Category: GST News

India’s economic landscape is in the midst of a remarkable transformation, as evidenced by the latest data released by the National Statistical Office (NSO) on May 31, 2024. The nation’s fiscal year 2024 growth rate stands at an impressive 8.2%, marking the ninth instance since 1961 where the GDP growth rate has surpassed the 8% threshold. This robust growth underscores the vigorous momentum within the economy, poised to accelerate further under a stable central government.

The quarterly growth rates for FY 2023-24, consistently stable at 8.2%, 8.1%, 8.6%, and 7.8%, highlight the resilience of domestic economic activities, buoyant investment, and consumption demand, alongside strong corporate performance. As the new fiscal year 2024-25 unfolds, expectations remain optimistic with a promising monsoon season and positive ratings from global agencies bolstering this outlook.

In contrast to the global scenario where only three of the major five economies—China (5.3%) and the UK (0.2%)—have shown significant growth, India remains the fastest-growing major economy. Projections from the OECD suggest a potential slowdown for the US and China in 2025, positioning India at the forefront of global economic expansion.

GST: The Backbone of India’s Economic Framework

As India approaches the seventh anniversary of the Goods and Services Tax (GST) regime, several critical developments warrant attention. Since its inception on July 1, 2017, the GST has undergone continuous evolution, facing demands for the establishment of Appellate Tribunals and the inclusion of petroleum products and natural gas under its purview. The current phase signifies a shift from procedural adjustments to adjudication and appeals, indicating a potential rise in litigation and disputes.

The Central Board of Indirect Taxes and Customs (CBIC) has issued an advisory on special procedures for manufacturers of tobacco and pan masala, and provided new guidelines for personal hearings in GST DRC-01. Additionally, the introduction of the new E-way Bill-2 portal by the National Informatics Centre (NIC) aims to enhance efficiency, operating alongside the main portal since June 1, 2024.

Fiscal Fortitude: May 2024 GST Revenue Insights

May 2024 witnessed gross GST revenues reaching Rs. 1.73 lakh crore, a 10% year-on-year increase. This surge is attributed to a significant rise in domestic transactions (up 15.3%) and a deceleration in imports (down 4.3%). Post-refunds, the net GST revenue for May 2024 stands at Rs. 1.44 lakh crore, reflecting a 6.9% growth compared to the same period last year.

Strategic Reassignments: Territorial Jurisdiction Adjustments

A notable amendment in the territorial jurisdiction of Central Tax Officers has been executed by the CBIC, effective from August 5, 2023. The revised jurisdiction covers districts in Rajasthan, including Alwar, Jaipur, Jodhpur, and Udaipur, as stipulated in the amended Notification No. 02/2017-CT dated June 19, 2017. This realignment aims to streamline tax administration and enhance operational efficiency.

Proactive Measures: CBIC Guidelines for Early Recovery

In a move to safeguard revenue, the CBIC has established guidelines for initiating recovery proceedings before the conventional three-month period post-demand order service. Under Section 79(1) of the CGST Act, 2017, recovery can commence before the three-month deadline if deemed necessary for revenue interests. This proactive measure requires proper justification and approval, emphasizing the balance between revenue protection and business facilitation.

Special Procedures for Tobacco and Pan Masala Manufacturers

With the issuance of Notification No. 04/2024-CT dated January 5, 2024, specific taxpayers dealing with tobacco and pan masala are required to follow a newly established special procedure. This includes the submission of detailed information via forms GST SRM-I and GST SRM-II, with the GSTN portal facilitating machine registration and data filing.

E-way Bill 2 Portal: Enhancing Logistics and Compliance

The launch of the E-way Bill 2 portal signifies a major step towards improving the efficiency of logistics and compliance in the GST regime. This portal, operational from June 1, 2024, allows taxpayers and logistic operators to generate and update E-way bills independently, ensuring high availability and seamless operations even during technical issues on the main portal.

Enhanced Compliance: Personal Hearing in GST DRC-01

In response to a directive from the Madras High Court, the GSTN has enabled an option for taxpayers to request a personal hearing in GST DRC-01 responses. This functionality, now active on the GST portal, allows taxpayers to choose between ‘Yes’ or ‘No’ for personal hearings, enhancing the procedural fairness and transparency of the adjudication process.

Sustained Growth: Breakdown of May 2024 GST Collections

The GST revenue collection for May 2024 stands at Rs. 1.73 lakh crore, with cumulative revenue for FY 2024-25 reaching Rs. 3.83 lakh crore, reflecting an 11.3% year-on-year growth. The breakdown of collections includes Rs. 32,409 crore for CGST, Rs. 40,265 crore for SGST, Rs. 87,781 crore for IGST (including Rs. 39,879 crore from imported goods), and Rs. 12,284 crore from Cess (including Rs. 1,076 crore from imported goods). Leading states in GST collection growth include Delhi, Punjab, Uttarakhand, and Haryana, while states like Himachal Pradesh, Mizoram, Assam, West Bengal, Madhya Pradesh, and Tamil Nadu lag behind.

India’s economic journey continues to be a testament to strategic governance and resilient growth, setting a benchmark for global economies to follow.

On 10th July 2024, the Central Government, following the counsel of the GST Council, unveiled substantial modifications to the Central Goods and Services Tax (CGST) Rules, 2017, through Notification No. 12/2024-Central Tax. This transformative measure aims to enhance procedural efficiency, ensure greater compliance, and address various GST operational facets. Here is an expert analysis of the key changes outlined in the notification:

1. Amendment in Rule 8

1. Introduction to Rule 8 Amendment: Recently amended under GST regulations, Rule 8 now introduces significant changes aimed at enhancing the registration process efficiency. Key among these is the requirement for biometric verification and thorough document authentication, ensuring robust compliance standards.
2. Biometric Verification Mandate: Under the amended rule, applicants opting out of Aadhaar authentication must undergo biometric verification at designated Facilitation Centers. This measure strengthens identity verification protocols, essential for maintaining integrity within the GST registration framework.
3. Document Verification Protocol: Additionally, the updated rule necessitates meticulous scrutiny of original documents submitted via FORM GST REG-01. This stringent verification process aims to authenticate the validity and accuracy of information provided, reinforcing regulatory adherence.
4. Completion Criteria: Crucially, the application for GST registration will only be deemed complete post-successful verification of biometric data and submitted documents. This criterion ensures that all regulatory requirements are met comprehensively before granting registration status.
5. Conclusion: In essence, the Rule 8 amendment signifies a pivotal step towards refining the GST registration process, prioritizing transparency and compliance. By mandating biometric and document verification, regulators aim to fortify the system’s efficacy, ensuring that registered entities uphold stringent standards of operational integrity.

