Major GST Amendments are notified by Notification No. 17/2024 effective from 1st November 2024 which were announced in 53rd GST council meeting and also introduced by Finance Act No.2 2024 which are now notified and going to be effective and are very important for taxpayers.
GST Amnesty Scheme – Interest and Penalty Waivers
Insertion of Section 128A in CGST Act, to provide for conditional waiver of interest or penalty or both, relating to demands raised under Section 73, for FY 2017-18 to FY 2019-20 : Considering the difficulties faced by the taxpayers, during the initial years of implementation of GST, the GST Council
recommended, waiving interest and penalties for demand notices issued under Section 73 of the CGST Act for the fiscal years 2017-18, 2018-19 and 2019-20, in cases where the taxpayer pays the full amount of tax demanded in the notice upto 31.03.2025. The waiver does not cover demand of erroneous refunds. To implement this, the GST Council has recommended insertion of Section 128A in CGST Act, 2017.
Amendment to Section 7
- Raw materials for liquor production, specifically undenatured extra neutral alcohol, are excluded from GST.
Applicability of Goods and Services Tax on Extra Neutral Alcohol (ENA) Taxation of ENA under GST: The GST Council, in its 52nd meeting, had recommended to amend GST Law to explicitly exclude rectified spirit/Extra Neutral Alcohol (ENA) from the scope of GST when supplied for manufacturing alcoholic liquors for human consumption. The GST Council now recommended amendment in sub-section (1) of Section 9 of the CGST Act, 2017 for not levying GST on Extra Neutral Alcohol used for manufacture of alcoholic liquor for human consumption
Introduction of Section 74A
- This section standardizes time limits for demand notices and orders, applicable from FY 2024-25 onward, while earlier periods remain under the previous provisions.
Amendments in Section 73 and Section 74 of CGST Act, 2017 and insertion of a new Section 74A in CGST Act, to provide for common time limit for issuance of demand notices and orders irrespective of whether case involves fraud, suppression, willful misstatement etc., or not: Presently, there is a different time limit for issuing demand notices and demand orders, in cases where charges of fraud,
suppression, willful misstatement etc., are not involved, and in cases where those charges are involved. In order to simplify the implementation of those provisions, the GST Council recommended to provide for a common time limit for issuance of demand notices and orders in respect of demands for FY 2024-25 onwards, in cases involving charges of fraud or willful misstatement and not involving the charges of fraud or willful misstatement etc.
Also, the time limit for the taxpayers to avail the benefit of reduced penalty, by paying the tax demanded along with interest, has been recommended to be increased from 30 days to 60 days.
Key Features of Section 74A
| Aspect | Non-Fraud Cases | Fraud Cases |
|---|---|---|
| Issuance of Notice (74A(1)) | Issued if tax not paid, short paid, erroneously refunded, or ITC wrongly availed/utilized for reasons other than fraud. | Issued if tax not paid, short paid, erroneously refunded, or ITC wrongly availed/utilized due to fraud, willful misstatement, or suppression of facts. |
| Time Limit for Issuance of Notice (74A(2)) | Issued within 42 months from the due date of filing the annual return or from the date of erroneous refund. | Issued within 42 months from the due date of filing the annual return or from the date of erroneous refund. |
| Issuance of Statement (74A(3)) | The proper officer may serve a statement containing details of tax discrepancies for periods not covered under the original notice. | The proper officer may serve a statement containing details of tax discrepancies for periods not covered under the original notice. |
| Condition for Deemed Notice (74A(4)) | Grounds for discrepancies in the statement must be the same as those in the original notice. | Grounds for discrepancies in the statement must be the same as those in the original notice. |
| Penalty (74A(5)) | 10% of the tax due or Rs. 10,000, whichever is higher. | Equivalent to the tax due from such person. |
| Issuance of Order (74A(6)) | The proper officer, after considering the representation made by the person, shall determine the amount of tax, interest, and penalty due and issue an order. | The proper officer, after considering the representation made by the person, shall determine the amount of tax, interest, and penalty due and issue an order. |
| Time Limit for Issuance of Order (74A(7)) | Issued within 12 months from the date of issuance of notice, extendable by 6 months with approval. | Issued within 12 months from the date of issuance of notice, extendable by 6 months with approval. |
| Voluntary Payment Before SCN (74A(8)(i)) | No penalty if tax and interest are paid voluntarily before the issuance of SCN. | 15% penalty if tax, interest, and a 15% penalty are paid before the issuance of SCN. |
| Voluntary Payment After SCN (74A(8)(ii)) | No penalty if tax and interest are paid within 60 days of the SCN. | 25% penalty if tax, interest, and a 25% penalty are paid within 60 days of the SCN. |
| Payment After Order (74A(9)(iii)) | Not explicitly covered. | 50% penalty if tax, interest, and a 50% penalty are paid within 60 days of the order. |
| Shortfall in Payment (74A(10)) | If the amount paid is short of the actual amount payable, the proper officer will issue a notice for the shortfall amount. | If the amount paid is short of the actual amount payable, the proper officer will issue a notice for the shortfall amount. |
| Self-Assessed Tax Penalty (74A(11)) | Penalty will be levied if any self-assessed tax or collected tax is not paid within 30 days from the due date. | Penalty will be levied if any self-assessed tax or collected tax is not paid within 30 days from the due date. |
| Applicability (74A(12)) | Applicable for determination of tax from the financial year 2024-25 onwards. | Applicable for determination of tax from the financial year 2024-25 onwards. |
| Explanation 1 | “All proceedings in respect of the said notice” do not include proceedings under Section 132. | “All proceedings in respect of the said notice” do not include proceedings under Section 132. |
| Explanation 2 | “Suppression” includes non-declaration of required information or failure to furnish information when asked by the proper officer. | “Suppression” includes non-declaration of required information or failure to furnish information when asked by the proper officer. |
Regularization of Tax Practices
- Insertion of Section 11A aims to protect businesses from penalties for generally accepted but incorrect tax practices.
