GST Amendment in Finance bill 2023 easy summary – This article is summarized guide on amendments to Central Goods and Service Tax and Integrated Goods and Service Tax as per latest Finance Bill 2023.
I CLAUSE 128 – Amendment in Section 10, sub-section (2A) Clause (c) & sub section (2) Clause (d) of CGST Act –
QUOTE FROM BILL – “Clause 128 of the Bill seeks to amend clause (d) of sub-section (2) and clause (c) of sub-section (2A) in section 10 of the Central Goods and Services Tax Act so as to remove the restriction imposed on registered persons engaged in supplying goods through electronic commerce operators from opting to pay tax under the composition levy”
IMPACT – Registered Person engaged in supply of goods through Electronic Commerce Operator who is required to collect tax at source U/S 52 can opt to pay tax under composition levy. If a registered persons opts to pay tax under composition levy, then the TCS collected, if any will be available in electronic cash ledger of registered person and same can be utilized to pay tax liability under composition scheme. Overall it will be beneficial for small dealers whose aggregate turnover does not exceed prescribed limit ( Currently set at up to 1.5 crores )
Though, inter state supplier cannot opt for Composition scheme however if inter state supply is made through Electronic Commerce Operator who collects tax at source U/S 52 will be able to opt for Composition scheme as per our opinion. The intention of law here seems to reduce the burden over small tax payers.
II CLAUSE 129 – Amendment in Section 16, sub-section (2) of CGST Act
QUOTE FROM BILL – “Clause 129 of the Bill seeks to amend second and third provisos to sub-section (2) of section 16 of the Central Goods and Services Tax Act to align the said sub-section with the return filing system provided in the said Act.”
IMPACT –
III CLAUSE 130 – Amendment in Section 17, sub-section (3) explanation of CGST Act
QUOTE FROM BILL – “Clause 130 of the Bill seeks to amend Explanation to sub-section (3) of section 17 of the Central Goods and Services Tax Act so as to restrict availment of input tax credit in respect of certain transactions specified in clause (a) of paragraph 8 of Schedule III of the said Act, as may be provided by rules, by including the value of such transactions in the value of exempt supply.
It also seeks to amend sub-section (5) so as to provide that input tax credit shall not be available in respect of goods or services or both received by a taxable person which are used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013″
IMPACT – The value of exempt supply will include activities or transactions specified in paragraph 5 [ i.e. Sale of land and, subject to clause (b) of paragraph 5 of schedule II sale of building ] and paragraph 8 clause (a) [ i.e. Supply of warehoused goods to any person before clearance for home consumption ] of Schedule III, due to this amendment the the Input tax credit will not be available with respect to these activities/transactions.
Further, a entry in block credit has been included restricting ITC on in respect of goods or services or both received by a taxable person which are used or intended to be used for activities relating to his obligations under corporate social responsibility U/S 135 of the Companies Act, 2013.
IV CLAUSE 131 – Amendment in Section 23 of CGST Act
QUOTE FROM BILL – “Clause 131 of the Bill seeks to substitute, with effect from the 1st day of July, 2017, section 23 of the Central Goods and Services Tax Act relating to persons not liable for registration so as to provide overriding effect to the said section over sub-section (1) of section 22 and section 24 of the said Act”
IMPACT – Section 23 will have over riding effect over section 22(1) & section 24 as a impact of which now the following persons :-
- a person engaged exclusively in supply of goods or services wholly exempt or not liable for tax
- a agriculturist who supplies produce out of cultivation land
shall not be liable for registration irrespective of the fact that
- there turnover exceeds “aggregate turnover limit” (Currently 40 Lakhs in case supply of goods & 20 lakhs in case of services) as per section 22(1)
- person makes inter state supply as per section 24
- person is a casual taxable person as per section 24
- person is required to pay tax under RCM as per section 24
- person who are required to collect tax u/s 52 or deduct tax u/s 51 as per section 24
- Input Service Distributor or other clauses of section 24
V CLAUSE 132 – Insert sub-section (5) in Section 37 of CGST Act
QUOTE FROM BILL – “Clause 132 of the Bill seeks to insert a new sub-section (5) in section 37 of the Central Goods and Services Tax Act so as to provide a time limit of three years up to which the details of outward supplies under sub-section (1) of the said section for a tax period can be furnished by a registered person. It further seeks to empower the Government, on the recommendation of the Council, to extend by notification, the said time limit for a registered person or a class of registered persons, subject to certain conditions and restrictions”
IMPACT – GSTR-1 i.e. summary of outward supplies cannot be filed after 3 years from the due date.
