RECENT CHANGES IN GST

1.Relief Measures relating to Statutory and Regulatory Compliance Matters regarding to GST in view of COVID-19 Outbreak

  • Last date for filing GSTR-3B in March, April and May 2020 is extended till the last week of June, 2020 and July, 2020. For taxpayers having aggregate annual turnover less than Rs. 5 Crores, no interest, late fee, and penalty is to be charged subject to conditions. For taxpayers having aggregate annual turnover of more than Rs. 5 Crores, reduced rate of interest @9 % per annum will be charged for any delayed payment made between 20th March 2020 and 30th June 2020. However, no late fees or penalty will be imposed.

The conditions for different class of registered persons for reduced Interest Rate and waiver of Late Fee is tabulated below (This notification is effective w.e.f. 20/03/2020):

Class of Registered personsRate of interestLate FeeTax periodCondition
Taxpayers having an aggregate turnover of more than rupees 5 crores in the preceding FYNil for first 15 days from the due date, and 9% thereafterNilFebruary, March, April 2020If return in FORM GSTR-3B is furnished on or before 24th June, 2020
Taxpayers having an aggregate turnover of more than rupees 1.5 crores and up to rupees 5 crores in the preceding FYNilNilFebruary, March 2020If return in FORM GSTR-3B is furnished on or before 29th June, 2020
Taxpayers having an aggregate turnover of more than rupees 1.5 crores and up to rupees 5 crores in the preceding FYNilNilApril 2020If return in FORM GSTR-3B is furnished on or before 30th June, 2020
Taxpayers having an aggregate turnover of up to rupees 1.5 crores in the preceding FYNilNilFebruary 2020If return in FORM GSTR-3B is furnished on or before 30th June, 2020
Taxpayers having an aggregate turnover of up to rupees 1.5 crores in the preceding FYNilNilMarch, 2020If return in FORM GSTR-3B is furnished on or before 3rd July, 2020
Taxpayers having an aggregate turnover of up to rupees 1.5 crores in the preceding FYNilNilApril, 2020If return in FORM GSTR-3B is furnished on or before 6th July, 2020

Due Date for GSTR 3B for the month of May 2020:

Class of Registered PersonsLocation of Principal Place of BusinessGSTR 3B for Tax PeriodDue Date
Taxpayers having an aggregate turnover of more than rupees 5 crore rupees in the previous FYAny State/ UTMay 202027th June, 2020
Taxpayers having an aggregate turnover of up to rupees 5crore rupees in the previous FYStates of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands or LakshadweepMay 202012th July, 2020
Taxpayers having an aggregate turnover of up to rupees five crore rupees in the previous FYStates of Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha, the Union territories of Jammu and Kashmir, Ladakh, Chandigarh or  DelhiMay 202014th July, 2020
  • The condition as specified in Rule 36(4) of CGST Rules shall apply cumulatively for the period February, March, April, May, June, July and August, 2020. GSTR-3B for the tax period September, 2020 shall be furnished with the cumulative adjustment of input tax credit for the said months in accordance with the condition specified in Rule 36(4) of CGST Rules.
  • Late fee is waived for the months of March, April and May, 2020, and for the quarter ending 31st March, 2020, for the registered persons who fail to furnish the details of outward supplies for the said periods in FORM GSTR-1 by the due date, but furnishes the same on or before 30th June, 2020.
  • Date for opting for composition scheme for FY 2020-21(intimation in FORM GST CMP-02) is extended till 30th June, 2020 and due date to furnish the statement in FORM GST ITC-03 is 31st July, 2020.  
  • Further, the last date for making payments for the quarter ending 31st March, 2020 in CMP-08 is extended to 7th July, 2020 and filing of GSTR 4 for FY 2019-20 by the composition dealers is extended till 15th July, 2020.
  • Due date for completion of any proceeding or passing of any order, issuance of notice, intimation, notification, approval order, sanction order, filing of appeal, reply or application, furnishing of any report, document, return, statement or such other record, time limit for completion or compliance of any action under the GST laws where the time limit is expiring between 20th March 2020 to 29th June 2020 is extended to 30th June 2020.
  • Where an e-way bill has been generated under Rule 138 of the CGST Rules, 2017 and its period of validity expires during the period 20th day of March, 2020 to 15th day of April, 2020, the validity period of such e-way bill shall be deemed to have been extended till 30th April, 2

