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Changed time frame for refund applications

ITC refund claims for inbound supplies must be submitted no later than two years after the last day of the quarter in which the supply was received. Before, the appropriate date was back by two years.

Input Tax Credit provisions have changed

1. No ITC that was incorrectly claimed but not used under Section 50 of the CGST Act was subject to an interest levy. From July 1st, 2017, it will be retroactively deployed.

2. The GST law no longer refers to the provisional ITC: Currently, the provisional ITC idea has been fully eliminated by the new amendment to Section 41 of the CGST Act. To align with the deletion of the temporary ITC in Section 41, Section 43A has been removed. Businesses now face greater pressure to appropriately report ITC each month as a result of these adjustments. Inadequate ITC could hurt cash flows, while excessive ITC could result in demand letters and fines.

3. Additional requirements for receiving input tax credit: Section 38, which now specifies the requirements and limitations for receiving input tax credit, is now titled "Communication of Details of Inward Supplies and Input Tax Credit." It also regulates the two-way communication process in return filing and controls how information about inward supplies and input tax credit is communicated to the recipient via an automatically generated statement. Previously, the buyer had to approve the seller's details from the GSTR-1 in the GSTR-2 before the buyer could claim ITC in the GSTR-3B. The official document used to determine ITC eligibility for a tax period is now GSTR-2B. According to the information provided to the buyer in Form GSTR-2B, Section 16(2) has also been changed to incorporate a new clause (ba) with the added requirement that the input tax credit be available if it is not restricted under Section 38. The deadline for taxpayers to claim input tax credits has also been extended from 30 September to 30 November of the following fiscal year.

Extending the deadline for issuing credit notes

The deadline for issuing credit notes has been extended to the 30th of November following the end of the fiscal year or the date on which the annual return is filed, whichever comes first. Earlier, this date was 30 September rather than 30 November.

Modifications to the GSTIN cancellation rules for non-filers

The CGST Act's revocation of a GSTIN by an officer was altered by the Finance Bill 2022's amendment to Section 29. A composition taxpayer's registration may be revoked if they don't submit an annual return for three months after the 30 April deadline of the following year. For all other taxpayers, a single consecutive tax period default as may be required has taken the place of a six-month consecutive return filing default.

Measures for filing returns are enhanced

1. By revising both Sections 37 and 39, the Finance Bill 2022 has made the regulations governing the filing of GST returns much tougher. The specifics of the outside supplies that must be provided, such as the GSTR-1, are governed by Section 37. The GSTR-3B, for instance, which summarizes inward and outward supply, input tax credits claimed, and taxes paid, is governed by Section 39.

2. According to a newly introduced sub-section (4) of Section 37, taxpayers are not permitted to provide information about their outward supplies for a tax period if the information is still pending for a prior tax period. The addition of sub-section (10) to Section 39 also makes it unlawful for taxpayers to file a Section 39 return while their Section 37 return for the same tax period is still ongoing. These changes would guarantee that a taxpayer currently files all outstanding returns.

Rules for the electronic credit ledger modifications

1. The limitations for using the money in the electronic credit ledger were prescribed in Section 49 of the CGST Act. A provision to transfer funds from a registered person's electronic cash ledger under the CGST Act to a different person's electronic cash ledger under the CGST or IGST Act is also part of the modification. A separate person is a person who falls under the same legal entity yet has various GSTINs. With the help of this modification, taxpayers who have several GSTINs can move unneeded cash holdings across states.

2. Additionally, the provision now allows for the maximum percentage of production tax liability to be discharged via the electronic credit ledger to be specified. These limitations were previously established by Rule 86B, and some taxpayers were compelled to pay a minimum of 1% of their production tax liability in cash. This change supports the CGST rule that it corresponds to.

References

1. https://www.gstrobo.com/blog/recent-changes-in-gst-law/

2. https://taxguru.in/goods-and-service-tax/change-gst-budget-2022.html

3. https://taxguru.in/goods-and-service-tax/budget-2022-23-18-gst.html