Major Changes in GST by Finance act 2022

Major Changes in GST by Finance act 2022     

  1. It’s harder to avail Input Tax Credit:

  • A new clause (ba) has been inserted in section 16(2) stating that ITC in respect with an Invoice can only be availed if such ITC has not been restricted in detail communicate to buyers in form of auto generated statement GSTR 2B u/s 38 of CGST Act.
  • Section 38 has also been added, GSTR 2B (auto generated) must contain these 2 components
    1. Details of Input Tax Credit to be availed:
    2. Details of Input Tax Credit that cannot be availed in respect of invoices furnished u/s 37(1) :
    3. By person who is registered under this Act, within prescribed period.
    4. By person who is registered under this Act, who has defaulted in payment of tax and that default has continued for a prescribed period.
    • By person who is registered under this Act, whose output tax is to be paid as per the statement of outward supplies filed by him under 37(1) during this period, as prescribed, is more than the output tax paid by him during that period by such limit as may be prescribed.
  • By person who is registered under this Act, during such period as may be prescribed ,has availed input tax credit of amount exceeding the credit limit can be availed by him in accordance with clause (a) , by such limit as may be prescribed
  • By person who is registered under this Act, who has defaulted in payment of tax liability as per the provision of section 49 subject to some conditions and restriction as may be prescribed.
  • By such other class of persons as may be prescribed.
  • The main motive of this amendment is to cut off the chain of fraudulent ITC by dealers causing a huge loss to economy. Although this would adversely affect the genuine buyer and when the supplier doesn’t discharge the liability properly.
  • Many discussions have come with the conclusion that buyers cannot be held responsible for suppliers default in payment of taxes. Hence, the proposed amendment shall also consider these cases.
  1. Time Limit for Availing Input Tax Credit Shall Be Extended:

  • Section 16(4) deals with time limit in regards with availing ITC. Amendment is being done in this section to avail ITC in respect of invoices or debit note for FY up to 30th Nov. of following financial year.
  • The previous due date for September was 20th October   /22nd   October /24th October depending on the case.
  1. Cancellation of registration provision by officer to be made strict: 

          For composite dealers:

  • If the composite dealer fails to furnish the returns for a financial year beyond 3 years from the due date, the registration is cancelled in section 29(2) (b). Previously the registration is to be cancelled if dealer does not furnish tax returns for 3 consecutive tax periods. Earlier composite dealers were to file a quarterly return, but now they file an annual return, hence this section required to be amended. As three tax periods would mean 3 years, which nullifies the objective of legislature.
  • For other than composite dealers: A continuous default of 6 months would result in cancellation of registration. As of now, cancellation of registration will be done for continuous default of prescribed no. of months (it is being said that the government will reduce the time period to 2 to 3 months).
  1. Time limit will be extended for issue of credit note :

  • Section that deals with time limit for issuing credit note in respect of supplies made in a Financial Year up to 30th November of the following financial year is sec 34(2).
  • Previously the time limit was no different from the return filing for September month of the following financial year.
  1. Procedure of Filing Return of Outward Supply:

  • Section 37(3) is being amended to extend the time limit up to 30th November of following financial year. So that the rectification of errors can be done for outward supplies furnished u/s 37(1) that is GSTR-1.
  • Section 37(2) is being omitted to remove the requirement of acceptance or rejection of invoices furnished and communicated to recipient.
  • A new section is added to make it compulsory that the returns of outward supply must be filed monthly in chronological order.
  1. Provision for furnishing return U/S 39 to be amended:

  • Section 39(5) is being amended so that the time limit for filing GSTR-5 by Non Resident taxable person will be reduced i.e  13th of the following month. Earlier this was of 20th of the following month.
  • Under Section 39(7) is being amended to provide an option to taxpayers furnishing return under proviso to sub-section (1), they can pay taxes either on actual self -assessment basis or in an alternate way that the government will prescribe later.
  • Section 39(9) is being amended to provide for an extended time up to 30th November of the following financial year So that the rectification of errors can be done for outward supplies furnished u/s 39.
  • Under Section 39(10) is being amended to provide that return u/s 39 of a particular period cannot be filed by taxpayer unless the return u/s 37 is filed for that period.
  1. Input Tax Credit reversal and interest payment by buyer in respect supplies on which suppliers default while making payment:
  • Changing concept ITC claim by buyer from provisional basis to self- assessed basis.
  • A new section i.e 41 provides for liability of interest on buyer with ITC reversal in case of supplies on which no tax is paid.
  1. Two way acceptance and rejection communication process for invoices and credit notes under GST shall be removed :

  • For this section 42, 43 and 43A has been omitted.
  1. GST Tax payments:

  • Section 49(10) is being amended to allow transfer of any amount of tax, interest, penalty, fee etc. available in electronic cash ledger a registered person to the electronic cash ledger of a distinct person registered under same PAN.
  • A new section that is 49(12) is also added to provide for maximum proportion of output tax liability that can be discharged through the electronic ledger. This implies that the balance liability has to be discharged in cash.
  1. Fee on late filing of GSTR-8:

  • Under Section 47(1) is being amended to provide for penalty for delay in filing GSTR-8 u/s 52.
  1. No Interest on wrong ITC availment if not utilized by taxpayer:

  • A New section 50(3) is added from 01.07.2017 for interest to be levied on wrongfully availing and utilized ITC. In cases where ITC has been availed but not utilized , no interest shall be levied. Many other courts stated the same intention.
  1. Time limit for rectification of errors for filing GSTR8 To be extended:

  • Adjustments have been made in sec 52(6) to give an extended time limit up to 30th November of following financial year for rectification of errors in return furnished in form GSTR-8 u/s 52(4).
  1. GST Tax Refund :

  • GST Refund Application by specialized agency of UNO – Section 54(2) is being amended to provide the time limit for claiming tax refund that has been paid on inward supplies u/s 55, as two years. Earlier it was 6 months.
  • Relevant date notified as the due date of for furnishing of return u/s 39 in case of zero-rated supply to a Special Economic Zone developer or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies themselves, or as the case may be, the inputs or input services used in such supplies.
  1. Amendment in Notification No. 13/2017:

  • Rate of interest u/s 50(3) of CGST Act is changed to 18% with retrospectively effects from 01.07.2017. Earlier it was 24%.
  • Similar amendment is being made in Notification No.6/2017 – Integrated Tax & Notification No.10/2017 – Union Territory Tax also.

Now GST payments can be made through 21 banks.

GSTN has enabled 21 banks to make GST Payments.  This Newly added bank changes the total number of banks that accept GST Payments.  Now GST payments can be made through 21 banks.  Below is the Complete list of all the Banks:

  1. Axis Bank
  2. Bank of Baroda
  3. Bank of India
  4. Bank of Maharashtra
  5. Canara Bank
  6. Central Bank of India
  7. City Union Bank
  8. Federal Bank
  9. HDFC Bank
  10. ICICI Bank Limited
  11. IDBI Bank
  12. Indian Bank
  13. Indian Overseas Bank
  14. Jammu and Kashmir Bank Limited
  15. Karur Vysya Bank
  16. Kotak Mahindra Bank Limited
  17. Punjab and Sind Bank
  18. Punjab National Bank
  19. State Bank of India
  20. UCO Bank
  21. Union Bank of India

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