Synopsis of GST Notifications issued on 22-12-2020

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Government has come up with various Notifications on 22nd December 2020 details of which are given here under: –

Restriction and Relaxation on availing and utilization of Input Tax Credit (ITC) under GST

I.        Rule 36 Documentary requirements and conditions for claiming input tax credit (Effective Date – 01st January 2021) – Refer Notification No. 94/2020 – Central Tax dated 22nd December 2020

The 110% rule for availing the ITC will now be changed to 105% rule. Thus from 01-01-2021, registered person can avail ITC up to 105% of eligible ITC available in his GSTR 2A/ 2B. Now the ITC can even be availed based on the invoices uploaded or furnished on the Invoice Furnishing Facility.

 

II.        Insertion of new Rule 86B Restriction on use of amount available in electronic credit ledger (Effective Date – 01st January 2021) – Refer Notification No. 94/2020 – Central Tax dated 22nd December 2020

Now from 01-01-2021 the registered person shall not use the amount of ITC available in his electronic credit ledger for the payment of GST outward liability on supplies/ sales made by him in excess of 99% of such tax liability for the month in which taxable supplies/ sales made by him exceeds 50 lakhs rupees. However, the said Rule will not apply when any one or more of the following conditions are fulfilled:

a.    where the  proprietor or Karta or the managing director or any of its two partners, whole-time Directors, Members of Managing Committee of Associations or Board of Trustees who,   have paid more than one lakh rupees as income tax in each of the last two financial years for which the time limit to file return of income under subsection (1) of section 139 of the said Act has expired.

b.    Where the registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilized input tax credit under zero rated supplies made without payment of tax.

c.    Where the registered person has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilized input tax credit under inverted duty structure.

 d.    The registered person has discharged his liability towards output tax through the electronic cash ledger for an amount which is in excess of 1% of the total output tax liability, applied cumulatively, up to the said month in the current financial year.

 e.    The registered person is –

  •  Government Department;
  • a Public Sector Undertaking;
  • a local authority
  • a statutory body.

 

Also, the commissioner or any officer authorized by him may remove the said restriction after such verifications and such safeguards as he may deem fit.

 

 III.        Amendment in Subsection 4 of Section 16 of CGST Act, 2017 (Effective Date – 01st January 2021)- Refer Notification No. 92/2020- Central Tax dated 22nd December 2020

Earlier a registered person is restricted to avail ITC of debit note if the date of Invoice for which debit note is issued is of Financial year for which time limit (due date of Sep GSTR 3B following the Financial Year or Annual Return whichever is earlier) under 16 (4) has expired.

Now registered person is allowed to take ITC of debit note on the basis of date of debit note instead of date of Invoice against which such debit note has been issued.

 

 

Cancellation, suspension and Revocation of GST Registration

  I.        Addition of new criteria on basis of which GST Registration of a registered person can be cancelled (Effective Date – 22nd December 2020) – Refer Notification No. 94/2020 – Central Tax dated 22nd December 2020

a.    When registered person has availed ITC in violation of the provisions of section 16 of the Act or the rules made.

b.    When registered person furnishes the details of outward supplies in FORM GSTR-1 for one or more tax periods which is in excess of the outward supplies declared by him GSTR 3B tax periods.

c.    When registered person violates the provisions of newly inserted rule 86B.

 

   II.        Changes regarding suspension of GST Registration (Effective Date – 22nd December 2020) – Refer Notification No. 94/2020 – Central Tax dated 22nd December 2020

a.    To suspend the GST Registration under section 29 or rule 21 the proper officer is not bound to give the opportunity of being heard.

b.    The GST Registration can now be suspended when there is significant differences or anomalies in GSTR 1 & GSTR 3B & GSTR 2A which are indicating contravention of provision of GST Act or rule made. Then the registered person will be given time period of 30 days to explain why his GST Registration shall not be cancelled.

c.    Refund of GST will be withheld during the period of suspension.

 

 III.        Condonation of Delay for applying revocation of cancellation of Registration (Effective Date – 1st January 2021) – Refer Notification No. 92/2020- Central Tax dated 22nd December 2020

The Additional / Joint Commissioner can now condone the delay in filling application for revocation of registration for maximum period of 30 days and Commissioner can further condone the delay for maximum period of 30 days.

