UNION BUDGET 2022-23 – CHANGES PROPOSED IN GOODS AND SERVICES TAX
The Finance Bill, 2022, has proposed various changes in CGST Act, 2017. The gist of proposed change are incorporated from clause 99 to clause 117 of the Finance Bill, 2022 summarised as under:
1. The entitlement of ITC with respect to supply is allowed, if such credit has not been restricted in the details communicated to the taxpayer and extended time for availment of ITC upto 30th November – Section 16 of the CGST Act: (Clause 99 of the Finance Bill)
A new clause (ba) in sub-section (2) of Section 16 of the CGST Act is being inserted, that the details of input tax credit in respect of the said supply communicated to such registered person under Section 38 has not been restricted.
Changes made in sub-section 2(c) of Section 16 of the CGST Act, shall be omitted Section 43A and changed as subject to the provisions of Section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of such supply; and
Changes made in sub-section (4) of Section 16 of the CGST Act, shall be a registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.
Comments: Time limit extended to 30th November of next year from existing 30th September of next year but ITC is restricted only in respect of Tax Invoices which are reported by filing of GSTR-1 as well as GSTR-3B on or before specified due dates for the month of November of next year for any previous year.
2. Provisions of Cancellation of GST registration modified for composition taxpayer and others also – Section 29 of the CGST Act: (Clause 100 of the Finance Bill)
Changes made in sub-section (2) of Section 29 of the CGST Act, The proper officer may cancel the registration of a person from such date, including any retrospective date, as he may deem fit, where,-
(b) a person paying tax under Section 10 has not furnished the return for a financial year beyond three months from the due date of furnishing the said return; or
(c) any registered person, other than a person specified in clause (b), has not furnished returns for such continuous tax period as may be prescribed; or
Comments: If Tax is not paid by the composition dealer beyond three months from the due dates of furnishing the return, then their registration is liable to be cancelled.
Sub-section (2) of Section 34 of the CGST Act is being amended as follows:
Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than the thirtieth following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed:
Comments: Time limit extended to 30th November of next year from existing 30th September of next year for issue of Credit Notes in respect of Tax Invoices which are reported by filing of GSTR-1 as well as GSTR-3B on or before specified due dates for the month of November of next year for any previous year.
4. Conditions and restrictions for furnishing the details of outward supply – Section 37 of the CGST Act: (Clause 102 of the Finance Bill)
Sub-section (1) Every registered person, other than an Input Service Distributor, a non-resident taxable person and a person paying tax under the provisions of Section 10 or Section 51 or Section 52, shall furnish, electronically, in such form and manner as may be prescribed, the details of outward supplies of goods or services or both affected during a tax period on or before the tenth day of the month succeeding the said tax period and such details shall, subject to such conditions and restrictions, within such time and in such manner as may be prescribed, be communicated to the recipient of the said supplies:
Sub-section (2) shall be omitted.
(3) Any registered person, who has furnished the details under sub-section (1) for any tax period shall, upon discovery of any error or omission therein, rectify such error or omission in such manner as may be prescribed, and shall pay the tax and interest, if any, in case there is short payment of tax on account of such error or omission, in the return to be furnished for such tax period:
Provided that no rectification or error or omission in respect of the details furnished under sub-section (1) shall be allowed after the thirtieth day of November following the end of the financial year to which such details pertains, or furnishing of the relevant annual return, whichever is earlier.
A new Sub-section (4) shall be inserted : A registered person shall not be allowed to furnish the details of outward supplies under sub-section (1) for a tax period, if the details of outward supplies for any of the previous tax periods has not been furnished by him.
Provided that the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, allow a registered person or a class of registered person to furnish the details of outward supplies under sub-section (1), even if he has not furnished the details of outward supplies for one or more previous tax periods.
Comments:Time limit extended to 30th November of next year from existing 30th September of next year for amending Tax Invoices in respect of Tax Invoices which are reported by filing of GSTR-1 as well as GSTR-3B on or before specified due dates for the month of November of next year for any previous year.
Matching of GSTR-1 vis-a-vis GSTR-3B is provided for each period wise filing and if supplier commits any kind of default, then he won’t be allowed to file subsequent returns. Further GSTR-3B can be filed only after filing GSTR-1.