2.Measures for Trade Facilitation

  • Interest for delay in payment of GST to be charged on the net cash tax liability w.e.f. 01.07.2017 (Law to be amended retrospectively).
  • Date of Invoice and debit note de-linked: Date of issuance of debit note and date of issue of underlying invoice has been de-linked. The effect is that debit note in respect of an invoice can be raised even after 30th September following end of financial year to which the invoice pertains.
  • Where registrations have been cancelled till 14.03.2020, application for revocation of cancellation of registration can be filled up to 30.06.2020 (extension of period of application as one-time measure to facilitate those who want to conduct business).
  • CBIC has exempted the requirement to file GSTR-1 and CMP-08 for F.Y. 2019-20 for those persons who were eligible to avail of the option of special composition scheme as per Notification No. 2/2019-Central Tax (Rate) dated 7-3-2019 and have filed GSTR-3B instead of statement containing details of payment of self-assessed tax in Form CMP-08.

3.Annual Return & GST Audit for FY 2018-19

  • Relaxation has been given to MSMEs from furnishing of Reconciliation Statement in FORM GSTR-9C for FY 2018-19, for taxpayers having aggregate turnover below Rs. 5 crores.
  • Due date for filing the Annual return and the Reconciliation Statement for FY 2018-19 to be extended to 30.06.2020
  • Late fees not to be levied for delayed filing of the Annual return and the Reconciliation Statement for financial year 2017-18 and 2018-19 for taxpayers with aggregate turnover less than Rs. 2 crores
  • The persons who are foreign company which is an airlines company  covered under the notification issued under sub-section (1) of section 381 of the Companies Act, 2013 (18 of 2013) and who have complied with the sub-rule (2) of rule 4 of the Companies (Registration of Foreign Companies) Rules, 2014, shall not be required to furnish reconciliation statement in FORM GSTR-9C. Provided that a statement of receipts and payments for the financial year in respect of its Indian Business operations, duly authenticated by a practicing Chartered Accountant in India or a firm or a Limited Liability Partnership of practicing Chartered Accountants in India is submitted for each GSTIN by the 30th September of the year succeeding the financial year.

4.Deferment of New GST Returns

The new GST return system which was to be implemented from 01.04.2020 will be implemented from October 2020. The present return filing system (GSTR-1, 2A & 3B) will continue until September 2020.

5.Deferment of E-invoice and QR Code

  • Certain class of registered persons (insurance company, banking company, financial institution, non-banking financial institution, GTA, passenger transportation service etc.) to be exempted from issuing e-invoices or capturing dynamic QR code
  • The dates for implementation of e-invoicing and QR Code to be extended to 01.10.2020.

6.Measures to curb Fake Invoicing

  • Beneficiary of bogus documents and person at whose instance bogus documents are issued liable to penalty equal to tax: Beneficiary of bogus documents and person at whose instance such bogus document was issued will both be liable to penalty equal to tax evaded or ITC availed. As per present provision, penalty can be imposed only on person issuing bogus invoice. Parallel provision has been made in section 271AAD(1) of Income Tax Act for imposing penalty equal to aggregate sum of false entry or omission of entry.
  • Beneficiary of an offence and who causes to commit offence can be punished with fine and imprisonment, in addition to person committing offence: Beneficiary of an offence and who causes to commit offence can be punished with fine and imprisonment, in addition to person committing offence. The offence is cognizable and non-bailable
  • To curb fake invoicing and fraudulent passing of ITC, restrictions to be imposed on passing of the ITC in case of new GST registrations, before physical verification of premises and Financial KYC of the registered person.

7.Restriction in Availment of ITC

  • Rule 36(4) of CGST Rules was inserted whereby Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under Section 37(1) of the CGST Act, shall not exceed 10% of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers. The restriction of 10% has been imposed w.e.f. 01/01/2020.
  • Transitory credit taken after due date is to be disallowed with retrospective effect to nullify judgments of High Court.

8.Reverse Charge Mechanism

The Government notified the following service on which tax is payable on Reverse Charge Mechanism w.e.f. 01/10/2019.