VI CLAUSE 133 – Insert sub-section (11) in Section 39 of CGST Act
QUOTE FROM BILL – “Clause 133 of the Bill seeks to insert a new sub-section (11) in section 39 of the Central Goods and Services Tax Act so as to provide a time limit of three years up to which the return for a tax period can be furnished by a registered person. It further seeks to empower the Government, on the recommendation of the council, to extend by notification, the said time limit for a registered person or a class of registered persons, subject to certain conditions and restrictions”
IMPACT – GSTR-3B i.e. tax return filed quarterly with monthly payments cannot be filed after 3 years from the due date.
VII CLAUSE 134 – Insert sub-section (2) in Section 44 of CGST Act
QUOTE FROM BILL – “Clause 134 of the Bill seeks to insert a new sub-section (2) in section 44 of the Central Goods and Services Tax Act so as to provide a time limit of three years up to which the annual return under sub-section (1) of the said section for a financial year can be furnished by a registered person. It further seeks to empower the Government, on the recommendation of the Council, to extend by notification, the said time limit for a registered person or a class of registered persons, subject to certain conditions and restrictions”
IMPACT – GSTR-9/9A i.e. annual returns cannot be filed after 3 years from the due date.
VIII CLAUSE 135 – Insert sub-section (15) in Section 52 of CGST Act
QUOTE FROM BILL – “Clause 135 of the Bill seeks to insert a new sub-section (15) in section 52 of the Central Goods and Services Tax Act so as to provide a time limit of three years up to which the statement under sub-section (4) of the said section for a month can be furnished by an electronic commerce operator. It further seeks to empower the Government, on the recommendation of the Council, to extend by notification, the said time limit for an operator or a class of operators, subject to certain conditions and restrictions”
IMPACT – GSTR-8 i.e. Statement for tax collection at source cannot be filed after 3 years from the due date.
IX CLAUSE 136 – Amendment in Section 54, sub-section (6) of CGST Act
QUOTE FROM BILL – “Clause 136 of the Bill seeks to amend sub-section (6) of section 54 of the Central Goods and Services Tax Act by removing reference to the provisionally accepted input tax credit so as to align the same with the present scheme of availment of self-assessed input tax credit as per sub-section (1) of section 41 of the said Act”
IMPACT – In case of claim of refund in case of zero rated supplies now the ITC has to availed by filing GSTR-3B on self assessment basis.
X CLAUSE 137 – Amendment in Section 56 of CGST Act
QUOTE FROM BILL – “Clause 137 of the Bill seeks to amend section 56 of the Central Goods and Services Tax Act so as to provide by rules the manner of computation of period of delay for calculation of interest on delayed refunds”
IMPACT – This will act as a enabling provision for computing interest on delayed refunds.
XI CLAUSE 138 – Insert sub-section (1B) in Section 122 of CGST Act
QUOTE FROM BILL – “Clause 138 of the Bill seeks to insert a new sub-section (1B) in section 122 of the Central Goods and Services Tax Act so as to provide for penal provisions applicable to electronic commerce operators in case of contravention of provisions relating to supplies of goods or services made through them by unregistered persons or composition taxpayers”
IMPACT – Insertion of (1B) will have the impact of attracting penalty for electronic commerce operators in case of contravention of provisions relating to supplies of goods or services made through them by unregistered persons or composition taxpayers
Penalty Amount – Higher of :
- 10,000 or
- Amount equivalent to tax evaded or tax not deducted u/s 51 or short deducted or deducted but not deposited into government account or tax not collected u/s 52 or short collected or collected but not deposited into government account.
XII CLAUSE 139 – Amendment in Section 132, sub-section (1) of CGST Act
QUOTE FROM BILL – “Clause 139 of the Bill seeks to amend sub-section (1) of section 132 of the Central Goods and Services Tax Act so as to decriminalize offences specified in clauses (g), (j) and (k) of the said sub-section and to increase the monetary threshold from one hundred lakh rupees to two hundred lakh rupees for launching prosecution for the offences under the said Act, except for the offences related to issuance of invoices without supply of goods or services or both”
IMPACT – The following offences has been decriminalized and no prosecution will be be done for these offences.
clause g – obstructs or prevents any officer in the discharge of his duties under this Act
clause j – tampers with or destroys any material evidence or documents
clause k – fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information.
