GST Changes Applicable from 1st Oct 2023

There are lot of changes made by government through Finance Act, 2023 which becomes applicable from 1st Oct 2023. I have prepared summary of such changes for easy reference.

Kindly ensure that respective changes are taken care of.

1.???? Section 10 CGST Act, 2013

Composition levy extended to suppliers of goods under ecommerce model:

Benefit of composition scheme which was earlier not available to registered persons engaged in supplying goods through Ecommerce operator shall be extended to them.

However, restriction will continue to apply for such registered persons who are engaged in supply of services through Ecommerce operator.

[Notification No. 36/2023 – Central Tax dated 04.08.2023]

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2.???? Section 16 of CGST Act, 2017

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Clarificatory amendment concerning payment to supplier within 180 days:?

?To align the language of law with the return filing system, it is provided that where a recipient fails to pay to the supplier the amount towards the value of supply along with tax, within a period of 180 days from the date of issue of invoice, an amount equal to the ITC availed by the recipient, shall be paid by the recipient along with interest payable u/s 50 of the CGST Act. The pre-amendment provision provides for payment of ITC as addition to output tax liability whereas, post-amendment it would be payment/reversal of ITC.

?Consequently, the liability of interest on such reversal shall be determined in accordance with Section 50(3) instead of 50(1) of the CGST Act.

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3.???? Section 17(3) of CGST?

Sale of warehoused goods before filing BOE includible in value of exempt supply for reversal of common ITC u/s 17(2) and (3) r. w. Rule 42/43:

The value of transactions as may be prescribed in respect of para 8(a) of Schedule III to the CGST Act i.e., “Supply of warehoused goods to any person before clearance for home consumption”, shall be includible in the value of exempt supply for the purpose of reversal of common input tax credit u/s 17(2)(3) r. w. Rule 42/43.

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4.???? 17(5) (fa) of CGST

ITC blocked on CSR activities:

ITC shall not be available on goods/services received by taxable person, which are used or intended to be used for activities relating to fulfilment of obligations under Corporate Social Responsibility (“CSR”) activities.

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5.???? Section 23(2) of CGST

Retrospective overriding effect of S. 23(2) on 22 and 25:

Retrospective amendment from 01.07.2017, to provide that the persons exempted from obtaining registration by virtue of a notification issued u/s 23(2) of the CGST Act need not be obtain registration notwithstanding anything contained u/s 22 (threshold limit cases) or 24 (mandatory cases). Interestingly, persons exempted from registration u/s 23(1) do not get the benefit of amendment.

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6.???? Section 30 & Rule 23?

Time limit on application for revocation of cancelled registration:

Time limit of 30 days prescribed u/s 30 has been omitted for moving an application for Revocation of Cancellation of GST Registration.

The time period has now been prescribed under Rule 23 which is increased to 90 days from the date of order of cancellation or such further period as may be allowed by Commissioner not exceeding 180 days.

[Notification No. 38/2023- Central Tax dated 4th Aug 23]

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7.???? Section 37, 39, 44, 52 of CGST

Limitation of 3 years on filing of returns:

The registered person shall not be allowed to furnish the return in GSTR-1, GSTR-3B, GSTR-9, GSTR-9C and GSTR-8 after a period of 3 years from the due date of furnishing the relevant return

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8.???? 54 & 56 of CGST and Rule 94

Refunds and Interest on delayed refunds

?Section 54: Technical amendment made merely to align the same with present scheme of availment of ITC on self-assessment basis.

Section 56: Interest on delayed refunds will be granted subject to certain conditions & restrictions and in the manner which will be prescribed.

[Notification No. 38/2023- Centra Tax dated 4th Aug 23]

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9.???? Section 62 of CGST

Assessment of unregistered persons:

Period to furnish Form GSTR 3B or Form GSTR 10 (Final Return) increased from 30 days to 60 days under Best Judgment Assessment for effecting deemed withdrawal of the best judgement order. Beyond 60 days, additional period of 60 days (61 to 120 days) has been extended on payment of additional late fee over and above standard late fee.

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10.? Rule 64 of CGST Rules

Inclusion of ‘Non-taxable online recipient’

A significant inclusion to Rule 64 is the term “non-taxable online recipient” as referred to in the Integrated Goods and Services Tax (IGST) Act, 2017. This change expands the scope of Rule 64 to cover more categories of recipients, thereby promoting greater tax compliance.

[Notification No. 38/2023- Centra Tax dated 4th Aug 23]

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11.? Section 122(1B) of CGST?

Penalty for certain offences:?

To provide penal provisions applicable to ECO (e-commerce operator) in case of contravention of provisions relating to supplies of goods made through them by unregistered persons or composition taxpayers.

[Notification No. 37/2023 – Central Tax dated 04.08.2023]

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12.? Section 132 of CGST

Punishment of certain offences (Section 132):

Decriminalization of certain offences: Decriminalize the offences specified under clause (g), (j) and (k) from Section 132(1) of the CGST Act, 2017

?Monetary limit for prosecution: Amendment in monetary limit for initiating prosecution proceedings: The Monetary threshold amended from Rs. 1 Crore to Rs.2 Crore for launching prosecution, except for cases those involving fake/bogus invoices. Thus, in case of offences, other than fake invoices, imprisonment can be initiated if value is more than Rs. 2 crores and for fake invoices, the prosecution will continue as for threshold amount of Rs. 1 Crore.

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13.? Section 138 of CGST and Rule 162

Compounding of offences:?