This revised approach not only enhances procedural clarity but also underscores the GST regime’s commitment to fostering a robust regulatory environment conducive to business growth and compliance excellence.

2. Stringent Registration Cancellation Criteria

The recent amendment to Rule 21 of tax regulations marks a decisive step towards fortifying compliance measures, particularly concerning registration cancellations. By introducing nuanced adjustments, notably inserting provisions subsequent to “FORM GSTR-1,” the amendment prioritizes meticulous adherence to cancellation protocols, specifically targeting violations outlined in sub-rule (1) of rule 23. This revision signifies a significant regulatory pivot, emphasizing the critical need for precise procedural adherence and fostering heightened transparency within tax administration.

3. Suspension of Registration Modifications:

1. Introduction to Rule 21A Amendment: Recently, the amendment to Rule 21A has sparked significant interest among taxpayers and professionals alike. This amendment primarily focuses on the suspension of registration under specific conditions, marking a pivotal shift in compliance dynamics.
2. Clause Enhancements: The latest iteration of Rule 21A introduces crucial enhancements, particularly concerning “FORM GSTR-1.” Notably, it mandates that any amendments made in “FORM GSTR-1A” must align seamlessly with current compliance standards, ensuring accuracy and adherence to regulatory frameworks.
3. Implications for Taxpayers: For taxpayers, understanding these enhancements is critical to maintaining compliance and avoiding potential penalties. The amended clause underscores the importance of timely and accurate filing, reflecting a broader commitment to streamlining tax administration and fostering transparency.
4. Professional Insights: According to industry experts, the amended Rule 21A signifies a proactive approach towards strengthening tax governance. It underscores the authorities’ efforts to curb non-compliance while providing clarity on procedural amendments, thereby promoting a more robust and accountable tax ecosystem.

4. Clarifying Rule 28 Amendments on Supply Value Determination

1. Key Provisions Enhanced: The recent amendments to Rule 28 bring clarity to the determination of supply values, particularly concerning transactions between related parties.
2. Invoice Value Specification: Notably, the amendments specify instances where the invoice value shall be deemed the supply’s value, ensuring transparency and compliance.
3. Impact on Input Tax Credit: Crucially, full availability of input tax credit conditions are outlined, ensuring comprehensive understanding and adherence to regulatory norms.

In a stride towards enhanced regulatory clarity, the amendments to Rule 28 concerning the determination of supply values have brought forth pivotal clarifications. Addressing transactions involving related parties, these revisions underscore scenarios where the invoice value assumes paramount importance as the definitive value of the supply. This nuanced approach ensures regulatory compliance while facilitating a more transparent and efficient taxation environment. Furthermore, by stipulating conditions for full input tax credit availability, the amendments fortify compliance frameworks, thereby fostering greater certainty and alignment within the regulatory landscape.

5. Understanding Rule 36 Amendments

1. Introduction to Rule 36 Amendments: The recent updates to Rule 36 have introduced crucial amendments aimed at refining the process of Input Tax Credit (ITC) claims. These amendments, now integrated with FORM GSTR-1A, emphasize precision and accuracy in claiming ITC benefits.
2. Key Conditions and Inclusions: The amendments comprehensively outline the conditions under which ITC can be claimed. They specifically address the incorporation of amendments found in FORM GSTR-1A. This inclusion ensures that businesses accurately reflect and claim eligible ITC amounts, thereby streamlining compliance and reducing errors.
3. Impact on Compliance and Accuracy: By aligning with FORM GSTR-1A, the amendments bolster compliance measures while enhancing the accuracy of ITC claims. This alignment is pivotal in mitigating discrepancies and ensuring that businesses adhere to regulatory guidelines effectively.
4. Ensuring Regulatory Adherence: The revised clauses underscore the importance of regulatory adherence in ITC claims. Businesses are now mandated to integrate amendments from FORM GSTR-1A into their filings, emphasizing the need for meticulousness in claiming ITC benefits.
5. Conclusion: In conclusion, the amendments to Rule 36 represent a pivotal step towards enhancing transparency and accuracy in ITC claims. By incorporating amendments reflected in FORM GSTR-1A, businesses can navigate regulatory complexities with heightened precision, ensuring compliance and optimizing their tax credit benefits effectively.

6. Navigating Rule 37A Amendments—Ensuring Supplier Compliance and Integrity

1. Introduction to Rule 37A Amendment
   The recent updates to Rule 37A are pivotal in maintaining regulatory integrity amidst evolving compliance frameworks. These amendments specifically address non-payment issues by suppliers, aiming to fortify financial transparency and regulatory adherence within the realm of FORM GSTR-1A.
2. Key Amendments and Implications
   The amendments under Rule 37A introduce stringent measures to tackle non-payment instances by suppliers. This includes a recalibration of compliance protocols within FORM GSTR-1A, ensuring robust financial discipline and regulatory alignment across all stakeholders.
3. Impact on Compliance Integrity
   By incorporating these amendments, regulatory bodies aim to bolster compliance integrity across supplier transactions. This proactive approach not only enhances financial transparency but also fosters a climate of trust and accountability within the regulatory ecosystem.
4. Navigating Implementation Challenges
   Effectively implementing these amendments poses challenges, necessitating a meticulous approach to ensure seamless integration within existing regulatory frameworks. Stakeholders are urged to adopt proactive measures to navigate these changes, safeguarding operational continuity and compliance efficacy.
5. Future Outlook and Recommendations
   Looking ahead, stakeholders must remain vigilant amidst dynamic regulatory landscapes. Embracing proactive compliance strategies and leveraging technological advancements will be instrumental in adapting to forthcoming regulatory reforms under Rule 37A.

