Debit Note is delinked from its original invoice for the purpose of claiming Input Tax Credit (ITC) u/s 16(4) of CGST Act, 2017.
By virtue of S.16(4) of CGST Act, Input Tax Credit (ITC) on any invoice can be claimed up to the month of September following the end of the financial year to which such invoice pertains to. Similarly, for debit note its original invoice date was required to be considered to decide whether that original invoice falls in previous financial year and if yes then ITC on that debit note can be claimed up to the month of September following the end of the financial year to which such invoice pertains. After this de-linking of debit note from its original invoice the debit note timeline can be independently considered to check for its time limit as stated above to take ITC. Effective from 01.01.2021.
For instance, if debit note is raised in the month of Dec, 2020 against an invoice pertaining to the month of March, 2020 then as per present provision u/s 16(4), the ITC on that debit note is not eligible, because the original invoice pertains to FY 2019-20 and ITC was to be taken up to the month of September, 2020. But now after the amendment the ITC on debit note (raised in Dec, 2020) can be claimed up to the month of September, 2021, because it is considered as a separate invoice.
Penalty u/s Sec.122 of CGST Act, is amended:
Sub-section (1A) is added to Sec 122 of CGST Act, 2017 which prescribes penalty equal to tax evaded on outward supply if the tax is collected but not paid to Govt. And if the input tax credit is claimed without the receipt of goods then equal to input tax credit claimed will be liable to be paid as penalty. This penalty is imposed on the person who evaded the payment of tax or has wrongly claimed the input tax credit as well as on the person at whose instance such tax is evaded or input tax credit is wrongly claimed. Effective from 01.01.2021.
Punishment u/s Sec.132 of CGST Act, is amended :
Sub-section (1) of Sec 132 of CGST Act, 2017 is substitute to provide that “whoever commits any of the following offences” with “whoever commits, or causes to commit and retain the benefit arising out of, any of the following offences”. This amended provision punishes not only the person who commits the offence but also who causes to commit such offences. The offences could be supply of goods or services without issue of invoice, issuing invoices or bill without supply of goods etc. Effective from 01.01.2021.
Rule 21 related to cancellation of GST Registration number is amended :
Rule 21 contains ground on which GST registration number can be cancelled. In the said rule, sub-rule (e), (f) & (g) is inserted.
i) Sub-rule (e) prescribes that if the input tax credit claim is in contravention to Sec 16 then GST registration shall be made liable to be cancelled.
ii) Sub-rule (f) prescribes that if the details of outward supplies furnished in GSTR-1 for one or more tax periods is more than the outward supplies furnished in GSTR-3B then the GST registration shall be liable to be cancelled.iii) Sub-rule (g) prescribes that in the event the provision of rule 86B is contravened the GST registration number shall be cancelled. Effective from 22.12.2020.
Rule 21A related to suspension of GST Registration number is amended :
Rule 21A (2) which prescribes suspension of GST registration number is being amended to omit the word “after affording the taxpayer a reasonable opportunity of being heard”. As a reason the proper officer may suspend the registration without affording reasonable opportunity of being heard in case he is of the belief that the GST registration of a person is liable to be cancelled. The proper officer then intimate the taxpayer to provide reason within 30 days as to why his registration certificate should not be cancelled. Effective from 22.12.2020.
In addition to above, sub-rule 2A is inserted to rule 21A which prescribes that in case by comparison or by such other analysis as may be recommended by the Council if the proper officer founds that there are significant differences or anomalies in the details furnished in GSTR-3B with the details of outward supplies as furnished in GSTR-1 or the details of inward supplies as populated based on GSTR-1 filed by the corresponding suppliers, then the registration number of the taxpayer shall be liable to be suspended. And, thereafter the taxpayer shall be communicated thru common portal or by email address giving thirty days’ time period to explain as to why his registration number shall not be cancelled. If the reply submitted to the proper officer in response to said communication is satisfactory then the proceedings shall be dropped. Effective from 22.12.2020.
Percentage of provisional Input Tax Credit (ITC) u/r 36(4) is reduced from 10% to 5% :
As per rule 36(4) 10% additional ITC to the amount that is populated into GSTR-2A can be claimed. For e.g. if Rs. 1000/- is appearing in GSTR-2A and as per books the ITC is Rs.1200/-, then 10% additional to GSTR-2A amount i.e. Rs.1100/- (1000 + 100) is allowed to claim. Now, after the amendment, only 5% i.e. Rs.1050/- can be claimed. Further, the word ‘uploaded’ has been replaced with the word ‘furnished’ which means the invoices in GSTR-1 or Invoice Furnishing Facility (IFF) should have been filed by the supplier and not merely uploaded. Effective from 01.01.2021.
If GSTR-3B is not filed for two tax period then GSTR-1 cannot be filed :
Sub-rule 5 is being added to rule 59 which prescribes that if GSTR-3B is not filed by a monthly taxpayer for preceding two months then that taxpayer will not be allowed to file GSTR-1. Similarly, the quarterly filing taxpayer will not be allowed to file GSTR-1 if he fails to file GSTR-3B for preceding two tax period. Effective from 22.12.2020.
Restriction on use of amount available in Electronic Credit Ledger :
Rule 86B is being added which restricts the use of amount available in Electronic Credit Ledger in excess of 99% of the tax liability. It indicates tax liability up to 99% can only be offset using ITC available in Electronic Credit Ledger and 1% tax liability has to be paid in cash. The following persons are exempted from this restriction:
(a) The person or the proprietor or karta or the managing director or any of its two partners, whole-time Directors, Members of Managing Committee of Associations or Board of Trustees, as the case may be, have paid more than one lakh rupees as income tax under the Income-tax Act, 1961(43 of 1961) in each of the last two financial years for which the time limit to file return of income under subsection (1) of section 139 of the said Act has expired; or
(b) the registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilised input tax credit under clause (i) of first proviso of sub-section (3) of section 54; or
(c) the registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilised input tax credit under clause (ii) of first proviso of sub-section (3) of section 54; or
(d) the registered person has discharged his liability towards output tax through the electronic cash ledger for an amount which is in excess of 1% of the total output tax liability, applied cumulatively, upto the said month in the current financial year; or
(e) the registered person is – (i) Government Department; or (ii) a Public Sector Undertaking; or (iii)a local authority;or (iv)a statutory body:
Effective from 01.01.2021
Period of validity of E-way bill has been reduced :
Rule 138 is amended to reduce the validity of an eway bill timeline. The kilometer coverage is increased from 100 kms to 200 kms per day for for validity of e-way bill. Presently, e-way bill is valid for 1 day for 100 kms. With the increase in kilometer from 100 kms to 200 kms, the e-way bill validity is 1 day only for 200 kms. It implies that the vehicle has to reach the customer place within 1 day if the distance between supplier and customer is 200 kms. Effective from 01.01.2021.
Condition of E-way bill site restriction to generate e-way bill is amended :
Clause (b) of Rule 138E is being amended to substitute ‘two months’ with ‘two tax periods’. This provision is clarificatory in nature. As the restriction for two month return was affecting the quarterly return filer. This amendment has given relief to quarterly filer. Effective from 22.12.2020.
Share this content: