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TMI BlogRECENT DEVELOPMENTS IN GSTX X X X Extracts X X X X X X X X Extracts X X X X ..... RECENT DEVELOPMENTS IN GST - By: - Dr. Sanjiv Agarwal - Goods and Services Tax - GST - Dated:- 17-8-2024 - The Finance (No.2) Bill, 2024 introduced in Parliament on 22 July, 2024 has been passed with amendments in the Lok Sabha on 8 th August, 2024 and Rajya Sabha on 9 th August, 2024. The Budget session of Parliament has now been adjourned. It is expected that the Bill will be enacted soon to become a legislation on President s assent. The demand for exempting life insurance and medical insurance premium from levy of GST has been turned down. It has been stated that of the 18 percent GST on medical insurance, about half of the same goes to states directly and from the balance, 41% moves into the devolution pool which also goes to states, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... implying that a total of 74% of tax collection goes to states. CBIC has decided to launch special drive to curb fake registrations from 16 August, 2024 for which guidelines have issued. DGGI was in news for issuance of high value demand notice of about Rs. 32000 crore on Infosys for likely tax evasion of IGST on import of services under reverse charge mechanism. However, the company has opined that it is in compliance. Infosys is the company who has been entrusted with the responsibility of creating and designing the GSTN, the backbone of GST implementation. Also, CBIC has issued yet another notice of over Rs. 700 crore to Binance, a crypto asset exchange for GST on collecting fee from customers dealing in virtual digital assets on its pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tform. Companies with head offices or branch offices outside India will not get any new show cause notice now under GST for FY 2017-18 as the due date for the same was 5 th August, 2024. On the GST Tribunal (GSTAT) front, the process of recruitment of members and setting up of infrastructure is on and with the notification of benches including circuit benches on 31 st July, 2024, it can be expected that GST Appellate Tribunals may see the light of the day in near future. Input Service Distribution (ISD) in GST Finance Act, 2024 (8 of 2024) had amended law relating to input service distribution. As a consequence, Section 2(61) and Section 20 of CGST Act, 2017 were substituted. Distribution of common credit shall become mandatory for those wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have multiple registrations and having common input tax credit (ITC). Recipient of common input tax credit shall have to be mandatorily registered as ISD Common input tax credit shall be distributed to distinct persons as per section 25 of CGST Act ISD shall also be applicable to services covered under Reverse Charge Mechanism (RCM). This change will require changes in record keeping accounting and require new compliance obligations. Cross charge option will no longer be applicable or relevant. The above changes have been notified to come into force w.e.f. 1 st April, 2025. (Source: Notification No. 16/2024-Central Tax dated 06.08.2024 ) Changes in GSTR 8 (TCS) GSTN has issued an advisory regards recent changes in GSTR-8 in relation to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction in TCS rates. It may be noted that TCS rate has been reduced from the current 1% (0.5% CGST + 0.5% SGST/UTGST, or 1% IGST) to 0.5% (0.25% CGST + 0.25% SGST/UTGST, or 0.5% IGST) effective from 10/07/2024 vide Notification No. 15/2024 dated 10.07.2024. GSTN has thus advised that: For Period from 1st July to 9th July 2024: During this period, the old TCS rate of 1% will continue to apply. Taxpayers are required to collect report TCS at this rate for all transactions happened between these dates. For period From 10th July 2024 onwards: A revised TCS rate of 0.5% will come into effect from 10th July 2024. Taxpayers must ensure their systems and processes are updated to reflect this new rate for all transactions happened from 10th July fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rward. GSTN team is working on the changes announced by GST Council in respect of GSTR 8, is expected to be complete in next couple of days, and users would be able to file returns from 06th August 2024 midnight onwards. (Source: GSTN Advisory dated 02.08.2024 ) Fake GST Registration 2 nd Special Drive Guidelines CBIC has issued guidelines for 2nd special All-India drive against fake registrations from 16 August, 2024 to 15 October, 2024. The first such drive was conducted from 16.05.2023 to 14.08.2023, exactly a year back. The objective is to detect suspicious/ fake GSTINs and to conduct requisite verification and further remedial action to weed out these fake billers from the GST eco-system and to safeguard Government revenue. These guide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lines are a set of common guidelines may be issued to ensure uniformity in action by the field formations and for effective coordination and monitoring of the action taken during the special drive. GSTN, in coordination with Directorate General of Analytics and Risk Management (DGARM), CBIC, will identify suspicious/ high-risk GSTINs, based on detailed data analytics and risk parameters, for the purpose of verification by the State and Central Tax authorities during the said drive and share the details of such suspicious GSTINs, jurisdiction wise, with the concerned tax administration. In case of such suspicious GSTINs falling under the jurisdiction of Central Tax, the details will be shared with the Central Tax authorities by GSTN through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DGARM. The tax authorities, at their own option may supplement the list of suspicious GSTNs by data analysis/ intelligence gathering at their end, using various available analytical tools like BIFA/ GAIN, ADVAIT, NIC Prime, E-Way Bill Analytics etc., as well