In the Union Budget 2024, Finance Minister Nirmala Sitharaman announced significant legislative changes in GST laws aimed at streamlining tax processes and facilitating trade. These changes, which will be brought into effect as per the recommendations of the GST Council and in coordination with States, encompass various amendments designed to enhance trade facilitation, regularize tax practices, and provide clarity on tax provisions. The proposed amendments reflect the government’s commitment to simplifying GST compliance and addressing industry concerns.
Save as otherwise provided, these changes will be brought into effect from a date to be notified in coordination with States, as per recommendations of the GST council
Amendment for Trade Facilitation
B.1 Amendment to Keep Extra Neutral Alcohol Outside the Purview of Central Tax: Section 9 is being amended to take Extra Neutral Alcohol used in the manufacture of alcoholic liquor for human consumption out of the purview of central tax. Similar amendments are also proposed in IGST Act and UTGST Act.
B.2 Amendment to Regularize Non-Levy and Short-Levy of Central Tax Due to General Practice: Section 11A is being inserted to empower the government to regularize non-levy or short levy of central tax due to any general practice prevalent in trade. Similar power is being proposed in IGST Act, UTGST Act, and GST (Compensation to States) Act.
B.3 Amendment to Relax the Time Limits to Avail Input Tax Credit: New sub-sections (5) and (6) are being inserted in section 16 of CGST Act to relax the time limit to avail input tax credit as per section 16(4) of the CGST Act with effect from 01.07.2017, as follows:
- a) In respect of initial years of implementation of GST, i.e., financial years 2017-18, 2018-19, 2019-20, and 2020-21: In respect of an invoice or debit note for the Financial Years 2017-18, 2018-19, 2019-20, and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed up to the 30th day of November, 2021.
- b) With respect to cases where returns have been filed after revocation: The time limit to avail input tax credit in respect of an invoice or debit note, in cases where returns for the period from the date of cancellation of registration/effective date of cancellation of registration till the date of revocation of cancellation of the registration, will be extended till the date of filing the said GSTR-3B return, subject to certain conditions, if the said return is filed by the registered person within thirty days of the order of revocation of cancellation of registration.
B.4 Insertion of New Section to Provide a Common Time Limit for Issuance of Demand Notices and Orders: Section 74A is being inserted in the CGST Act to provide a common time limit for the issuance of demand notices and orders in respect of demands for FY 2024-25 onwards, for cases involving charges of fraud, suppression of facts or wilful misstatement, and the cases not involving the charges of fraud, suppression of facts or wilful misstatement, etc. Also, the time limit for the taxpayers to avail the benefit of reduced penalty, by paying the tax demanded along with interest, is being increased from 30 days to 60 days.
B.5 Amendment to Reduce the Maximum Amount of Pre-Deposit for Filing Appeals: Sections 107 and 112 of CGST Act are being amended to reduce the maximum amount of pre-deposit for filing an appeal with the Appellate Authority from Rs. 25 crore of central tax to Rs. 20 crore of central tax and to reduce the amount of pre-deposit for filing an appeal with the Appellate Tribunal from 20% with a maximum amount of Rs. 50 crore of central tax to 10% with a maximum of Rs. 20 crore of central tax. Besides, the time limit for filing appeals before the Appellate Tribunal is being modified w.e.f. 1st August 2024 to avoid the appeals from getting time-barred, on account of Appellate Tribunal not coming into operation.
B.6 Amendment to Provide Conditional Waiver of Interest or Penalty or Both Relating to Demands Raised Under Section 73, for Certain Tax Periods: Section 128A is being inserted in the CGST Act to provide for a conditional waiver of interest and penalty in respect of demands pertaining to financial years 2017-18, 2018-19, and 2019-20, in cases where demand notices have been issued under section 73 and full tax liability is paid by the taxpayer before a date to be notified.
Watch the changes announced under Income Tax
B.7 Amendment to Enable Availment of the Transitional Credit of Eligible CENVAT Credit by Input Services Distributor in Respect of Invoices Received Prior to the Appointed Date: Section 140(7) of CGST Act is being amended with effect from 01.07.2017, to enable availment of transitional credit in respect of input services received by an Input Services Distributor prior to the appointed day, where invoices were also received prior to the appointed day.