7. Rule 39 Amendment—Transform Input Tax Credit Distribution

1. Comprehensive Overhaul: The amendment of Rule 39 introduces sweeping revisions, ushering in new sub-rules and clauses that meticulously outline the process for distributing input tax credit through the Input Service Distributor (ISD).
2. Detailed Methodology: The newly established guidelines provide a step-by-step framework ensuring that the distribution of input tax credit is both transparent and precise.
3. Equitable Credit Distribution: One of the pivotal changes is the mandate that credit allocation must be proportional to the turnover of the respective recipients. This ensures that the distribution is fair and reflects the actual economic activity of each entity.
4. Ensuring Compliance: The conditions set forth within these revisions are designed to enforce strict compliance, ensuring that the credit distribution is conducted in accordance with established turnover proportions, thereby reducing discrepancies and potential for error.
5. Enhanced Transparency: These revisions aim to foster a more transparent system, reducing ambiguities and enhancing the overall efficiency of credit distribution through the ISD mechanism.

By integrating these comprehensive changes, the Rule 39 Amendment aims to refine and optimize the input tax credit distribution process, ensuring alignment with the actual business turnover and promoting a more equitable and transparent tax environment.

8. Navigating Rule 40 Amendment

1. Form Adjustments and Enhanced Precision
   The recent amendments to Rule 40 have brought about significant changes, specifically in the credit claiming process. These changes are meticulously reflected in the revised FORM GSTR-1A, ensuring that taxpayers can now claim credits with unparalleled accuracy.
2. Incorporating Clause Modifications
   The amendments incorporate crucial clause modifications, designed to streamline and simplify the credit claiming mechanism. This ensures that every entry in FORM GSTR-1A is aligned with the new regulatory requirements, fostering a more transparent and efficient process.
3. Optimizing Compliance
   By adopting these amendments, businesses can optimize their compliance strategies. The precision offered by the new FORM GSTR-1A adjustments eliminates ambiguities, allowing for a more straightforward credit claim procedure. This change marks a significant step towards improving financial reporting standards.
4. Ensuring Financial Accuracy
   The amendments serve as a robust framework for maintaining financial accuracy. The detailed adjustments in FORM GSTR-1A facilitate a seamless credit claiming experience, reducing errors and enhancing the reliability of financial data submitted.
5. Interactive Guidance for Taxpayers
   These changes not only benefit financial institutions but also provide clear and interactive guidance for taxpayers. The precise nature of the amendments ensures that businesses, both large and small, can navigate the credit claiming process with greater confidence and efficiency.

In essence, the Rule 40 amendment and the subsequent adjustments to FORM GSTR-1A represent a pivotal development in the realm of credit claiming. By embracing these changes, taxpayers can achieve a higher level of precision, compliance, and financial accuracy, ultimately transforming the landscape of tax reporting.

9. Rule 48’s Transformative Impact on Invoice Issuance

1. Introduction of Additional Provisions: The latest amendments to Rule 48 significantly reshape the landscape of invoice issuance. These changes ensure that both FORM GSTR-1 and FORM GSTR-1A are now integral to the invoice issuance protocols, marking a pivotal advancement in the regulatory framework.
2. Integration of FORM GSTR-1 and FORM GSTR-1A: By incorporating FORM GSTR-1 and FORM GSTR-1A into the issuance process, the amendment brings a dual-layer verification system. This integration not only enhances the accuracy and transparency of invoicing but also aligns with the broader objectives of the Goods and Services Tax (GST) regime, promoting compliance and efficiency.
3. Enhancing Transparency and Compliance: The dual consideration of both forms in the issuance protocol ensures that every transaction is meticulously recorded and cross-verified. This measure significantly reduces discrepancies and fosters a culture of transparency and accountability among taxpayers.
4. Streamlined Invoice Issuance Protocols: The amendments streamline the procedural aspects of invoice issuance. By mandating the use of both FORM GSTR-1 and FORM GSTR-1A, the regulatory framework now offers a more robust and comprehensive mechanism, thereby minimizing errors and facilitating smoother compliance for businesses.
5. Empowering Businesses with Clarity: With these amendments, businesses gain a clearer understanding of their invoicing obligations. The detailed provisions within FORM GSTR-1 and FORM GSTR-1A provide explicit guidelines, thereby empowering enterprises to adhere to compliance requirements with greater precision and confidence.
6. Conclusion – A Paradigm Shift in GST Compliance: The Rule 48 amendments mark a significant leap forward in the GST compliance landscape. By ensuring the incorporation of FORM GSTR-1 and FORM GSTR-1A in the invoicing protocols, the amendments not only fortify the regulatory framework but also usher in a new era of transparency, accuracy, and accountability in tax administration.

10. Rule 59 Amendment—Crucial GSTR-1 Table Updates Unveiled

1. New Provisions Effective August 2024: From August 2024, registered persons will experience significant changes in their GSTR-1 filing process. The amendments empower taxpayers to amend or add details to their outward supplies in FORM GSTR-1A prior to filing FORM GSTR-3B. This critical update ensures a more accurate and efficient tax filing process, aligning with contemporary business needs.
2. Threshold Reduction: One of the standout features of this amendment is the reduction in the threshold amount. Previously set at “two and a half lakh rupees,” the threshold has now been lowered to “one lakh rupees.” This adjustment is a strategic move designed to streamline compliance, making it more accessible for smaller businesses and enhancing overall tax governance.

These updates, encapsulated in Rule 59, represent a pivotal shift in the regulatory landscape, promising enhanced clarity and compliance for all registered taxpayers.

