Bihar's GST Overhaul: Key Amendments and Implications for Businesses

Alcoholic Products Inclusion

The amendment modifies Section 9 to include "undenatured extra neutral alcohol or rectified spirit" used in producing alcoholic liquor for human consumption under the taxable category. This change ensures that these products are now subject to GST, aligning with the state's revenue objectives.

Extended Power to Forgive Tax

A new Section 11A empowers the government to exempt back taxes not levied on certain goods and services due to common practice, provided such exemptions receive Council approval. This provision offers flexibility in addressing past tax liabilities, potentially benefiting businesses that faced ambiguities in tax applicability.

Input Tax Credit Adjustments

Amendments to Section 16 allow taxpayers with revoked registrations to claim previously unclaimed input tax credits on invoices, subject to specific time constraints. This measure facilitates businesses in optimizing their tax credits, promoting better cash flow management.

Introduction of Section 74A

The newly added Section 74A establishes a process for assessing tax liabilities for the financial year 2024-25 onward, including penalties for unpaid taxes, short payments, and misuse of input tax credits. This aims to enhance compliance and deter tax evasion.

Changes in Refund Policies

Amendments to Section 54 restrict refunds on unutilized input tax credit or tax paid on zero-rated supplies if such goods are subject to export duties. This change aligns with national tax policies and ensures consistency in refund claims.

Reduction in Pre-deposit for Appeals

Modifications to Section 112 reduce the deposit required to file appeals, setting a new limit at 10% of disputed tax or ?20 crore, whichever is lower. This reduction aims to make the appeals process more accessible to businesses.

Extended Deadlines for Appeals

The government now has the authority to extend filing deadlines for appeals to the Appellate Tribunal, subject to notification, providing taxpayers with additional time to comply with appeal procedures.

Restriction on Anti-profiteering Cases

Section 171 has been amended to limit new applications for anti-profiteering investigations by specifying the timeframe for accepting such requests, streamlining the process and focusing on current issues.

Schedule III Additions

The amendment adds insurance and reinsurance activities under Schedule III, clarifying tax obligations for lead insurers and reinsurers in co-insurance agreements, thereby providing greater clarity in the insurance sector.

Implications for Businesses

These amendments reflect Bihar's commitment to aligning with national GST policies while addressing state-specific concerns. Businesses should review these changes carefully to ensure compliance and take advantage of the provisions that may offer tax relief or benefits.