 

 IV.        Cancellation of GST Registration by a person voluntarily registered under GST

Now GST Law allows a registered person to cancel the registration who had taken the registration (voluntarily) even while running the business (Effective Date 01st January 2021) – Refer Notification No. 92/2020- Central Tax dated 22nd December 2020

 

 

Restriction on GST Return filing (Effective Date – 22nd December 2020) – Refer Notification No. 94/2020 – Central Tax dated 22nd December 2020

  1. The registered person will not be allowed to furnish details of GSTR-1, if he has not filed his GSTR-3B for preceding 2 Months in case of monthly filers of GSTR 3B.
  2. The registered person will not be allowed to furnish details of GSTR-1 or in IFF, if he has not filed GSTR-3B for preceding period – in case of registered persons opting for QRMP.
  3. The registered person will not be allowed to furnish details of GSTR-1 or in IFF, if he has not filed GSTR-3B for preceding tax period – in case rule 86B applies on the said Registered persons.

 

 

Waiver of Late fee for GSTR-4 – Refer Notification No. 93/2020- Central Tax dated 22nd December 2020

Government has issued notification to waive the late fee for delay in filing of GSTR-4 for Financial Year 2019-20 in case such return is filed between 1st day of November, 2020 and the 31st day of December, 2020 for the Registered person whose principal place of business is in the Union Territory of Ladakh.

 

 

Other amendment in GST Act (Effective date 01st January 2021) – Refer Notification No. 92/2020- Central Tax dated 22nd December 2020

 

Section of Finance Act 2020 Section of GST in which Amendment is Made / Section Main Heading Analysis
119 10 / Composition Scheme This provision has curtailed the eligibility for composition scheme. The persons now cannot be eligible for composition scheme if

–      Registered person is engaged in making any supply of goods or services which are not leviable to tax under this Act;

–      Registered person is engaged in making any inter-State outward supplies of goods or services;

–      Registered person is engaged in making any supply of goods or services through an electronic commerce operator who is required to collect tax at source under section 52;

Earlier the restriction was given for person supplying goods only. Now the scope of restrictions has been extended to suppliers of services.

123 31 / Tax Invoice The government can now specify the categories of services or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed
124 51 / Tax deduction at source Certificate of tax deduction will be issued in form to be specified, further no late fees will be charged if the deductor fails to issue TDS Certificate.
126 122 / Penalty for certain offences Any person who retains the benefit of a transaction and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.
127 132 / Punishment for certain offences. The government will also penalize the persons who retains the benefit intentionally or unintentionally the benefit or at whose instance such transaction is conducted or fraudulently avails input tax credit without any invoice or bill
131 Schedule II Government has retrospectively (i.e., from 01st July 2017) removed the word “whether or not for a consideration” from Paragraph 4.

 

Other amendment in GST Rules – Refer Notification No. 94/2020 – Central Tax dated 22nd December 2020

 

Rule No. / Rule Name Effective Date Analysis
8(4A) / Application for registration To be notified later Now to apply a new registration the taxpayer has to undergo

(a) biometric-based Aadhaar authentication and taking photograph, if he has opted for authentication of Aadhaar number or

(b) taking biometric information, photograph and verification of such other KYC documents, if he has opted not to get Aadhaar authentication done and physical verification along with the verification of the original copy of the documents uploaded with the application in FORM GST REG-01 at one of the Facilitation Centres notified by the Commissioner and the application shall be deemed to be complete only after completion of the process laid down.

 

9 / Verification of the application and approval 22/12/2020 Now for a new registration the department will be taking 7 days instead of 3 days (if Aadhaar Authentication is done) else 30 days after physical verification.

 

The Physical verification can now even be done by the proper officer when he deems it fit to carry out physical verification of places of business, and then the registration shall be granted within thirty days of submission of application, after physical verification of the place of business in the presence of the said person, and can verify any other document he wants too.

 

138/ Information to be furnished prior to commencement of movement of goods and generation of E-way bill 01/01/2021 The validity of the e-way bill has been shortened. Earlier for every100kms e-way bill would be valid for 1 day & now for every 200kms e-way bill will be valid for 1 day
138E/ Restriction on furnishing of information in PART A of FORM GST EWB-01 22/12/2020 The registered person will not be able to generate e way bill if

–        he has not furnished returns for 2 tax periods

–       whose registration is suspended

 

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