11. Amendment in Rule 60: Refining the Process for Inward Supply Details

In a move aimed at enhancing the accuracy of inward supply details, Rule 60 has undergone significant modifications. Specifically, sub-rule (1) now includes the addition of “FORM GSTR-1A” following “FORM GSTR-1”. This change aims to provide a more comprehensive mechanism for capturing detailed amendments in outward supplies. Moreover, sub-rule (7) introduces clause (iia), which mandates the inclusion of additional details or amendments in the details of outward supplies submitted by suppliers in FORM GSTR-1A within the specified timeframe. These adjustments are poised to streamline the reconciliation process and ensure a higher degree of precision in tax filings.

12. Amendment in Rule 62: New Deadline for GSTR-4 Submission

In an effort to provide more flexibility to registered persons, Rule 62 has been amended to extend the deadline for furnishing GSTR-4. For financial years starting from FY 2024-25, the GSTR-4 return must be filed by June 30th following the end of the financial year. This extension is expected to alleviate the pressure on taxpayers, allowing them ample time to compile and verify their tax information.

13. Amendment in Rule 78: Enhanced Matching of e-Commerce Operator and Supplier Details

To fortify the matching of details furnished by e-Commerce operators with those provided by suppliers, Rule 78 now includes the phrase “, as amended in FORM GSTR-1A if any,” following “FORM GSTR-1”. This inclusion ensures that any amendments made in FORM GSTR-1A are duly considered, thereby improving the accuracy of the data reconciliation process between e-Commerce operators and suppliers.

14. Amendment in Rule 88B: Clarification on Interest Calculation for E-Cash Ledger Balances

A crucial amendment to Rule 88B provides clarity on the calculation of interest for balances in the Electronic Cash Ledger. The new proviso stipulates that if an amount is credited to the ledger by the due date of filing the return but debited afterward, the interest calculation will exclude this amount, provided it remains in the ledger until debited. This adjustment is designed to prevent undue financial burdens on taxpayers due to interest on timely credited amounts.

15. Amendment in Rule 88C: Addressing Liability Discrepancies

Rule 88C has been updated to include “, as amended in FORM GSTR-1A if any,” after “FORM GSTR-1” in sub-rule (1). This amendment ensures that any discrepancies between the liability reported in the outward supplies statement and the return are accurately addressed, incorporating any amendments made in FORM GSTR-1A.

16. Amendment in Rule 89: Streamlining Refunds for Upward Price Revisions in Exports

Rule 89 now includes sub-rule (1B), allowing exporters to claim refunds for additional integrated tax paid due to upward price revisions post-export. Applications for such refunds must be submitted electronically in FORM GST RFD-01 within two years from the relevant date as specified in section 54(2)(a). Additionally, sub-rule (2) mandates detailed documentation, including export invoices, shipping bills, Bank Realisation Certificates, and a chartered accountant’s certification, to substantiate the refund claims. This amendment aims to provide a clear and structured process for exporters seeking refunds for additional taxes paid due to post-export price adjustments.

17. Introduction of Rule 95B: Refunds for Canteen Stores Department

The new Rule 95B facilitates the refund process for the Canteen Stores Department (CSD) under the Ministry of Defence. Eligible for a 50% refund of the central tax paid on inward supplies, the CSD must apply quarterly using FORM GST RFD-10A. The refund process will mirror that of FORM GST RFD-01, with specific conditions such as receipt of goods from registered suppliers and proper documentation. This provision aims to streamline the refund process for the CSD, ensuring efficient and timely reimbursement.

18. Amendment in Rule 96: Enhanced Provisions for Export Refunds

Rule 96 has been refined to accommodate upward price revisions in export goods. Exporters can now file for refunds of additional integrated tax paid due to such revisions through FORM GST RFD-01. The amendment also includes “, as amended in FORM GSTR-1A if any,” after “FORM GSTR-1” in sub-rules (1) and (2), ensuring that all amendments are considered during the refund process. This change provides a clear pathway for exporters to reclaim additional taxes paid due to price adjustments after export.

19. Amendment in Rule 96A: Aligning Export Payment Timelines with FEMA

Rule 96A has been updated to align the timelines for receiving export payments with the Foreign Exchange Management Act, 1999 (FEMA). Sub-rule (1)(b) now allows for payment receipt within fifteen days after one year from the invoice date, or the period permitted under FEMA, whichever is later. This amendment provides flexibility for exporters, accommodating extensions granted by the Reserve Bank of India for receiving payments.

20. Amendment in Rule 110: Streamlined Appeals to the Appellate Tribunal

The revised Rule 110 introduces a structured process for filing appeals to the Appellate Tribunal. Appeals must be filed electronically in FORM GST APL-05, with provisional acknowledgments issued immediately. Manual submissions are permitted only under special orders from the Registrar. The rule also specifies the fee structure for filing appeals, capping it at INR 25,000 and setting a minimum of INR 5,000. This amendment aims to ensure a transparent and efficient appeals process, with clear guidelines on submission and acknowledgment of appeals.

These comprehensive amendments across various GST rules are designed to streamline processes, enhance accuracy, and provide greater clarity and flexibility for taxpayers. By addressing specific issues such as inward supply details, export refunds, and appeal procedures, these changes are poised to significantly improve the overall efficiency of the GST system.

21. Introduction to Rule Amendments

The recent amendments to Rule 111 of the GST framework signify a pivotal shift in appellate procedures. Applicants are now required to electronically file appeals using Form GST APL-07, accompanied by pertinent documentation. Notably, manual submissions in exceptional circumstances necessitate explicit Registrar authorization, under specified conditions, ensuring immediate provisional acknowledgments to appellants.

22. Memorandum of Cross-Objections

In compliance with Section 112(5), the memorandum of cross-objections must be electronically filed via Form GST APL-06. However, manual submissions are admissible under Registrar approval, subject to specific directives, maintaining procedural integrity as per Rule 26.