Further, In case of all the offenses from clause (a) to (l) except clause (b) which relates to “issue of any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of tax” the monetary threshold has been increased to two hundred lakh rupees ( of the amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken ). For clauses (a) to (l) refer link section 132 >> https://taxinformation.cbic.gov.in/content-page/explore-act/1000736/1000001/schedule%20III/ACTS
XIII CLAUSE 140 – Amendment in Section 138, sub-section (1) first proviso & sub-section (2) of CGST Act
QUOTE FROM BILL – “Clause 140 of the Bill seeks to amend first proviso to sub-section (1) of section 138 of the Central Goods and Services Tax Act so as to exclude the persons involved in offences relating to issuance of invoices without supply of goods or services or both from the option of compounding of the offences under the said Act.
It further seeks to amend sub-section (2) so as to rationalize the amount for compounding of various offences by reducing the minimum as well as maximum amount
for compounding.”
IMPACT – Compounding of offences as per section 138(1) will no longer can be applied in case of issue of any invoice or bill without supply of goods or services or both in violation of the provisions of this Act
Further, minimum range for amount of compounding has been proposed as 10,000 or 25% of tax amount, whichever is higher & maximum range for amount of compounding has been proposed as 30,000 or 100% of tax amount, whichever is higher.
XIV CLAUSE 141 – Insert new Section 158A of CGST Act
QUOTE FROM BILL – “Clause 141 of the Bill seeks to insert a new section 158A in the Central Goods and Services Tax Act so as to provide for the manner and conditions for sharing of the information furnished by the registered person in his application for registration or in his return filed or in his statement of outward supplies, or the details uploaded by him for generation of electronic invoice or E-way bill or any other details, as may be provided by rules, on the common portal with such other systems, as may be notified”
IMPACT – The new section will enable transfer of information from one system to another system as may be prescribed with consent of registered person.
XV CLAUSE 142 – Amendment in Schedule III CGST Act
QUOTE FROM BILL – “Clause 142 of the Bill seeks to amend Schedule III of the Central Goods and Services Tax Act to give retrospective applicability to paragraphs 7 and 8 and the Explanation 2 to the said Schedule with effect from the 1st day of July, 2017”
IMPACT – The entries of Schedule III i.e. Activities which will neither be treated as supply of goods nor supply of services and the following 2 entries are being given retrospective applicability :
- Para 7 – Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India
- Para 8(a) – Supply of warehoused goods to any person before clearance for home consumption
- Para 8(b) – Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption,
XVI CLAUSE 143 – Amendment in Section 2, clause 16 & clause 17 of IGST Act
QUOTE FROM BILL – “Clause 143 of the Bill seeks to amend clause (16) of section 2 of the Integrated Goods and Services Tax Act, by omitting certain words therein, so as to restrict the meaning of the term “non-taxable online recipient” to mean any unregistered person receiving online information and database access or retrieval services located in the taxable territory. It further seeks to clarify that the persons registered solely in terms of clause (vi) of section 24 of the Central Goods and Services Tax Act shall be treated as unregistered person for the purpose of the said clause.
It also proposes to amend clause (17) of the said section by removing certain words therein so as to remove the condition of “essentially automated” and “involving minimal human intervention” from the said definition.”
IMPACT – Broadening the definition of non-taxable online recipient by omitting the words “in relation to any purpose other than commerce, industry or any other business or profession” . Now, “non-taxable online recipient” to mean any unregistered person receiving online information and database access or retrieval services located in the taxable territory. Further, a person registered solely registered as per section 24(vi) [ person who are required to deduct tax under section 51 ] will be treated as unregistered.
Further impact being OIDAR supplying services to unregistered person for business use will be taxable on forward charge basis
Further, Broadening the definition of online information and database access or retrieval services (OIDAR) by omitting the words “essentially automated and involving minimal human intervention”. Now, OIDAR means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply and impossible to ensure in the absence of information technology and includes electronic services such as prescribed.
XVII CLAUSE 144 – Omits proviso of sub-section 8 of Section 12 of IGST Act
QUOTE FROM BILL – “Clause 144 of the Bill seeks to omit the proviso to sub-section (8) of section 12 of the Integrated Goods and Services Tax Act so as to remove the confusion regarding availment of input tax credit and other matters”
IMPACT – The proviso omitted “Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods” due to which place of supply is no longer determined on basis of destination of goods.
Place of supply in case of transportation of goods ( including by courier or mail ) will be location of recipient ( if registered ) or location at which goods handed over ( if unregistered recipient)
Thus, a registered person can avail ITC benefit in case of obtaining supply of service by way of transportation of goods to place outside India.
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