availment utilization of credit has been proposed to be levied at the rate of 24%
• This amendment has been made from retrospective effect from 01.07.2017.

(In this regard, section 50(3) has been proposed to be substituted under the CGST Act.)

Section 52: Collection of tax at source

• Sub-section (6) of section 52 of the CGST Act is being amended so as to provide for an extended time upto 30^th November of the following financial year for rectification of errors in the statement furnished for tax collection at source.

(In this regard, amendment has been done u/s 52(6) of the CGST Act.)

Section 54: Refund of tax

The following amendments have been proposed:

• Refund claim of any balance in the electronic cash ledger shall be made in such form and manner as may be prescribed;
• Time limit for claiming refund of tax paid on inward supplies of goods or services or both for specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as notified u/s 55 of the CGST Act has been extended as 2 years from the last day of the quarter in which the said supply was received. Currently, the time limit is 6 months from the last day of the quarter in which the said supply was received
• Scope of withholding of or recovery from refunds in respect of all types of refund has been extended in case the registered person has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date.
• In case of zero-rated supply of goods or services or both to a SEZ developer or a SEZ unit where a refund of tax paid is available in respect of such supplies themselves, or as the case may be, the inputs or input services used in such supplies, the relevant date for filing the refund shall be the due date for furnishing of return under section 39 in respect of such supplies.

(In this regard, amendment has been done u/s 54(1), (2), (10) and Explanation to section 54 of the CGST Act.)

Section 168: Power to issue instructions or directions

• Consequent to the amendment in section 38 of the CGST Act, section 168 (2) of the CGST Act is being amended so as to remove reference to section 38 therefrom.

Amendment in Notification No. 9/2018 – Central Tax, dated the 23rd January, 2018 

The Notification No. 9/2018 – Central Tax, dated the 23rd January, 2018 has been proposed to be amended so as to notify gst.gov.in, retrospectively, w.e.f. 22.06.2017, as the Common Goods and Services Tax Electronic Portal, for all functions provided under Central Goods and Services Tax Rules, 2017, other than those provided for e-way bill and for generation of invoices under sub-rule (4) of rule 48 of the CGST Rules.

Retrospective exemption from, or levy or collection of, central tax in certain cases.

• Exemption from levy and central, integrated and union territory tax has been proposed in respect of supply of unintended waste generated during the production of fish meal (falling under heading 2301), except for fish oil, during the period commencing from the 1st day of July, 2017 and ending with the 30th day of September, 2019 (both days inclusive).
• However, no refund shall be made of all such tax which has been collected, but which would not have been so collected, had the above provision been in force at all material times.

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Summary Prepared By: CA. Palash Sharma, M/s Palash Sharma & Associates | psasscoaite8@gmail.com