23. Transforming E-Way Bill Protocols for Unregistered Persons

Rule 138(3) Overhaul: E-Way Bill Transformation
In a groundbreaking revision set to redefine logistics, the government has introduced pivotal changes to Rule 138(3. This amendment mandates that unregistered persons now have a clear and streamlined process for generating e-way bills, fortifying the regulatory framework.

New Proviso Addition: Simplified Compliance Pathway
Effective from a date soon to be declared, a new proviso has been seamlessly integrated after the third proviso of Rule 138(3. This strategic inclusion aims to demystify the compliance requirements for unregistered entities, ensuring a more inclusive and accessible system.

Introducing FORM GST ENR-03: Electronic Submissions
The amendment specifies that an unregistered person, obligated or opting to generate an e-way bill via FORM GST EWB-01, must electronically submit their details on the common portal using the newly notified FORM GST ENR-03. This can be done directly or through a Commissioner-notified Facilitation Centre, thus broadening the avenues for compliance.

Unique Enrolment Number: Enhanced Verification Mechanism
Upon electronic submission and subsequent validation of the provided details, a unique enrolment number will be generated and communicated to the unregistered person. This mechanism ensures enhanced accuracy and verification, reinforcing the integrity of the e-way bill system.

This amendment signifies a monumental shift towards an inclusive, streamlined, and technologically advanced e-way bill generation process, marking a new era in regulatory compliance for unregistered persons.

24. Streamlining GST Payments

1. Introduction to GST Rule Modifications The recent amendments to Rule 142 under the GST Act mark a pivotal shift towards enhancing transparency and efficiency in tax compliance procedures. These amendments, detailed in sub-rules (2), (2A), and the newly introduced (2B), introduce significant procedural changes aimed at simplifying the payment and acknowledgment processes for tax liabilities under various sections.
2. Key Amendments Explained

• Sub-rule (2): The substitution of procedural steps now mandates that any payments made under FORM GST DRC-03 must be acknowledged electronically through FORM GST DRC– 04, ensuring immediate confirmation of payment via the common portal.
• Sub-rule (2A): Addition of Part-C in FORM GST DRC-01A allows the proper officer to issue intimation, acknowledging submissions or payments made by the taxpayer, thereby streamlining the acceptance process.
• New Sub-rule (2B): This addition enables taxpayers to adjust payments made under FORM GST DRC-03 against electronic liability registers in FORM GST PMT –01 through electronic applications filed in FORM GST DRC-03A, facilitating seamless integration and credit adjustments against tax demands.

1. Impact and Implications These amendments not only ensure quicker acknowledgments and integrations of tax payments but also establish a robust framework for electronic compliance, reducing administrative burdens and enhancing taxpayer convenience. By aligning with electronic platforms, the GST regime strengthens its commitment to operational efficiency and taxpayer facilitation.
2. Conclusion In conclusion, the amendments to Rule 142 signify a progressive step towards a more transparent and digitally integrated GST ecosystem. These reforms are poised to streamline tax compliance, bolster administrative effectiveness, and foster greater compliance confidence among taxpayers. As businesses navigate the complexities of GST regulations, these amendments herald a new era of efficiency and accountability in India’s tax administration landscape.

25. Rule 163 Revised

The recent amendment to Rule 163 marks a pivotal shift towards enhanced transparency and compliance in GST regulations. Rule 163, sub-rule (1)(c), now includes provisions for amended disclosures in FORM GSTR-1A, reflecting a nuanced approach to data integrity and regulatory alignment.

In the latest revision of Rule 163 of the GST regulations, a significant enhancement has been introduced to streamline information sharing practices. Specifically, under sub-rule (1)(c), an additional provision has been incorporated allowing for the inclusion of amended details in FORM GSTR-1A. This amendment underscores a critical stride towards fostering greater transparency and regulatory compliance within the GST framework. By mandating consent-based adjustments to information originally reported in FORM GSTR-1, the revision aims to bolster accuracy and accountability in tax filings. This development not only aligns with evolving regulatory standards but also empowers stakeholders with a more robust mechanism to maintain integrity across GST reporting obligations. As businesses navigate these regulatory updates, understanding and adhering to the revised Rule 163 becomes paramount, ensuring seamless compliance and operational efficiency in the GST landscape.

26. Miscellaneous

1. Overview of Changes: The landscape of GST compliance has recently undergone significant transformations, marked notably by updates across multiple key forms including GSTR-1, 3B, 2A, 2B, 7, 8, 9, 4, RFD-01, APL, DRC-01A, DRC-03A, and DRC-04, reflecting a concerted effort towards streamlining regulatory frameworks and enhancing transparency.
2. Emergence of GSTR-1A: Among these revisions, the introduction of the new GSTR-1A form stands out, heralding a nuanced approach towards reconciling discrepancies in GSTR-1 filings, thus fortifying compliance mechanisms against potential inconsistencies.

In recent regulatory updates, the GST regime has witnessed a pivotal evolution with profound implications for stakeholders navigating the intricate web of compliance. These amendments, spanning a spectrum from GSTR-1 to RFD-01, underscore a strategic recalibration aimed at bolstering procedural robustness and aligning with the evolving fiscal landscape. The advent of GSTR-1A, in particular, underscores a proactive stride towards harmonizing reporting accuracies, engendering a climate conducive to clarity and coherence in fiscal engagements.

In a landmark ruling, the Rajasthan Authority for Advance Rulings (AAR) has determined that baby food products containing ingredients other than milk could now be subjected to an 18% Goods and Services Tax (GST), a stark increase from the 5% rate applicable to pure milk products. This precedent-setting decision could have far-reaching implications for the baby food industry.

The case in question involved an application from Jaipur-based Bebymil, seeking clarification on the GST rate for its products, marketed under the trade name Momylac. Bebymil’s product line includes infant milk formulas enriched with cereals and protein supplements, designed as substitutes for mother’s milk.