Nature of ServiceService ProviderRecipient of Service
Services provided by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient, provided to a body corporateAny person, other than a body corporate who supplies the service to a body corporate and does not issue an invoice charging central tax at the rate of 6 per cent. to the service recipientAny body corporate located in the taxable territory

9.Changes in GST rates on supply of goods and services

  • Maintenance, repair or overhaul services in respect of aircrafts, aircraft engines and other aircraft components or parts has been reduced to 5% w.e.f. 01/04/2020
  • GST rate on Mobile Phones and specified parts is increased to 18% w.e.f. 01/04/2020
  • GST rate on all types of matches (Handmade and other than Handmade) has been rationalised to 12% (from 5% on Handmade matches and 18% on other matches) w.e.f. 01/04/2020
  • Lotteries (both State run and State authorized lottery) to attract uniform 28% GST rate from 01/03/2020
  • Upfront amount payable for long term lease of industrial/ financial infrastructure plots by an entity having 20% or more ownership of Central or State Government is exempt w.e.f. 01/01/2020. Earlier the exemption was available to an entity having 50% or more ownership of Central or State Government.
  • GST rate on Woven and Non-Woven Bags and sacks of polyethylene or polypropylene strips or the like, whether or not laminated, of a kind used for packing of goods including Flexible Intermediate Bulk Containers (FIBC) ( HS code 3923/6305) has been changed to a uniform rate of 18%(from 12%) w.e.f. 01.01.2020.

10.Aadhaar Authentication for New Taxpayers

Authorised signatory of all types, Individuals, Managing and Authorised partners of a partnership firm and Karta of an HUF shall undergo authentication of possession of Aadhaar number, as specified in rule 8 of the Central Goods and Services Tax Rules, 2017 in order to be eligible for registration under GST w.e.f. 01/04/2020. However, Aadhaar authentication shall not apply to a person who is not a citizen of India.

Provided that if Aadhaar number is not assigned to the said persons, they shall be offered alternate and viable means of identification in the manner specified in rule 9 of the said rules. Further, where a person fails to undergo authentication of Aadhaar number, then the registration shall be granted only after physical verification of the principle place of business in the presence of the said person.

11.Clarification in respect of issues under GST law for Companies under Insolvency and Bankruptcy Code, 2016 [Circular No.134/04/2020-GST]

  • The corporate debtor who is undergoing Corporate Insolvency Resolution Process (CIRP) is to be treated as a distinct person of the corporate debtor and shall be liable to take a new registration in each State or Union territory where the corporate debtor was registered earlier, within thirty days of the appointment of the Interim Resolution Professional/ Resolution Professional (IRP/RP).
  • Provided that in cases where the IRP/RP has been appointed prior to the date of this notification, he shall take registration within thirty days from the commencement of this notification, with effect from date of his appointment as IRP/RP. In cases where the IRP/RP has been appointed prior to the issuance of notification No.11/2020- Central Tax, dated 21.03.2020, he shall take registration within thirty days of issuance of the said notification, with effect from date of his appointment as IRP/RP.
  • The IRP/RP will be liable to furnish returns, make payment of tax and comply with all the provisions of the GST law during CIRP period. The IRP/RP is required to ensure that the first return is filed under section 40 of the CGST Act, for the period beginning the date on which it became liable to take registration till the date on which registration has been granted.
  • It is clarified that IRP/RP are not under an obligation to file returns of pre-CIRP period.
  • Relief from Section 16(4) of the CGST Act & Rule 36(4) of CGST Rules for IRP/RP: The IRP/RP shall, in his first return, be eligible to avail input tax credit on invoices covering the supplies of goods or services or both, received since appointment as IRP/RP and during the CIRP period but bearing the GSTIN of the erstwhile registered person, subject to the conditions of Chapter V of the CGST Act and rule made thereunder, except the provisions of sub-section (4) of section 16 of the CGST Act and sub-rule (4) of rule 36 of the CGST Rules. This exception is made only for the first return filed under section 40 of the CGST Act.
  • Relief from Section 16(4) of the CGST Act & Rule 36(4) of CGST Rules for Registered persons who are receiving supplies from Corporate Debtor: Registered persons who are receiving supplies from the corporate debtors undergoing CIRP shall, for the period from the date of appointment of IRP / RP till the date of registration as required in this  notification or 30 days from the date of this notification, whichever is earlier, be eligible to avail input tax credit on invoices issued using the GSTIN of the erstwhile registered person, subject to the conditions of Chapter V of the CGST Act and rule made thereunder, except the provisions of sub-rule (4) of rule 36 of the CGST Rules.

