Budget Update on Indirect Taxes- GST:

1.??????Section 16 deals with eligibility and conditions for claiming the input tax credit

?Further, sub-section (4) of section 16 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 up to thirtieth day of November i.e. 30th November of the following financial year.

Summary Note:?ITC availment period has been extended from Sept to Nov of the following financial year or furnishing the annual return whichever is earlier.

Existing Provisioning:

This section restricts entitlement to input tax credit in respect of any invoice or debit note of a particular financial year if the same is not taken on or before the due date of filing of the return for the month of September of the subsequent year or the furnishing of the annual return of the financial year to which the invoice/debit note pertains to, whichever is earlier.

2.??????Section 29 deals with the cancellation or suspension of registration

Clause (b) and (c) of sub-section (2) of section 29 of the CGST Act are being amended so as to provide that the registration of a person is liable for cancellation, where –

(i)?????????????????a person paying tax under section 10 has not furnished the return for a financial year beyond three months from the due date of furnishing of the said return;

(ii)???????????????a person, other than those paying tax under section 10, has not furnished returns for such continuous tax period as may be prescribed.

Existing Provisioning:

Under Section 29(2) deals with the cancel the registration where: i.e. GST Registration Cancellation:

29(2)(b): a person paying tax u/s 10 has not furnished return for three consecutive tax period

29(2)(c): any registered person other than a person specified in clause (b) has not furnished return for a continuous period of 6 month.

3????????Section 34 (2): deals with Time Limit for issuance of GST Credit Note

Sub-section (2) of section 34 of the CGST Act is being amended so as to provide for an extended time for issuance of credit notes in respect of any supply made in a financial year up to thirtieth day of November of the following financial year.

Amendment in Section 34 (2): i.e. Time Limit for issuance of GST Credit Note

Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than:-

a)?????November following the end of the financial year in which such supply was made,

b)?????or b) Date of filing of the relevant annual return {i.e. Date of filing GSTR-9 of that F.Y}, whichever is earlier.

Existing Provisioning:

Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than:-

c)??????September following the end of the financial year in which such supply was made,

d)?????or b) Date of filing of the relevant annual return {i.e. Date of filing GSTR-9 of that F.Y}, whichever is earlier.

4????????Section 37 deals with furnishing details of Outward Supplies:

Section 37 of the CGST Act is being amended so as to:

(i)?????????????????provide for prescribing conditions and restrictions for furnishing the details of outward supply and for communication of the details of such outward supplies to concerned recipients;

(ii)???????????????do away with two-way communication process in return filing;

(iii)??????????????provide for an extended time upto thirtieth day of November of the following financial year for rectification of errors in respect of details of outward supplies furnished under sub-section (1);

(iv)??????????????Provide for tax period-wise sequential filing of details of outward supplies under sub-section (1).

5????????Section 38 deals with furnishing details of Inward Supplies:

Section 38 of the CGST Act is being substituted for:

a.??????Prescribing the manner as well as conditions and restrictions for communication of details of inward supplies

b.?????input tax credit to the recipient by means of an auto-generated statement

c.??????to do away with two-way communication process in return filing.

One New Section inserted namely Section 16 (2) (ba):-

ü?Section 16(2)(aa) was inserted vide Finance Act, 2021 (which was being notified w.e.f 1st January 2022) which allows to take credit of input tax in respect of an invoice or debit note related to supply of goods or services if the same has been furnished the supplier in his statement of outward supplies (commonly referred to as GSTR 1) and the such details have been communicated to the recipient.

ü?In the current budget, a new provision has been inserted by Finance Act, 2022 by way of insertion of Section 16(2)(ba) which states that input tax credit with respect to a supply may be availed only when such credit has not been restricted in the details communicated to the registered person u/s 38.

?6????????Section 39 deals with the “Furnishing of Return”

Section 39 of the CGST Act is being amended so as to:

(i)?????????????????provide that the non-resident taxable person shall furnish the return for a month by 13th day of the following month; in the existing provision it is 20th

(ii)???????????????provide an option to the persons furnishing return under proviso to sub-section (1), to pay either the self-assessed tax or an amount that may be prescribed;

(iii)??????????????provide for an extended time upto thirtieth day of November i.e. 30th Nov of the following financial year, for rectification of errors in the return furnished under section 39;

(iv)??????????????provide for furnishing of details of outward supplies of a tax period under sub-section (1) of section 37 as a condition for furnishing the return under section 39 for the said tax period.

7????????Section 41 deals with the Claim of Input Tax Credit and Provisional Acceptance thereof.

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.

8????????Section 42 deals with Matching, Reversal, and Re-claim of Input Tax Credit

Section 43 deals with Matching, Reversal, and Re-claim of reduction of Output Tax Liability

Section 43A deals with Procedure for Furnishing Return and availing Input Tax Credit

Sections 42, 43 and 43A of the CGST Act are being omitted so as to do away with two-way communication process in return filing

9????????Section 49 deals with Payment of tax, interest, penalty and other amount

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)???????????????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;

(iii)??????????????provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger.

10????Section 50(3) of CGST Act:

Section 50 deals with Interest on delayed payment of tax

Sub-section (3) of section 50 of the CGST Act is being substituted retrospectively, with effect from the 1st July, 2017, so as to provide for levy of interest on input tax credit wrongly availed and utilized.

?Existing Provisioning:

Section 50(3) of CGST Act, a taxable person who makes an undue or excess claim of input tax credit or undue or excess reduction of output tax liability shall pay interest on such undue or excess claim, or such undue or reduction in output liability as the case may be at such rate not exceeding 24%?