The AAR’s ruling hinges on the classification of these products under the Harmonised System of Nomenclature (HSN) codes. The authority concluded that Bebymil’s products fall under HSN 1901, which pertains to food preparations where milk is one of several ingredients. In contrast, products classified under HSN 0402, which exclusively cover milk products, enjoy a lower GST rate of 5%.

Experts have pointed out that the ingredient composition of a product plays a crucial role in determining its appropriate tax classification. The level of non-milk ingredients in any baby food product significantly influences its classification and the applicable GST rate,” noted tax expert Sehgal. This ruling underscores the complexity of GST regulations and the importance of precise product classification to ensure compliance and optimize tax liabilities.

This decision by the AAR not only clarifies the GST rate for Bebymil’s products but also sets a significant precedent for other manufacturers in the baby food sector. The industry now faces the challenge of adapting to these regulatory changes, which may impact pricing strategies and market dynamics.

In a landmark achievement for India’s fiscal landscape, the Goods and Services Tax (GST) collections soared to an unprecedented ₹2.1 lakh crore in April 2024, marking a substantial 12.4% year-on-year growth. As Union Finance Minister Nirmala Sitharaman prepares to unveil the Union Budget 2024-25 on July 23, these staggering figures are set to play a pivotal role in economic deliberations.

The GST, a cornerstone of India’s multi-tiered taxation framework, continues to dominate the discourse surrounding the nation’s economic strategy. Instituted by Prime Minister Narendra Modi’s administration in July 2017, the GST was designed to eliminate the cascading effect of multiple indirect taxes, thereby streamlining the taxation process. This system has significantly impacted the Ministry of Finance’s approach to budget allocation, with the latest figures underscoring its efficacy.

With the GST revenue poised to exceed the Revised Estimate for the current fiscal year, there is widespread speculation that the central government may elevate the targets delineated in the interim Budget for the forthcoming fiscal period. Though no formal announcements have been made, experts are optimistic, attributing their confidence to the extraordinary collection numbers.

In April 2024, the GST collections reached a new zenith of ₹2.1 lakh crore, alleviating the strain on government finances. This impressive figure, indicative of a 12.4% annual growth, was fueled by a robust surge in domestic transactions, which grew by 13.4%, and imports, which saw an 8.3% rise. According to an official statement, after adjusting for refunds, the net GST revenue for the month stood at ₹1.92 lakh crore, reflecting an outstanding 15.5% growth compared to the same period in 2023.

May 2024 continued this positive trend, with GST collections amounting to ₹1.73 lakh crore, signaling the system’s increasing maturity and the enhanced compliance among taxpayers.

The implications of these high GST collections are far-reaching. Bolstering the government’s revenue stream, these collections fortify fiscal health, stimulate infrastructural development, and amplify funding for social programs. This confluence of benefits not only fosters economic stability but also instills greater confidence among investors, thus reinforcing India’s economic resilience.

In conclusion, as the Union Budget 2024-25 is poised for release, the remarkable GST collection figures stand as a testament to the robustness of India’s tax framework and its critical role in shaping the nation’s economic future.

In a striking revelation, State Bank of India’s Economic Research Department (ERD) has underscored the urgent necessity for taxation parity on bank deposits, encompassing both demand and time deposits, to align with other investment avenues. This call to action is driven by the noticeable shift of investors towards alternate asset classes that are currently yielding higher returns.

The ERD’s comprehensive analysis indicates that the fiscal impact of such a move on government revenue would be marginal. According to Soumya Kanti Ghosh, Group Economic Adviser at SBI, the existing tax regime for equity and mutual fund holdings imposes a 15% tax on short-term capital gains and a 10% tax on long-term capital gains, with the latter being exempt up to one lakh rupees annually. This preferential tax treatment, combined with the ability to offset losses against profits and carry them forward for up to eight years, renders these investment options exceedingly attractive.

To rectify this imbalance, the ERD proposes that the government standardize the taxation of deposit interest across different maturities, akin to the treatment of mutual funds and equities. This recommendation comes against the backdrop of declining household net financial savings, which dropped to 5.3% of GDP in FY23 and are projected to slightly recover to 5.4% in FY24. Enhancing the attractiveness of deposit rates in line with mutual funds could significantly bolster household financial savings and increase the flow of funds into current and savings accounts (CASA).

Ghosh further highlighted that an increase in bank deposits would not only stabilize the core deposit base and the financial system but also enhance financial stability in household savings. This is particularly pertinent as the banking system is better regulated and inherently more trustworthy compared to other volatile and risky investment alternatives.

Moreover, the current disparity where deposits are taxed on an accrual basis while other asset classes are taxed only upon redemption needs to be addressed. Aligning the taxation policy for bank deposits with that of other investment avenues would not only level the playing field but also encourage additional spending, thereby generating increased Goods and Services Tax (GST) revenue for the government.

In conclusion, achieving taxation parity for bank deposits is imperative for fostering a balanced investment landscape, promoting financial stability, and enhancing government revenue through augmented household savings and spending.

In the labyrinthine world of India’s taxation, the Goods and Services Tax (GST), introduced seven years ago with much fanfare, continues to grapple with complexities far removed from its envisioned simplicity. Arvind Subramanian, the former Chief Economic Advisor, has cast a critical eye on the tax regime, asserting that the promise of a ‘Good and Simple Tax’ remains an unfulfilled aspiration.

Revenues generated under the GST have, disappointingly, only now matched the levels seen before its implementation, Subramanian lamented on Thursday. This sluggish revenue performance, he attributed to a “rate-cutting spree” initiated by the GST Council from late 2017 through 2019, a period during which both the Centre and States were culpable.

Subramanian highlighted a significant oversight: the absence of critical data on refunds. “Our focus was misguided, fixated on collections because refunds were not published. This led us to an erroneous conclusion about the health of GST revenues. Had refunds data been transparent, the approach to rate cuts would have been far more prudent,” he explained.

