Amendments/Changes in GST After Introduction of Finance Bill, 2021
Introduction : Since its inception GST is prone to changes and amendments, in this finance bill also, there is introduction of some changes and some insertion/deletion/substantial modification in core sections. In this article we will cover all the amendments made in finance bill, 2021 relation to GST.
- Amendment under section 7 of CGST Act, 2017; earlier there was a judgement of supreme court that if any service is provided by club / association to its member, both were not treated as separate person and therefore it would not attract service tax on any services provided by the club to its persons following the concept of mutuality. The same interpretation was carried under GST however to put all the controversy on side, above section is amended and now activities or transactions, by any person (Firm, Association of Person, Body of Individual, etc.) not being individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration will be treated as supply.
- Amendment under section 16 of CGST Act, 2017; there is always a confusion relating to availment of ITC not shown in GSTR-2A/2B, in reference to said government has amended rule 37 of CGST Rules, 2017; stating that assessee will be allowed only to take the credit up to 110% of credit shown in GSTR-2A/2B. Now new clause has been inserted under section 16 that assessee will be allowed credit for invoice or debit note only if such has been furnished by supplier in GSTR-1 and the tax has been paid by him on such invoice or debit note. This implies 100% matching will be done by the department, but as per our expert there will be amendment in rule 37 which will be in line with above amendment and will allow the assessee to take the credit up to 105% or 110% of credit shown in GSTR-2A/2B.
- One of the major amendments has been made by omitting section 35(5), 44(1) and 44(2) of CGST Act, 2017; the section was requiring assessee to get its books of account audited and furnish the reconciliation statement in form GSTR-9A/9C along with filing annual return in form of GSTR-9. After amendment the said section is replaced where it states assessee will be required to furnish an annual return which may include a self – certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement (as per Income Tax or any other law for time being in force) for every financial year electronically. Effect of above amendment is, mandatory requirement of getting the reconciliation in GSTR-9C certified by a Chartered Accountant/ Cost Accountant is proposed to be removed. Any registered person would be able to furnish the annual return along with a self-certified reconciliation statement reconciling the values between annual return and financial statements. The amendment will be effective from prospective date and therefore assessee will be required to file above GSTR-9C for financial year 2019-2020. The said is also clarified by the department.
- Amendment under section 50 of CGST Act, 2017; it is controversy since beginning that whether interest is to be payable on NET-TAX Liability or GROSS-TAX liability; it has been now clarified through amendment under section 50 of CGST Act, 2017; that assessee will liable to pay interest on net-liability portion. For e.g. if assessee has liability of Rs. 6,000/- and he is eligible to avail and avails the credit of Rs. 4,000/- than interest will be payable only on the difference amount of Rs. 2,000/-. Important point to be noted is that amendment is made retrospectively i.e., it shall be effective from 01/07/2017.
- Amendment has been made under section 75 of CGST Act, 2017; Earlier for recovery of any taxes from the assessee a show-cause notice was required to be served, however now the section has been amended and it states that if any taxes which has been declared by assessee under GSTR-1 has not been paid by the assessee or has been short paid than the said can be recovered without issuance of show cause notice. This is the remedy provided to government that they can directly opt for recovery of taxes under Section 79 without issuance of any show cause notice u/s 73 or 74.
- Amendment has been made under section 129(3) of CGST Act, 2017; earlier assessee was able to file the appeal against detention order (passed after detention of goods) upon payment of 10% of the tax in dispute now appeal can be filed only upon payment of 25% of penalty levied under Section 129. This will require additional outflow from assessee’s end.
- Under the said section there are few more amendments
- Previously there was no time limit to issue the notice and order of detention or seizure but now it has been amended and law provides for time limit of issuance of notice as 7 days of such detention or seizure and date for issuance of order will be 7 days from date of notice of such detention or seizure.
- Firstly, there was the provision on basis of which the goods which has been detend or seize, to release such goods upon furnishing or execution of bond and security. Now such provision is removed and assessee will not be available with such facility.
- Another amendment in said provision is earlier one has to pay tax along with the penalty in order to get the goods released being the case of detention or seizure. Now penalty amount needs to be paid in order to secure release of goods whereas the tax amount would continue to be paid through GSTR-3B of the relevant month.
- There is change in amount of penalty for non-exempted goods which has been seized or detend:
|Situation||Earlier Penalty||Amended penalty|
|Where owner comes forward for payment of penalty||100% of the tax payable||200% of the tax payable|
|Where owner does not come forward for penalty payment||50% of the value of goods less tax paid||Higher of:
a) 50% of the value of goods
b) 200% of the tax payable
- There is amendment in definition of zero-rated supply i.e., under section 16 of IGST Act, 2017;Earlier all supplies made to SEZ unit were covered under the definition of Zero-Rated Supply but now this definition has been amended and supply of goods or services or both for authorized operations to a Special Economic Zone developer or a Special Economic Zone unit will only be treated as zero-rated supply. This will restrict the definition of zero-rated supply.
This were the major amendments which has been made under GST provision, and that every assessee shall take under consideration.