12.Changes in Refund Related Provisions

Several instances have been found where untraceable exporters have claimed fake refunds and overvalued exports to obtain higher input tax credit. To curb Export related Fraud under the GST Regime, the Government has amended/ inserted the following Rules. [Notification No. 16/2020 – Central Tax]

  • Capping the value of zero rated supplies

In Rule 89(4) Clause(c) of the CGST Rules, the following clause shall be substituted, namely:- “(C) “Turnover of zero-rated supply of goods” means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking or the value which is 1.5 times the value of like goods domestically supplied by the same or similarly placed supplier, as declared by the supplier, whichever is less, other than the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both”

Capping the value of zero rated supplies would likely curb the export related frauds where exports are overvalued for greater refund of ITC.

  • Mandating repayment of refunds by exporters by Insertion of Rule 96B of CGST Rules: Recovery of refund of unutilised input tax credit or integrated tax paid on export of goods where export proceeds not realized

Rule 96B of CGST Rules, 2017: (1) Where any refund of unutilised input tax credit on account of export of goods or of integrated tax paid on export of goods has been paid to an applicant but the sale proceeds in respect of such export goods have not been realised, in full or in part, in India within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), including any extension of such period, the person to whom the refund has been made shall deposit the amount so refunded, to the extent of non realisation of sale proceeds, along with applicable interest within thirty days of the expiry of the said period or, as the case may be, the extended period, failing which the amount refunded shall be recovered in accordance with the provisions of section 73 or 74 of the Act, as the case may be, as is applicable for recovery of erroneous refund, along with interest under section 50.

Provided that where sale proceeds, or any part thereof, in respect of such export goods are not realised by the applicant within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), but the Reserve Bank of India writes off the requirement of realisation of sale proceeds on merits, the refund paid to the applicant shall not be recovered.

(2) Where the sale proceeds are realised by the applicant, in full or part, after the amount of refund has been recovered from him under sub-rule (1) and the applicant produces evidence about such realisation within a period of three months from the date of realisation of sale proceeds, the amount so recovered shall be refunded by the proper officer, to the applicant to the extent of realisation of sale proceeds, provided the sale proceeds have been realised within such extended period as permitted by the Reserve Bank of India.

13.Apportionment of input tax credit (ITC) in cases of business reorganization under section 18 (3) of CGST Act read with rule 41(1) of CGST Rules

The Government has clarified issues and doubts regarding interpretation of section 18 (3) of CGST Act and Rule 41(1) of CGST Rules vide Circular No.133 03/2020-GST wherein it has clarified that:

  • In case of demerger, the value of assets for calculation of ratio to apportion the Input Tax Credit as per proviso to Rule 41(1), is to be taken on State level (at the level of distinct person)  and not at the all India level.
  • Form GST ITC-02 is to be filed in states where transferor and transferee are registered.
  • The ratio of value of assets need not be applied in respect of each head of IGST/CGST/SGST. The ratio of value of assets shall be applied to the total amount of unutilized input tax credit (ITC) of the transferor i.e. sum of CGST, SGST/UTGST and IGST credit.
  • The transferor shall be at liberty to determine the amount to be transferred under each tax head (IGST, CGST, SGST/UTGST) within the total amount of ITC calculated as per proviso to Rule 41(1), subject to the ITC balance available with the transferor under the concerned tax head.
  • The ratio of value of assets is to be taken on the appointed date of merger and the apportionment formula shall be applied on the ITC balance of the transferor as available in electronic credit ledger on the date of filing of FORM GST ITC – 02 by the transferor.

14.Others

  • Also, CBIC has issued clarification on refund related issues whereby CBIC has clarified that there is no restriction on bunching of refund claims across financial years. Refund of accumulated ITC on account of reduction in GST (Inverted Duty Structure) rate not applicable where the input and output supplies are the same. It is further clarified that the refund of accumulated ITC availed is restricted to those invoices, which are uploaded in GSTR-1 and reflected in GSTR-2A of the applicant and some other clarifications are also made vide Circular No.135/05/2020 – GST
  • No refund of GST Compensation Cess under inverted duty structure in respect of tobacco products from 1-7-2017

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. The author does not accept any liabilities for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon. No part of this document should be distributed or copied without express written permission of the author.

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