Earlier this year, the government resumed the practice of releasing net GST collection figures, only to halt it once more. Without access to refund data, there is a misleading perception that GST revenues are robust,” Subramanian observed during a seminar on GST’s seventh anniversary, organized by the Centre for Social and Economic Progress.

Subramanian did not mince words when addressing the GST’s convoluted structure, referring to the multiple cess rates and the overall rate framework as ‘monstrous. He proposed a radical simplification: a single cess rate, one standard rate, and one lower rate. This, he argued, would bring much-needed clarity and efficiency to the system.

Frequent amendments and adjustments every time the GST Council convenes, Subramanian contended, have further complicated the tax regime, moving it away from the simplicity and rationalisation initially intended. Reflecting on his 2015 recommendations, he noted he had proposed a tri-rate structure: one for essential goods, a standard 18% rate, and a 40% rate for demerit goods.

Interestingly, Subramanian’s stance on including sectors such as electricity, petroleum, and alcohol within the GST ambit has evolved. Once a proponent, he now sees such inclusion as politically unfeasible and ill-advised, especially given the strained relations between the Centre and the States. Expecting States to relinquish more sovereignty under current conditions is unrealistic,” he conceded, acknowledging the significant concessions already made by States for GST’s original rollout.

Subramanian’s incisive critique underscores a fundamental reality: the GST, envisioned as a streamlined and efficient tax system, remains ensnared in a web of complexities and political dynamics, far from the straightforward solution it was intended to be.

The National Litigation Policy of India mandates a strategic approach to legal appeals, stipulating that appeals should not be pursued when the monetary amount involved is below a specified threshold set by Revenue Authorities. It also discourages appeals in cases where precedents from Tribunals and High Courts have settled the matter without further contestation in the Supreme Court.

In a significant move, the GST Council, during its 53rd meeting held in New Delhi on June 22, 2024, introduced several measures aimed at simplifying compliance procedures for taxpayers. These recommendations included steps to facilitate trade and reduce the burden of litigation.

A pivotal recommendation by the Council involves setting monetary thresholds for filing appeals in GST cases by the department before the GST Appellate Tribunal, High Courts, and the Supreme Court. The monetary limits recommended are as follows:

GST Appellate Tribunal (GSTAT): Rs. 20 lakhs
High Court: Rs. 1 crore
Supreme Court: Rs. 2 crores

Following these recommendations, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 207/1/2024-GST on June 26, 2024, providing clarifications on reducing government litigation by fixing monetary limits for filing appeals or applications by the Department before GSTAT, High Courts, and the Supreme Court.

Non-Filing of Appeals Under Section 120

Section 120 of the CGST Act 2017 empowers the CBIC to issue orders, instructions, or directions fixing monetary limits to regulate the filing of appeals or applications by Central Tax Officers. When an Officer refrains from filing an appeal or application due to such directions, it does not prevent them from filing in other cases involving similar issues or questions of law. Importantly, the non-filing in one case cannot be interpreted as consent to the decision on the disputed issue.

Key Points from CBIC Circular No. 207/2024

The CBIC has exercised its powers under Section 120 of the CGST Act to establish the following monetary limits below which appeals or applications shall not be filed by Central Tax Officers:

Appellate Forum and Monetary Limit

GST Appellate Tribunal (GSTAT): Rs. 20 lakhs
High Court: Rs. 1 crore
Supreme Court: Rs. 2 crores

These thresholds apply to appeals or applications, including Special Leave Petitions (SLPs), under any provision of the CGST Act.

Principles for Non-Filing of Appeals

The following principles are to be observed to determine if a case falls within the monetary limits for non-filing of appeals:

• Only the aggregate amount of tax in dispute is considered (excluding interest and penalties).
• The monetary limit covers all types of GST (CGST, SGST, UGST, IGST) and Compensation Cess.
• Disputes solely involving interest, penalty, or late fees are assessed based on the amount of interest, penalty, or late fee.
• In cases of erroneous refunds, the disputed refund amount is considered.
• The monetary limit applies to the disputed amount only, excluding any admitted amounts.
• For composite orders disposing of multiple appeals or notices, the monetary limit applies to the total amount involved.

Exceptional Situations

Threshold limits do not apply in certain exceptional circumstances where decisions are based on merits rather than monetary limits. These include cases where:

• A provision is deemed ultra vires to the Constitution of India.
• A rule or regulation is deemed ultra vires to the parent Act.
• An order, notification, instruction, or circular is deemed ultra vires to the Act or Rules.
• Matters related to the valuation of goods or services, classification, refunds, place of supply, or other issues that are recurring, involve interpretation, or where adverse comments or costs have been imposed against the government.

Deciding to File Appeals

Even when the amount involved exceeds the prescribed monetary limit, appeals are to be decided on merits. The objective is to reduce unnecessary litigation and provide certainty to taxpayers regarding tax assessments.

Precedent Value

Judgments against which appeals are not filed due to monetary limits will not hold precedent value. The reviewing authority must record that although the decision is not acceptable, no appeal is filed because the amount involved is below the monetary limit set by the Board. This non-filing does not result in ‘attaining finality’ on an issue and does not prevent filing appeals in other cases with similar issues exceeding the monetary limit. Appeals may also be filed in cases involving questions of law.

Conclusion

The recent CBIC clarification offers comprehensive guidance on applying monetary limits in GST appeals. However, the scope for applying these limits is limited by numerous exceptions, including issues of valuation, classification, place of supply, refunds, recurring issues, interpretation issues, and validity of provisions. Notably, these areas have been major sources of disputes in the GST regime. The emphasis remains on reducing unnecessary litigation while ensuring justice and revenue interests are upheld.

In a dramatic turn of events, the State Goods and Services Tax (SGST) and Subsidiary Intelligence Bureau (SIB) teams orchestrated a high-stakes raid on Tuesday targeting a prominent builder and developer in Kanpur’s Civil Lines and Barra areas, following allegations of extensive tax evasion.

According to SGST insiders, substantial evidence pointing to large-scale tax evasion was unearthed during the operation. The intensive investigation, stretching late into the night, culminated in the builder conceding and promptly depositing a sum of Rs 1.03 crore.

