GST Amendments proposed in in Budget 2022
TO strengthen the ecosystem of Goods and Services Tax and curb the menace of fake / bogus invoicing, various amendments are proposed in the GST law.
The amendments in CGST and IGST Act span out from section 99 to section 123 of Finance Bill, 2022. In all, there are 17 changes in CGST Act and 1 change in IGST Act and UTGST Act each.
The amendments will be effective from a date to be notified unless otherwise specified (refer section 1 (2) (b) of Finance Bill, 2022.
Few amendments will be effective retrospectively from 1st July 2017 (such as amendment in Section 50.
Let's decode the key amendments
1. One more condition for claiming ITC
Section 16 of the CGST Act deals with the eligibility and conditions for claiming ITC. Now, a new clause (ba) to section 16 (2) 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 restricted in the details communicated to the taxpayer under section 38. For taxpayers, this new condition is the sixth condition to fulfill ITC under section 16 (2). [refer clause 99 of Finance Bill, 2022]
2. Time limit to avail ITC to be 30th November
Section 16 (4) provides for time limit to avail ITC. Now, section 16 (4) of the CGST Act is being amended so as to provide for an extended time for availment of input tax credit by a registered person in respect of any invoice or debit note pertaining to a Financial Year upto 30th November of the following Financial Year. This is a welcome move as taxpayers get few more days to reconcile and claim ITC (approx. 40 days if we consider 20th October as earlier due date). [refer clause 99 of Finance Bill, 2022]
3. ITC to be availed on self-assessment basis
Section 49 deals with payment of tax, interest etc. Now, section 49 of the CGST Act is being amended so as to: i. Provide for prescribing restrictions for utilizing the amount available in the electronic credit ledger; ii. Provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger iii. Allow 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; Sr. no. (i) and (ii) could prove detrimental to genuine taxpayers. [refer clause 109 of Finance Bill, 2022]
4. Section 54 amended
Section 54 of the CGST Act deals refunds and has been subject matter of amendment earlier. Now, section 54 of the CGST Act is being amended so as to: (i) Explicitly provide that refund claim of any balance in the electronic cash ledger shall be made in such form and manner as may be prescribed; (ii) Provide the time limit for claiming refund of tax paid on inward supplies of goods or services or both under section 55 as two years from the last day of the quarter in which the said supply was received; (iii) Extend the scope of withholding of or recovery from refunds in respect of all types of refund; (iv) Provide clarity regarding the relevant date for filing refund claim in respect of supplies made to a Special Economic Zone developer or a Special Economic Zone unit by way of insertion of a new sub-clause (ba) in clause (2) of Explanation thereto. Aforesaid amendment could be helpful to taxpayers. [refer clause 112 of Finance Bill, 2022]
5. Time limit to issue Credit Note to be 30th November
Section 34 provides for time limit to issue Credit Notes. Now, section 34 (2) of the CGST Act is being amended so as to provide for time for issuance of credit notes in respect of any supply made in a Financial Year upto 30th November of the following Financial Year. This is a welcome amendment and is in line with section 16 (4) amendment. [refer clause 101 of Finance Bill, 2022]
6. GST Outward return process revamped
Section 37 deals with Outward supply return. Now, section 37 is revamped and inter-alia, the erstwhile two-way communication process in return filing is done away with Further, section 38 deals with Inward supply return. Now, 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. [refer clause 102 and 103 of Finance Bill, 2022]
7. ITC to be availed on self-assessment basis
Section 41 dealt with provisional acceptance of ITC. Now, Section 41 of the CGST Act is being substituted so as to do away with the concept of "claim" of eligible input tax credit on a "provisional" basis and to provide for availment of self-assessed input tax credit subject to such conditions and restrictions as may be prescribed. Further, sections 42, 43 and 43A (which dealt with matching etc) of the CGST Act are being omitted so as to do away with two-way communication process in return filing. [refer clause 105 and 106 of Finance Bill, 2022]
8. Section 50 amended
Section 50 of the CGST Act deals levy of interest. Now, section 50 (3) is being substituted retrospectively, with effect from 01.07.2017, so as to provide for levy of interest on input tax credit wrongly availed and utilized. Further, Not. No. 13/2017 - CT, dated the 28th June, 2017, is being amended retrospectively, w.e.f. 01.07.2017, so as to notify rate of interest as 18% under Section 50 (3). Similar, amendment, for rate of interest, is proposed for IGST and UTGST.
The Press Release can be accessed at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1794165
