GST PROPOSALS IN BUDGET 2022 (PART-II)

[Dr. Sanjiv Agarwal]

The Finance Minister has introduced the Finance Bill, 2022 in Lok Sabha on 1st February, 2022. Changes in Customs, Central Excise, GST law and rates have been proposed through the Finance Bill, 2022.

Amendments in GST

Amendments carried out in the Finance Bill, 2022, vide clauses 99 to 113 will come into effect from the date when the same will be notified, as far as possible, concurrently with the corresponding amendments to the similar Acts passed by the States & Union territories with legislature, until stated otherwise.

Clause wise Proposals

Finance Bill, 2022 contains clauses from 99 to 123 in relation to changes proposed in GST laws:

Changes in provision related to GST Practitioners

• Clause 108 of Finance Bill, 2022 seeks to amend sub-section (2) of section 48 of the Central Goods and Services Tax Act so as to remove reference to section 38 therefrom as there is no requirement of furnishing details of inward supplies by the registered person under the said section 38.
• Section 48 deals with scope of work of GST Practitioners.
• This amendment is in view of the proposed amendment in section 38 of the CGST Act, 2017. The substituted section 38 provides for:

• Prescribing such other supplies as well as the manner, time, conditions and restrictions for communication of details of inward supplies and input tax credit to the recipient by means of an auto-generated statement and to do away with two-way communication process in return filing.
• The details of inward supplies in respect of which input tax credit may be availed and the details of supplies on which input tax credit cannot be availed by the recipient.

• This there will be no requirement of filing return of inward supplies.

[Source: Clause 108 of Finance Bill, 2022]

Allowing cash balance to be transferred to Distinct Persons

• Clause 109 proposes to amend section 49 of the CGST Act, 2017 which deals with payment of tax, interest, penalty and other amounts
• The proposed amendments are:

• Omit reference to section 43A in sub-section (2) as section 43A is being omitted.
• Amend section 49(4) of the Central Goods and Services Tax Act so as to provide for prescribing restrictions for utilizing the amount available in the electronic credit ledger.
• Amend sub-section (10) so as to 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.
• Insert sub-section (12) so as to provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger.

• Central Government will be empowered to make rules for maximum proportion of output tax liability which may be discharged through the electronic credit ledger.
• The taxpayers can now transfer the balance of credit in cash ledger to any other distinct person (i.e., any other GST registration under the same PAN) subject to stipulation that there is no unpaid liability in the electronic liability ledger.
• New sub-section 12 enables and makes valid the rule 86B for mandatory payment of 1 percent of tax liability by specified persons, despite there being sufficient balance of ITC.

[Source: Clause 109 of Finance Bill, 2022]

Retrospective relief in interest liability on wrong ITC in GST: Finance Bill, 2022

• According to section 50(3) of CGST Act, 2017, a taxable person who makes an undue or excess claim of input tax credit under section 42(10) or undue or excess reduction in output tax liability under section 43(10), shall pay interest on such undue or excess claim or on such undue or excess reduction.
• Finance Bill, 2022 has proposed to substitute new sub-section 50(3) retrospectively, with effect from the 1^st July, 2017, so as to provide for levy of interest on input tax credit wrongly availed and utilized, and to provide for prescribing manner of calculation of interest in such cases.
• This amendment would result in following :
  • No interest leviable if wrong ITC availed but not utilized
  • Interest to be levied only when ITC is both, availed and utilized
  • No new litigation on this issue
  • The rules will prescribe the manner of calculation of interest
• The amendment will have retrospective effect from 1.7.2017.

[Source: Clause 110 of Finance Bill, 2022]

Rectification of error in TCS Return

• Clause 111 of the Finance Bill, 2022 proposes to amend section 52 of the CGST Act, 2017 which deals with Collection of Tax at Source (TCS)
• It amends proviso to section 52(6) so as to provide for thirtieth day of November following the end of the financial year, or the date of furnishing of the relevant annual return, whichever is earlier, as the last date upto which the rectification of errors shall be allowed in the statement furnished under sub-section (4).
• Thus, there will be extension upto 30^th November of the following financial year for rectification of errors in the statement furnished under sub-section (4) viz GSTR-8 by the Electronic Commerce Operator in respect of tax collection at source.
• Presently, time allowed is upto filing of September return of the following financial year (i.e. 10^th October) in relation to such TCS return (GSTR-8)
• Thus, assessee can make rectification of errors the TCS return upto 30^th November of following financial year.

[Source: Clause 111 of Finance Bill, 2022]

Rationalization of Refund

• Clause 112 of the Finance Bill, 2022 proposes to amend section 54 of CGST Act, 2017 which provides for refunds.
• The proposed amendment :

•  Amend proviso to sub-section (1) of section 54 of the Central Goods and Services Tax Act so as to explicitly provide that claim of refund of any balance in the electronic cash ledger shall be made in such form and manner as may be prescribed by way of rules.
• Amend sub-section (2) so as to align it with sub-section (1) by providing time limit of two years from the last day of the quarter in which the supply was received for claiming refund of tax paid on inward supplies of goods or services or both by the person specified in the said sub-section.
• Amend sub-section (10) so as to extend the scope of the said sub-section to all types of refund claims.
• Insert a new sub-clause (ba) in clause (2) of Explanation in order to provide clarity regarding the relevant date for filing refund claim in respect of supplies made to a Special Economic Zone developer or a Special Economic Zone unit.

• Amendments provides that refund claim of any balance in the electronic cash ledger shall be made in such form and manner as may be prescribed as per rules.
• Amendment extends scope of withholding of or recovery from refunds in respect of all types of refund.
• Thus, time limit for filing GST refund claim has been linked to supplies as reported in Form GSTR-3B for transactions done with SEZ units / SEZ developers.

[Source: Clause 112 of Finance Bill, 2022]

Amendment in Section 168 with reference to section 38 of CGST Act, 2017

• Clause 113 of Finance Bill, 2022 proposes to amend section 168 of CGST Act, 2017, which deals with power to issue  instructions or directions
• In section 168(2), reference to section 38(2) is to be omitted.
• In view of major changes in section 38 wherein two way communication in return filing has been withdrawn, this is a consequential amendment as no more reference to section 38 is needed.
• section 38 provides for auto drafted ITC statement in Form GSTR-3B and restricts ITC availment.

[Source: Clause 113 of Finance Bill, 2022]

Common GST Portal

• Clause 114 of Finance Bill, 2022 proposes to amend Notification No. 9/2018-CT dated 23.01.2018 issued under section 146 of CGST Act, 2017 / under section 20 of IGST Act, 2017.
• The said amendment implies that such notification will be deemed to have retrospective effect w.e.f. 22.06.2017.
• www.gst.gov.in was notified as common electronic portal vide Notification No. 4/2017-CT dated 19.06.2017 w.e.f. 22.06.2017.
• Thus, www.gst.gov.in will be the common goods and services tax electronic portal w.e.f. 22.06.2017 for all functions provided under CGST Rules, 2017 except those provided for e-way bills and generation of e-invoices (for these, there are separate portals)
• This amendment shall have retrospective application, i.e., w.r.e.f. 22.06.2017.

[Source: Clause 114 of Finance Bill, 2022]

(To be continued ……)