In a robust display of regulatory enforcement, multiple documents were seized under the directive of Joint Commissioner SIB Shivika Singh. The coordinated raid was executed by Deputy Commissioners SIB Sushma Singh, Vivek Upadhyay, Ramendra Ratnakar, Vijay Singh, and Kaushalendra Singh, who meticulously combed through the builder’s establishments.

Joint Commissioner Shivika Singh elaborated on the findings, stating, “Our scrutiny revealed significant discrepancies in tax declarations. The builder was found accepting advance payments during pre-bookings but had been consistently underreporting tax liabilities over the previous years.” Singh further highlighted the irregularities in tax rates, underscoring the deliberate manipulation detected during the probe.

This operation underscores the SGST’s relentless pursuit of tax compliance, reflecting broader efforts to uphold fiscal integrity and deter fraudulent practices. The implications of this raid echo beyond Kanpur, resonating as a stern warning to entities attempting to circumvent tax laws.

In a fervent appeal to the Union Finance Minister, the Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco) has underscored the urgent need to reduce the Goods and Services Tax (GST) on arecanut and its associated agricultural inputs.

Appeal for Tax Reduction

Aiming to alleviate the financial burden on farmers, Campco President A Kishore Kumar Kodgi penned a detailed letter to Finance Minister Nirmala Sitharaman, urging a reduction in GST on arecanut from 5% to 2%. Kodgi emphasized that such a reduction would not only incentivize farmers to transact through cooperatives but also significantly curtail tax evasion prevalent in informal trading networks. This strategic move, he argued, would endow cooperatives with a competitive edge, thereby bolstering their sustainability in the market.

Kodgi also highlighted the critical need to reduce the GST on copper sulphate from 18% to 5%. Copper sulphate, an essential fungicide used in the cultivation of arecanut, coffee, and rubber, stands as a cornerstone in modern agricultural practices. Aligning its GST rate with that of other fertilizers would provide substantial financial relief to smallholding farmers, fostering a more equitable agricultural environment.

Curbing Illegal Imports and Protecting Farmers

In addition to tax revisions, Kodgi urged the government to lower the Customs Duty on advanced agricultural tools, particularly carbon fibre poles, which are indispensable for tasks such as fungicide spraying and crop harvesting. Currently subjected to a prohibitive 48% Customs Duty, reducing this rate would render these tools more accessible to farmers, thereby enhancing agricultural efficiency.

Furthermore, Campco’s letter vehemently called for stringent measures to curb illegal imports of arecanut and pepper. Kodgi proposed the incineration of such illicitly imported quantities to mitigate health risks and maintain market integrity. He asserted that illegal imports jeopardize both public health and the livelihoods of local farmers, necessitating immediate and decisive action.

Research and Development Initiatives

Highlighting the necessity of ongoing research, Campco also appealed for government funding to explore the medicinal benefits of arecanut and to develop solutions for combating yellow leaf disease, which plagues arecanut plantations. These research initiatives, Kodgi noted, are vital for advancing agricultural knowledge and ensuring the long-term viability of arecanut cultivation.

By addressing these multifaceted issues, Campco aims to foster a more robust, sustainable agricultural sector that safeguards the interests of farmers while promoting public health and market stability.

The gross goods and services tax (GST) collections for June 2024 have risen to Rs 1.74 trillion, representing a year-on-year (Y-o-Y) increase of 7.7 percent, according to sources disclosed to Business Standard. This marks a deceleration in growth compared to the 12.4 percent and 10 percent increases observed in April and May, respectively, with month-on-month figures remaining largely unchanged.

May’s gross GST collections stood at Rs 1.73 trillion, while April witnessed a record high of Rs 2.1 trillion. The revenue accumulated by June has brought the fiscal year-to-date total to Rs 5.57 trillion. Despite the tempered growth, an official remains optimistic, predicting that the upward trend will persist in the coming months with gross collections expected to stay above the Rs 1.6 trillion threshold.

Specific figures for Central and State GST collections were not provided; however, it is known that approximately Rs 39,600 crore was allocated to the central GST account from the Integrated GST (IGST) collection, and states received Rs 33,548 crore from the IGST collection. This data coincides with the seventh anniversary of the GST rollout in India, with the finance ministry deciding to cease the publication of detailed tax collection figures.

“The stabilisation of the GST regime likely underpins the decision to withhold detailed figures,” commented the source.

Pratik Jain, a partner at PwC India, remarked, “Although June’s collection growth appears subdued compared to previous months, the overall GST collection trend has been encouraging.” He suggested that this positive trend might prompt the GST Council to revisit the rate rationalisation initiative, as discussed in their latest meeting.

Another expert highlighted that the figures reflect a resilient economy, bolstered by businesses’ commendable self-compliance. “Effective audits, scrutiny measures, and enforcement by the department have significantly contributed to this success,” observed Saurabh Agarwal, tax partner at EY.

Marking the seventh anniversary of the GST regime, which consolidated 17 local taxes, the finance ministry issued statements lauding the system through social media. The theme of the 7th GST Day, “Sashakt Vyapar Samagra Vikas” (empowered trade, overall growth), was prominently featured. The ministry highlighted the benefits of reduced tax rates on household goods, proclaiming that “#7yearsofGST has brought happiness and relief to every home with lower GST on household appliances and mobile phones.

The GST taxpayer base expanded to 14.6 million in April 2024, up from 10.5 million in April 2018. The ministry also underscored the reduction in compliance burdens for small taxpayers, with the GST Council recommending the waiver of annual return filing for those with an aggregate annual turnover of up to Rs 2 crore in 2023-24.

The Quarterly Returns with Monthly Payment (QRMP) scheme has cut the number of annual returns filed from 24 to 8 for more than 4.4 million small taxpayers. Additionally, the Invoice Furnishing Facility (IFF) has ensured the seamless transfer of input tax credit, further easing the compliance process.