RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

According to S & P Global Ratings, India is poised to be the fastest growing major economy over next three years and the third largest economy by 2030, but its rising population poses challenges in the basic service coverage.

For 2024, Nobel Prize in Economics has been awarded jointly to Daron Acemoglu, Simon Johnson and James A. Robinson for their work on how institutions shape economic prosperity. Their contribution is in respect of state institutions whose presence is necessary to achieve positive economic outcome like growth with equity. These institutions are various from law and order to contract enforcement to sanctity of private property to honest public administration to equity, fairness and justice etc. In nutshell, good and well functioning state institutions are a necessary condition.

GoM on rate rationalization has recommended concessions / exemptions on health and medical insurance, 20 L water cans and bicycles. Also, it suggested rate hike on high end bicycles, shoes (over Rs. 10,000) and watches (over Rs. 25,000) to 28%. GST law and rates must be made progressive and revenue alone should not be the motive. While rates slabs need to be reduced, list must also be short.

Now that GST Council has set up a Group of Ministers (GoM) with Mr. Pankaj Choudhary, Union Minister of State for Finance on Compensation Cess, States prefer merging the cess with tax rates as GST Compensation Cess shall cease in March, 2026. States have suggested that once it is decided to merge cess with taxes, no new goods should be added to the list of luxury, sin and demerit items. Also, the only way to restructure the cess is to merge the levy with taxes and bring about separate tax rates for the goods on which cess is currently levied. The goods subjected to compensation cess include cigarettes, pan-masala, motor vehicles with more than 1500cc capacity, caffeinated beverages, coal and lignite etc.

The new Invoice Management System (IMS) introduced by GSTN shall facilitate taxpayers in matching records / invoices issued by their supplies to avail correct ITC. They can now seamlessly accept, reject or keep invoices pending in the system to access in future.

Based on GST Council’s recommendations and subsequent amendments, CBIC has issued few Circulars (viz Nos. 234 to 238 in last few days clarifying on certain services / goods, as is where is basis, ITC and section 128A for waiver of interest & penalty.

Advisory for Taxpayers on new GST provision for Metal Scrap transactions

• GSTN has issued an advisory dated 13.10.2024, in relation to new GST provision for Metal Scrap transactions.
• CBIC has issued Notification 25/2024-Central Tax, on October 9, 2024 under section 51 of the CGST Act, 2017 mandating compliance by the businesses dealing with Metal Scrap.
• The GST portal will soon be updated to enable compliance of registration through FORM GST REG-07 by these category of registered persons.

(Source: GSTN Advisory dated 13.10.2024)

Advisory on Invoice Management System (IMS)

• GSTN has issued an advisory which provides that Invoice Management System (IMS) will be made available to taxpayers from 14.10.2024.
• The new system shall facilitate taxpayers in matching their records/invoices vis a vis issued by their suppliers for availing the correct Input Tax Credit (ITC).
• The first GSTR-2B would be generated for the return period Oct’ 24 on 14^th November, 2024 considering action taken on Invoice Management System.
• It may be noted that it is not mandatory to take action on invoices in IMS dashboard for GSTR-2B generation.
• Taxpayers can make use of this system to take action on the invoices reflecting on IMS from 14.10.2024.

                                                    (Source: GSTN Advisory dated 14.10.2024)

GSTN Advisory on GSTR-9/9C

• GSTN has issued an Advisory which provides that GST system will auto-populate eligible ITC for domestic supplies (excluding reverse charge and imports ITC) from table 3(I) of GSTR-2B to table 8A of GSTR-9.
• A validation utility will be executed progressively (for validation by taxpayers) to complete the auto population of GSTR-9 from GSTR-2B for Apr-23 till Mar-24.
• These changes in GSTR-9 and 9C for the FY 2023-24 are available on the GST portal from i.e., 15th October 2024 onwards.

(Source: GSTN Advisory dated 15.10.2024)

GSTN Advisory on Hard Locking of auto-populated liability in GSTR-3B

• GSTN has issued an advisory in relation to locking of auto-populated liability in GSTR-3B. In order to assist taxpayers in filing their returns and minimizing human errors, GSTN has continuously improving the GST return filing process and in this endeavor the GST Portal now provides a pre-filled GSTR-3B form, where the tax liability is auto-populated from the declared supplies in GSTR-1/ GSTR-1A/ IFF by the supplier, while the Input Tax Credit (ITC) is auto-populated from GSTR-2B. A detailed system generated pdf of the auto populated GSTR-3B is also provided to all the taxpayers.

• Now, taxpayers also have a facility to amend their incorrectly declared outward supplies in GSTR-1/IFF through GSTR-1A, allowing them an opportunity to correct their liabilities before filing their GSTR-3B. Additionally, to manage inward supplies and ensure accurate ITC claims in GSTR-3B, taxpayers have the option to take informed actions of accept/reject/pending on inward supplies via the Invoice Management System (IMS) which is now available to the taxpayers.
• It may be noted that tentatively from January, 2025 tax period, the GST Portal is going to restrict making changes in auto-populated liability in pre-filled GSTR-3B from GSTR-1/1A/IFF to further enhance accuracy in return filing. It is once again suggested hereby that in case any change is required in auto-populated liability, the same may please be handled through GSTR-1A.
• However, locking of auto-populated ITC in GSTR-3B, after the roll out of IMS, will be implemented from a later date. For the same a separate advisory would be issued after addressing all the issues related to IMS, raised by the trade.

(Source: GSTN Advisory dated 17.10.2024)

Additional FAQs on IMS issued by GSTN

• Invoice Management System (IMS) is now available to taxpayers. This new system shall facilitate taxpayers in matching their records/invoices vis a vis issued by their suppliers for availing the correct Input Tax Credit (ITC).
• Taxpayers can now make use of this facility to seamlessly accept, reject, or keep invoices pending in the system to avail later as and when required.
• The first GSTR-2B on the basis of actions taken in IMS would be generated for the return period Oct’24 on 14th November, 2024.

(Source: GSTN Advisory dated 17.10.2024)