No Compounding of offences: Fake/bogus invoice cases excluded from the option of compounding of offences.

?Reduction in Compounding fees: Reduction of amount for compounding of various offences except offence of fake invoice, by reducing the minimum and maximum amount for compounding.?

[Notification No. 38/2023- Centra Tax dated 4th Aug 23]

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14.? Section 158A of CGST Rule 162

Consent based sharing of information furnished by taxable person:

Insertion of Section 158A for allowing sharing of information or details furnished by a taxable person on the GST common portal with such other systems as may be notified by government.

[Notification No. 38/2023- Centra Tax dated 4th Aug 23]?

15.? Schedule III of CGST And Rule 43?

Retrospective applicability of Para 7, 8(a) and 8(c) of Schedule III:

Activities of supply of goods from a place outside the taxable territory to another place outside the taxable territory, high sea sales, and supply of warehoused goods before their clearance for home consumption were inserted in Schedule III of the CGST Act vide CGST Amendment Act, 2018 dated 01.02.2019, thereby making them non-taxable.

?Now, these supplies are proposed to be made non-taxable with retrospective effect from 01 July 2017 to put an end on ongoing litigations or prospective litigations in cases wherein no tax is paid by any taxpayer on such supplies.

However, no refund of such tax paid shall be available in cases where any tax has already been paid in respect of such transactions/ activities during the period July 01, 2017 to January 31, 2019.

[Notification No. 38/2023- Centra Tax dated 4th Aug 23]

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16.? Section 2(17) of IGST Act

Scope of OIDAR services widened:

Definition of OIDAR amended to widened the scope of services, by removing the condition of “essentially automated” and “involving minimal human intervention”

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18.? Section 12(8) and 13(9) of IGST

?Place of Supply i.r.o. Transportation of Goods:

?a) Place of supply of transportation of goods, including by mail or courier (Section 12(8) of IGST Act): To omit Proviso to Section 12(8) so as to specify the place of supply, irrespective of destination of the goods, in cases where the supplier of services and recipient of services are located in India. The POS shall be the location of recipient of service if the recipient is a registered person. Consequently, half of the tax shall accrue to the State where recipient is registered as against the erstwhile accrual of full tax to the Union in case of goods destined outside India.

?b) Place of supply of transportation of goods, other than by mail or courier (Section 13 of IGST Act): Omitted Section 13(9) of the IGST Act, 2017, to provide that place of supply of services in case of transportation of goods, other than by way of mail or courier would be covered under default provision of Section 13(2) of IGST Act and would be the location of the recipient of services, , in cases where either the supplier of services or recipient of services is located outside India. As a result, Services to recipient outside India would qualify as export, and Services from supplier outside India would qualify as import of service irrespective of the destination of goods.

[Notification 13/2023 - Integrated Tax (Rate) dated 26th Sept 23]

[Notification 11/2023 - Integrated Tax (Rate) dated 26th Sept 23]

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20.? Section 16(1)(b) of IGST Act

?Zero-rated supplies to SEZ for authorised operations:

The words “for authorised operations” have been added to clause (b) of Section 16(1) to remove the ambiguity that only the supplies made for authorised operations to SEZ unit or developer shall qualify as zero-rated supplies. Earlier, the requirement existed under Rule 89 to provide endorsement from designated officer of SEZ regarding authorised operations while claiming refund of accumulated ITC or IGST by the DTA supplier. Now, the same has been incorporated under the Statute so that the Rules cannot be challenged as superseding the Statute. For the period prior to 01.10.2023, one may argue that even if endorsement of authorised operations is unavailable, still the supply to SEZ qualifies as zero-rated supply qua Section 16 of the IGST Act.

[Notification No. 27/2023–Central Tax Dated: 31st July, 2023]

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21.? Section 16(3) & (4) of IGST Act

?IGST Zero-rated supplies not permitted with payment of IGST until notified:

?The default option is now supplying under LUT without tax payment and claiming refund of accumulated ITC, with the government authorized to notify categories permitted for IGST payment and refund route.

The latest notification, No.01/2023-IGST, permits tax payment for all exports of goods and services, barring specific goods like cigarettes, pan-masala, and other tobacco related products. Currently, no notification has been issued permitting supplies to SEZ units/developers with payment of IGST. Hence, default route of LUT without payment of IGST would only be available.

[Notification No. 1/2023–IGST ?Dated: 31st July, 2023]

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22.? Notification 11,12&13/202 3-IGST (Rate)

?Notifications deleting the entries casting liability on importers on import ocean freight in CIF imports under RCM to align with the Supreme Court Judgement in UOI vs Mohit Minerals

?The three Notifications have made amendment in the Rate, Exemption, and RCM principal notifications of IGST to terminate the liability casted on the importers on the services supplied by a person located in non- taxable territory (foreign shipping line) to a person located in non-taxable territory (foreign supplier) by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India (in lieu of import ocean freight) in case of CIF imports under reverse charge. The amendments come after more than a year of Supreme Court’s judgement in UNION OF INDIA & VERSUS M/S MOHIT MINERALS PVT. LTD. wherein Supreme Court had held the reverse charge levy on importer as import of service violative of Section 8 of the CGST Act, 2017, and decided in favour of the Indian importers.

[Notification 11/2023 - Integrated Tax (Rate) dated 26th Sept 23]

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Everyone should take care of above changes in their respective books so as to ensure that no unnecessary cost is incurred to company.

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Regards,

CA Abhishek Malpani

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