5. Conditions and restrictions for communication of details of inward supplies and Input Tax Credit – Section 38 of the CGST Act: (Clause 103 of the Finance Bill)
(1) The details of outward supplies furnished by the registered persons under sub-section (1) of Section 37 and of such other supplies as may be prescribed, and an auto generated statement containing the details of input tax credit shall be made available electronically to the recipients of such supplies in such form and manner, within such time, and subject to such conditions and restrictions as may be prescribed.
(2) The auto-generated statement under sub-section (1) shall consist of –
(a). Details of inward supplies in respect of which credit of input tax may be available to the recipient, and
(b). Details of supplies in respect of which such credit cannot be availed, whether wholly or partly, by the recipient, on account of the details of the said supplies being furnished under sub-section (1) of Section 37, –
(i). by any registered person within such period of taking registration as may be prescribed; or
(ii). by any registered person, who has defaulted in payment of tax and where such default has continued for such period as may be prescribed; or
(iii). by any registered person, the output tax payable by whom in accordance with the statement of outward supplies furnished by him under the said sub-section during such period, as may be prescribed, exceeds the output tax paid by him during the said period by such limit as may be prescribed; or
(iv). by any registered person who, during such period as may be prescribed, has availed credit of input tax of an amount that exceeds the credit that can be availed by him in accordance with clause (a), by such limit as may be prescribed; or
(v). by any registered person, who has defaulted in discharging has tax liability in accordance with the provisions of sub-section (12) of Section 49 subject to such conditions and restrictions as may be prescribed; or
(vi). by such other class of persons as may be prescribed.”
6. Changes in manner of furnishing of returns – Section 39 of the CGST Act: (Clause 104 of the Finance Bill)
Changes in sub-section (5) Every registered non-resident taxable person shall, for every calendar month or part thereof, furnish, in such form and manner as may be prescribed, as return, electronically, within thirtieth days after the end of a calendar month or within seven days after the last day of the period of registration specified under sub-section (1) of Section 27, whichever is earlier.
Changes in sub-section (7) for the first proviso replaced as:
“Provided that every registered person furnishing return under the proviso to sub-section (1) shall pay to the Government, in such form and manner, and within such time, as may be prescribed, –
(a) an amount equal to the tax due taking into account inward and outward supplies of goods or services or both, input tax credit availed, tax payable and such other particulars during a month; or
(b) in lieu of the amount referred to in clause (a), an amount determined in such manner and subject to such conditions and restrictions as may be prescribed.”;
Changes in sub-section (9) where any registered person after furnishing a return under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the return to be furnished for the month or quarter during which such omission or incorrect particulars in such form and manner as may be prescribed, subject to payment of interest under this Act:
Provided that no such rectification of any omission or incorrect particulars shall be allowed after the thirtieth day of November following the end of the financial year to which such details pertains, or the actual date of furnishing of relevant annual return, whichever is earlier.
Changes in sub-section (10) A registered person shall not be allowed to furnish a return for a tax period if the return for any of the pervious tax periods or the details of outward supplies under sub-section (1) of Section 37 for the tax period has not been furnished by him.
Provided that the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions, as may be specified therein, allow a registered person or a class of registered persons to furnish the return, even if he has not furnished the details of outward supplies under sub-section (1) of Section 37 for the said tax period.”
7. Availment of Self-assessed input tax credit subject to such conditions and restrictions clarified – Section 41 of the CGST Act: (Clause 105 of the Finance Bill)
The following Section substituted to Section 41 as the following namely:
(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to avail the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited to his electronic credit ledger.
(2) The credit of input tax availed by a registered person under sub-section (1) in respect of such supplies of goods or services or both, the tax payable whereon has not been paid by the supplier, shall be reversed along with applicable interest, by the said person in such manner as may be prescribed: Provided that where the said supplier makes payment of the tax payable in respect of the aforesaid supplies, the said registered person may re-avail the amount of credit reversed by him in such manner as may be prescribed.”.
8. Section 42, 43, 43A of the CGST Act shall be omitted : – (Clause 106 of the Finance Bill)
9. Levy of late fee for delayed filing of return – Section 47 of the CGST Act: (Clause 107 of the Finance Bill)
Any registered person who fails to furnish the details of outward supplies required under Section 37 or returns required under Section 39 or Section 45 or Section 52 by the due date shall pay a late fee of one hundred rupees for every day during which such failure continues subject to a maximum amount of five thousand rupees.
