RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

On the economic front, it is expected that economy may grow at 6.5- 6.7% in current year as the momentum is strong in the backdrop of good monsoon. This may result in boosting farm growth, rural demand and investments. In medium term, growth may be around 7% on a sustained basis if India can build on the structural reforms undertaken in recent past. Both, manufacturing and service sector are also performing well. However, there can be risks from global political changes impacting global trade and investments. Geopolitical conflicts may also affect supply dislocations, commodity prices and inflationary pressures. 

Recently, Fitch Ratings has affirmed India’s sovereign rating at ‘BBB minus’ with a stable outlook and that India may remain the fastest growing economy globally. Indian economy grew @ 6.7% during Q1 of current fiscal. The growth may also be range bound in 6.5-7% during FY 2025.

The Finance Minister recently expressed that trade and businesses should regularly visit the GST offices, in order to move away from the practice of visiting the GST officers only when there is problem. She advised to proactively engage with officials and have open dialogue to resolve their concerns.

The next (54^th) GST Council meeting is scheduled to be held on 9^th September, 2024 at New Delhi. It may inter alia, consider rate rationalization including issues concerning real estate sector such as tax on transfer of development rights etc. The Fitment Committee may submit its report at the meeting. Taxation of health insurance and life insurance may also figure, besides recent high demand notices.

The enforcement of new GST provisions enacted through Finance (No.2) Act, 2024 shall come into force from a date to be notified. This could be notified after the ensuing GST Council meeting on 9^th September, 2024.  

GSTN has recently issued new functionalities in relation to bank account details for GSTR-1 & 1/IFF and introduction of reverse charge mechanism (RCM) / Input tax credit (ITC) statement. W.e.f. 1.92024, if taxpayer has not added and validated bank account details in GST registration, GSTR-1 / IFF will be blocked.

August, 2024 has once again seen enhanced GST collections of Rs. 1,74,962 crore, up by 10% on YoY basis. There has been a growth of 8.9% in CGST, 7.3% in SGST and 12.5% in IGST compared to August, 2023. This indicates that tax collection is buoyed based on robust consumption which is likely to go up on festive season ahead. The collection represents July, 2024 transactions which is considered to be a normal month only. It appears that higher tax collection is a result of enhanced compliances and focus on investigation and anti-tax evasion drives. However, during August, 2024, refunds shoot up by 38% resulting in net GST collection growing by 6.5% only.

Bank Account details for GSTR-1 and 1/IFF

• GSTN has issued an advisory for furnishing bank account details before filing GSTR-1/IFF in terms of Notification No. 38/2023 – Central Tax dated 4th August, 2023.
• According to Rule 10A, a taxpayer is required to furnish details of a valid Bank Account within a period of 30 days from the date of grant of registration, or before furnishing the details of outward supplies of goods or services or both in FORM GSTR-1 or using Invoice Furnishing Facility (IFF), whichever is earlier.
• Since Rule 10A shall come into force w.e.f. 1 September, 2024, for the Tax period August-2024 onwards, the taxpayer will not be able furnish GSTR-01/IFF as the case may be, without furnishing the details of a valid Bank Account in their registration details on GST Portal.
• All the taxpayers who have not yet furnished the details of a valid Bank Account details should add their bank account information in their registration details by visiting Services > Registration > Amendment of Registration Non - Core Fields tabs on GST Portal.
• In absence of a valid bank account details in GST registration, you will not be able to file GSTR-1 or IFF as the case may, be from August-2024 return period.

(Source: GSTN Advisory dated 23.08.2024)

Introduction of RCM / ITC Statement

• GSTN has introduced on its portal a new statement to report Reverse Charge Mechanism (RCM) transactions i.e., ‘RCM Liability / ITC Statement’.
• This statement will enhance accuracy and transparency for RCM transactions by capturing the RCM liability shown in Table 3.1(d) of GSTR-3B and its corresponding ITC claimed in Table 4A(2) and 4A(3) of GSTR-3B for a return period and also assist taxpayers in correct reporting.
• Such statement will be applicable from tax period August 2024 onwards for monthly filers and from the quarter, July-September-2024 period for quarterly filers.
• The RCM Liability/ITC Statement can be accessed using the navigation: Services >> Ledger >> RCM Liability/ITC Statement.
• RCM ITC opening balance can be reported by following below navigation:
• Login >> Report RCM ITC Opening Balance or Services >> Ledger >> RCM Liability/ITC Statement >> Report RCM ITC Opening Balance
• For opening balance, taxpayers should reconcile the following till tax Period:

• Monthly filers: Report the opening balance considering RCM ITC till the July-2024 return period.
• Quarterly filers: Report the opening balance up to Q1 of FY 2024-25, considering RCM ITC till the April-June, 2024 return period.

• Opening balance can be declared till 31.10.2024.
• Taxpayers can rectify any errors committed while declaring the opening balance on or before 30.11.2024, he shall be provided three opportunities for the same.
• This amendment facility shall be discontinued after 30.11.2024.

(Source: GSTN Advisory dated 23.08.2024)

Enforcement of new GST Provisions

• The Finance (No. 2) Act, 2024 enacted on 16.08.2024 had amended various provisions of CGST Act, 2017 and IGST Act, 2017.
• Through the Act was legislated on assent of President on 16.08.2024, the amendments have not yet been brought into force.
• Notification to bring into force the provisions of Finance Act, 2024 in respect of GST is to be issued by the Central Government on the recommendation of the GST Council as it would require co-ordination with states.
• States are required to carry out similar amendments in respective SGST legislations.
• GST Council is scheduled to meet on 9^th September, 2024 wherein, it may consider this issue.
• As of now, it is made clear that the amendment provisions have not come into force.

(Source: @ CBIC India Tweet)

GST collection in August, 2024

• Gross GST collection in August, 2024 is Rs. 1,74,962 crore, up by 10% on YoY basis.
• CGST collection is Rs. 30,862 crore (8.9% up); SGST collection at Rs. 38,411 crore (7.3% rise) and IGST collection at Rs. 93,621 crore (12.5% growth)
• GST Compensation Cess collection is Rs. 12,100 crore against Rs. 11,700 crore in August, 2023 (3.4 % up)
• GST refunds during August, 2024 amounted to about Rs. 24,460 crore, up by 38% on YoY basis, mainly on account of domestic refunds.
• Net GST collection has grown by 6.5% only on YoY basis, due to domestic and export refunds.
• Top 5 States to collect GST are Maharashtra, Karnataka, Gujarat, Tamil Nadu and Haryana.
• States with negative growth include Arunachal Pradesh, Nagaland, Mizoram, Meghalaya, Chhattisgarh, Lakshadweep and Andhra Pradesh

(Source: GST Revenue Collection dated 01.09.2024)

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