B.8 Amendment to Empower Government to Notify Appellate Tribunal to Handle Anti-Profiteering Cases and to Provide for a Sunset Clause for Accepting Anti-Profiteering Cases: Section 171 of CGST Act is being amended to enable the Government to notify the GST Appellate Tribunal to handle anti-profiteering cases and to empower the Government to notify a date after which the Authority for anti-profiteering shall not accept applications for examination.
B.9 Amendment to Clarify Various Activities in Insurance Sector as Neither a Supply of Goods nor a Supply of Services: Paragraphs 8 and 9 are being inserted in Schedule III of CGST Act to provide that the activity of apportionment of co-insurance premiums by the lead insurer to the co-insurers in the co-insurance agreement and the services by insurers to reinsurers in respect of ceding/re-insurance commission will, subject to certain conditions, be treated neither as a supply of goods nor as a supply of services.
Other Law Amendments in CGST Act
B.10 Amendment to Clarify Time of Supply of Services in Reverse Charge Supplies: Amendment is proposed in Section 13 of CGST Act to provide for the time of supply of services where the invoice is required to be issued by the recipient of services in cases of reverse charge supplies.
B.11 Amendment to Restrict Blockage of Input Tax Credit for Tax Paid Under Section 74 to Demands Up to Financial Year 2023-24: Clause (i) of Section 17 of CGST Act is being amended to restrict blockage of input tax credit for tax paid under Section 74 for demands pertaining up to FY 2023-24.
B.12 Amendment to Provide for Conditions and Restrictions for Revocation of Cancellation of Registration: Section 30 of the CGST Act is being amended to enable the government to prescribe conditions and restrictions for revocation of cancellation of registration.
B.13 Amendment to Prescribe the Time Period for Issuance of Invoice by Recipient in Reverse Charge Mechanism Supplies: Clause (f) of section 31 of CGST Act is being amended to provide for an enabling provision to prescribe the time period within which the invoice has to be issued by the recipient under reverse charge mechanism and to clarify that a person registered solely for the purpose of deducting TDS under section 51 of CGST Act shall be treated as a person not registered for the purpose of clause (f) of section 31(3) of the said Act.
B.14 Amendment to Make Filing of Monthly Returns by TDS Deductors Mandatory: Section 39 is being amended to mandate filing of returns by TDS deductors for every month, even if no deductions are made during the said month, and also to provide for an enabling clause for prescribing the time limit for filing such returns.
B.15 Amendment to Prohibit Refund in Zero Rated Supply of Goods Where Such Goods are Subjected to Export Duty: Section 54 of CGST Act and section 16 of IGST Act are being amended to prohibit refund of unutilized input tax credit or integrated tax on zero-rated supply of goods, which are subjected to export duty.
B.16 Amendment for Allowing Appearance by Authorized Representative on Behalf of a Summoned Person: Sub-section 1A is being inserted in section 70 of the CGST Act to enable appearance by an authorized representative on behalf of a summoned person.
B.17 Amendment to Empower the Government to Notify Cases Which Shall be Heard Only by the Principal Bench of GST Appellate Tribunal: Section 109 of CGST Act is being amended to empower the government to specify cases to be heard only by the Principal Bench of the Appellate Tribunal.
B.18 Amendment to Restrict Applicability of Penal Provisions Under Section 122(1B) to Electronic Commerce Operators Who Deduct TCS: Section 122(1B) of CGST Act is being amended w.e.f. 01.10.2023 to restrict the applicability of penal provisions under this section to only those Electronic Commerce Operators who are required to collect tax at source under section 52.
B.19 Consequential Amendments Due to Insertion of New Section 74A in the CGST Act: Sections 73 and 74 of CGST Act are being amended to limit the applicability of these sections to demands up to FY 2023-24, since from FY 2024-25 onwards demands are to be ascertained as per provisions of the newly inserted section 74A. Also, Section 75 of CGST Act is being amended to allow for redetermination of penalties if the charges of fraud, suppression, or wilful misstatement are not established. Further, references to section 74A or the concerned sub-sections of section 74A are being inserted in section 10, section 21, section 35, section 49, section
The proposed legislative changes in GST laws, as announced in the Union Budget 2024, signify a progressive step towards simplifying tax compliance and enhancing the ease of doing business in India. By addressing trade facilitation, regularizing tax practices, and providing clear guidelines on various tax provisions, these amendments aim to create a more efficient and transparent tax environment. The government’s proactive approach in revising GST laws underscores its dedication to fostering economic growth and ensuring a fair and equitable tax system for all stakeholders.
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