10. Changes in respect of GST Practitioners of Section 48 of the CGST Act: (Clause 108 of the Finance Bill)
Sub-section (2) A registered person may authorize an approved goods and services tax practitioner to furnish the details of outward supplies under Section 37 and the return under Section 39 or Section 44 or Section 45 and to perform such other functions in such manner as may be prescribed.
11. Changes in payment of tax, interest, penalty and other amounts – Section 49 of the CGST Act: (Clause 109 of the Finance Bill)
Sub-section (2) The Input Tax Credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with Section 41, to be maintained in such manner as may be prescribed.
Sub-section (4) the amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in such manner and subject to such conditions and restrictions and within such time as may be prescribed.
Sub-section (10) A registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger under this Act, to the electronic cash ledger for, –
(a). Integrated Tax, Central Tax, State Tax, Union Territory Tax or Cess; or
(b). Integrated tax or central tax of a distinct person as specified in sub-section (4) or, as the case may be, sub-section (5) of Section 25,
in such form and manner and subject to such conditions and restrictions as may be prescribed and such transfer shall be deemed to be a refund from the electronic cash ledger under this Act:
Provided that no such transfer under clause (b) shall be allowed if the said registered person has any unpaid liability in his electronic liability register.”
“(12) Notwithstanding anything contained in this Act, the Government may, on the recommendations of the Council, subject to such conditions and restrictions, specify such maximum proportion of output tax liability under this Act or under the Integrated Goods and Services Tax Act, 2017 which may be discharged through the electronic credit ledger by a registered person or a class of registered person, as may be prescribed.
12. Interest on delayed payment of tax, interest will not be levied if ITC is not utilized – Section 50 of the CGST Act, 2017 – Clause 110 of the Finance Bill)
Changes in sub-section (3) where the Input Tax Credit has been wrongly availed and utilized, the registered person shall pay interest on such input tax credit wrongly availed and utilized, at such rate not exceeding twenty-four per cent as may be notified by the Government, on the recommendations of the Council, and the interest shall be calculated, in such manner as may be prescribed.”
Comments: Interest would be payable under Section 50(3) only if ITC is incorrectly availed and utilized and if not utilized then interest won’t be payable. Rate of interest is specfieid to be 18% from July 1, 2017.
Interest would be payable under Section 50(3) only if ITC is incorrectly availed and utilized and if not utilized then interest won’t be payable.
13. Collection of tax at source (TC) – Section 52 of the CGST Acct: (Clause 111 of the Finance Bill)
Sub-section (6) If any operator after furnishing a statement under sub-section (4) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the statement to be furnished for the month during which such omission or incorrect particulars are noticed, subject to payment of interest, as specified in sub-section (1) of Section 50:
Provided that no such rectification of any omission or incorrect particulars shall be allowed after the thirtieth day of November following the end of the financial year or the actual date of furnishing of the relevant annual statement, whichever is earlier.
Comments: Time limit extended to 30th November of next year from existing 30th September of next year for filing TCS Returns plus amendments on or before specified due dates for the month of November of next year for any previous year.
14. Refund of tax any balance in the electronic cash ledger, time limit for claiming refund of tax paid on inward supplies, SEZ refund scope clarified – Section 54 of the CGST Act : (Clause 112 of the Finance Bill)
Sub-section (1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed:
Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of Section, 49, may claim such refund in such manner as may be prescribed.
Sub-section (2) A 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 under Section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make and application for such refund, in such form and manner as may be prescribed, before the expiry of two years from the last day of the quarter in which such supply was received.
Sub-section (10) where any refund is due under sub-section (3) to a registered person who 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, the proper officer may –
(a) Withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be;
(b). Deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains, unpaid under this Act or under the existing law.
“(ba) in case of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic 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 due date for furnishing of return under Section 39 in respect of such supplies;”
Comments: Time limit for filing claim of GST Refunds u/s 54 is now linked to supplies reported in GSTR-3B in respect of Transactions done with SEZ Units.
15. Power to issue instructions or directions – Section 168 of the CGST Act: (Clause 113 of the Finance Bill)
Consequent to the amendment in Section 38 of the CGST Act, sub-section (2) of Section 168 of the CGST Act is being amended so as to remove reference to Section 38 therefrom.
Remarks: Amendments carried out in the Finance Bill, 2022 will come into effect from the date when the same will be notified, as far as possible, con-currently with the corresponding amendments to the similar Acts passed by the States and Union territories with Legislature.
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