Tax, Accounting, and Finance Chronicle

The Central Goods and Services Tax (CGST) Act, 2017 has undergone significant budgetary revisions, coming into effect from July 1, 2024. These amendments are aimed at refining tax compliance and easing procedural constraints for registered taxpayers. Below are the pivotal changes and their far-reaching implications:

Amendment to Section 16

Eligibility for Input Tax Credit (ITC) has been modified with the introduction of sections 16(5) and 16(6).

• Section 16(5) grants ITC for invoices or debit notes pertaining to FY 2017-18 to 2020-21 if filed by November 30, 2021.
• Section 16(6) states that if a taxpayer’s registration is revoked and later reinstated, ITC claims on invoices or debit notes (unrestricted on the date of cancellation) can be filed by November 30 following the financial year of the invoice or within 30 days of revocation.

Amendment to Section 30

Procedures for revoking a cancelled registration have been clarified in Section 30.

• Section 30(2) now includes a proviso that revocation is contingent on conditions and restrictions as prescribed.

Amendment to Section 31

Tax invoice issuance timelines are detailed in Section 31.

• Section 31(3)(f) mandates registered taxpayers to issue invoices for goods or services received from unregistered suppliers within a prescribed period.
• Section 31(6)(g) clarifies that “supplier who is not registered” includes those registered solely for tax deduction under section 51.

Amendment to Section 39

Return filing obligations are reiterated in the revised Section 39.

• Section 39(3) requires taxpayers deducting tax at source under section 51 to file monthly electronic returns for deductions made, even if no deductions occur in a month.

Amendment to Section 54

The refund process for unutilized ITC is refined in Section 54.

• The second proviso to Section 54(3), which denied refunds on goods subjected to export duty, is omitted.
• Section 54(15) specifies no refunds for zero-rated supplies subjected to export duty.

Amendment to Section 70

Section 70 has been expanded with sub-section 70(1A).

• It mandates individuals summoned to attend, provide truthful statements, and produce required documents or things as directed by the proper officer.

Amendments to Sections 73 and 74

Determining tax for periods up to FY 2023-24 is addressed.

• New sub-sections 73(12) and 74(12) specify the application of these sections for tax determination up to FY 2023-24.

Amendment to Section 75

General tax determination provisions have been updated.

• Section 75(2A) adjusts penalty provisions based on appellate conclusions.
• Section 75(10) sets the timeline for concluding adjudication proceedings.

Amendment to Section 109

The constitution of the GST Appellate Tribunal is clarified in Section 109.

• The Tribunal will be established as per government notification, based on Council recommendations.

Amendment to Section 112

Appeal procedures to the Appellate Tribunal are detailed in Section 112.

• Appeals must be filed within three months from the order communication date or a date notified by the government, whichever is later.
• Commissioners can direct appeals to the Appellate Tribunal within six months.
• Reduced pre-deposit requirements for appeals have been set at 10% of the disputed tax, capped at Rs. 20 crore.

Amendment to Section 122

Penalties for certain offenses by electronic commerce operators have been specified.

Insertion of Section 128A

A new Section 128A introduces waivers of interest or penalties for certain periods.

• It provides conditions for waiving interest and penalties for taxes payable from July 1, 2017, to March 31, 2020, if paid by a government-notified date.

Amendment to Section 140

Input Service Distributors (ISD) can distribute pre-appointed day service credits under the amended Section 140(7).

Amendment to Section 171

Anti-profiteering measures are addressed in Section 171.

• It specifies that the government may set a cut-off date for the Authority to stop accepting examination requests regarding tax rate reductions or input tax credits.

Amendment to Schedule III

Insurance and reinsurance services are detailed in new paragraphs 9 and 10 of Schedule III.

• Para 9 pertains to co-insurance agreements, while Para 10 deals with reinsurance services, ensuring tax is paid on gross premiums inclusive of commissions.

These amendments are designed to streamline processes, ensure compliance, and clarify taxpayers’ obligations under the CGST Act. Stakeholders must stay abreast of these changes to avoid non-compliance and leverage available benefits.

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