as through human intelligence, modus operandi alerts, experience gained through the past detections, as well as the first special All-India drive. On receipt of data from GSTN, a time bound exercise of verification of the suspicious GSTINs shall be undertaken by the concerned jurisdictional tax officer(s). If, after detailed verification, it is found that the taxpayer is non-existent and fictitious, then the tax officer may immediately initiate action for suspension and cancellation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the registration of the said taxpayer in accordance with the provisions of section 29 of CGST Act, read with the rules. The matter may also be examined for blocking of input tax credit in Electronic Credit Ledger as per the provisions of Rule 86A of CGST Rules without any delay. The details of the recipients to whom the input tax credit has been passed by such non-existent taxpayer may be identified through the details furnished in FORM GSTR-1 by the said taxpayer. For the purpose of communicating information to the recipient tax jurisdiction, a Nodal Officer shall be appointed immediately by each of the Zonal CGST Zone and State. The Nodal Officer of the tax jurisdictions may be assigned the role of Enforcement Officer on the BO portal. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erever the details of the recipient GSTIN needs to be shared to other tax jurisdiction, the same may be done through the nodal officer. Action may also be taken to identify the masterminds/ beneficiaries behind such fake GSTIN for further action, wherever required, and also for recovery of Government dues and/ or provisional attachment of property/ bank accounts, etc. as per provisions of section 83 of CGST Act. An action taken report will be uploaded by each of the State as well as CGST Zones, through the nodal officer on the portal provided for the same, on a weekly basis on the first working day after completion of the week, for enabling the GST Council Secretariat to monitor the same. If any novel modus operandi is detected during the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erification/ investigation, the same may also be indicated in the said action taken report. The Principal Chief Commissioner/ Chief Commissioner of the Central GST Zones and the Chief Commissioner/ Commissioner of the States/ UTs may monitor the progress of action taken in respect of list of suspicious GSTINs received from GSTN and chosen locally. GST Council Secretariat will compile the reports received from various formations and make it available to the National Coordination Committee immediately. (Source: CBIC Instruction No. 02/2024-GST dated 12.08.2024 ) Guidelines on Penalty under section 73 / 74 Kerala Kerala Government has issued clarification with illustrations on computation and imposition of penalty under the fourth proviso of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 20 of the Integrated Goods and Services Tax (IGST) Act, 2017 in cases where tax is being demanded under Section 73(1) / 74(1) of the KSGST Act, 2017 . The gist of guidelines is a follows: Section 73 of the KSGST Act, 2017 provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful-misstatement or suppression of facts. As per Section 73(9) of the KSGST Act, 2017 , The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent of tax or ten thousand rupees, whichever is higher, due from such pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and issue an order. Section 74 of the KSGST Act, 2017 provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts. As per section 74(1) , a SCN is to be issued, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice. According to section 20(xxv) of IGST Act, 2017 , the provisions relating to the imposition of interest and penalty, shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they apply in relation to central tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as if they are enacted under IGST Act . Also, in cases where the penalty is leviable under the Central Goods and Services Tax Act and the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, the penalty leviable under IGST Act shall be the sum total of the said penalties. What emerges is that the quantum of penalty under the IGST Act is entirely dependent upon the penalty leviable under the CGST and the SGST Acts. Thus, a s per 4th proviso of Section 20 of IGST Act, the penalty leviable under the IGST Act would be the sum total of the quantum of penalty to be levied under the CGST Act and the SGST Act. (For example, where tax rate is 18% (9% CGST, 9% SGST), the penalty is (CGST (Taxable value x 9% x 10%) + SGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (Taxable value x 9% x 10%)), which is equal to 10% of (9% + 9%), i.e., which is equal to 10% of 18%. In short, the 'penalty' is ten per cent of tax amount under IGST Act. Therefore, as per section 20 of IGST Act, it is the penalty amounts that must be added, (The penalty rates should NOT be added.) (Source: Circular No. 12/2024- Kerala SGST dated 13.08.2024 issued by Government of Kerala) GST collection in July, 2024 GSTN has released the data on GST collection for the month of July, 2024 recording a third highest ever collection of Rs. 1.82 lakh crore. Gross GST collection in July, 2024 in higher by 10.3% compared to July, 2023 collection (Rs. 1.66 lakh crore) Net GST collection rose by 14.4% to Rs. 1.66 lakh crore. While states ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like Maharashtra, Karnataka, Gujarat and Delhi reported a double digit growth on YoY basis, few states have shown negative growth which include Himachal Pradesh, Meghalaya, Lakshadweep, Madhya Pradesh, Sikkim etc. It is expected that GST collection may rise further in coming months due to festive session ahead. (Source: GSTN Revenue Report dated 01.08.2024 ) *********** - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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