Insertion of Section 11A in CGST Act for granting power not to recover duties not levied or short-levied as a result of general practice under GST Acts:
The GST Council recommended inserting a new Section 11A in CGST Act to give powers to the Government, on the recommendations of the Council, to allow regularization of non-levy or short levy of GST, where tax was being short paid or not paid due to common trade practices.
Self-Invoicing Time Limits
- Clear time limits for self-invoicing related to Reverse Charge Mechanism (RCM) supplies have been established.
New Rule 47A. Time limit for issuing tax invoice in cases where recipient is required to issue invoice.– Notwithstanding anything contained in rule 47, where an invoice referred to in rule 46 is required to be issued under clause (f) of sub-section (3) of section 31 by a registered person, who is liable to pay tax under sub-section (3) or sub-section (4) of section 9, he shall issue the said invoice within a period of thirty days from the date of receipt of the said supply of goods or services, or both, as the case may be
ITC Restrictions
- Restrictions on ITC claims for tax paid under Section 74 will now only apply to demands from FY 2023-24 and earlier.
Revocation of Registration Cancellations
- The Central Government is now authorized to set conditions for the revocation of GST registration cancellations.
Mandatory GSTR-7 Filing
- TDS deductors are required to file GSTR-7 monthly, even when no tax has been deducted.
The Council recommended that return in FORM GSTR-7, to be filed by the registered persons who are required to deduct tax at source under section 51 of CGST Act, is to be filed every month irrespective of whether any tax has been deducted during the said month or not. It has also been recommended that no late fee may be payable for delayed filing of Nil FORM GSTR-7 return. Further, it has been recommended that invoice-wise details may be required to be furnished in the said FORM GSTR-7 return.
IGST Refunds
- Refunds for IGST on goods subjected to export duty, including exports to SEZs, are restricted.
Amendment in Section 16 of IGST Act and section 54 of CGST Act to curtail refund of IGST in cases where export duty is payable: The Council recommended amendments in section 16 of IGST Act and section 54 of CGST Act to provide that the refund in respect of goods, which are subjected to export duty, is restricted, irrespective of whether the said goods are exported without payment of taxes or with payment of taxes, and such restrictions should also be applicable, if such goods are supplied to a SEZ developer or a SEZ unit for authorized operations.
Refund of additional Integrated Tax (IGST) paid on account of upward revision in price of the goods subsequent to export: The GST Council recommended to prescribe a mechanism for claiming refund of additional IGST paid on account of upward revision in price of the goods subsequent to their export. This will facilitate a large number of taxpayers, who are required to pay additional IGST on account of upward revision in price of the goods subsequent to export, in claiming
refund of such additional IGST
Compliance with Summons
- Authorized representatives can now represent summoned individuals to comply with summons.
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.
Reduced Pre-Deposit for Appeals
- The pre-deposit amount for filing GST appeals has been lowered, with a new 3-month time limit for appeals set from the notification date.
The Council recommended amendment in rule 142 of CGST Rules and issuance of a circular to prescribe a mechanism for adjustment of an amount paid in respect of a demand through FORM GST DRC-03 against the amount to be paid as pre-deposit for filing appeal.
Amendment in Section 107 and Section 112 of CGST Act for reducing the amount of pre-deposit required to be paid for filing of appeals under GST: The GST Council recommended reducing the amount of pre-deposit for filing of appeals under GST to ease cash flow and working capital blockage for the taxpayers. The maximum amount for filing appeal with the appellate authority has been reduced from Rs. 25 crores CGST and Rs. 25 crores SGST to Rs. 20 crores CGST and Rs. 20 crores SGST. Further, the amount of pre-deposit for filing appeal with the Appellate Tribunal has been reduced from 20% with a maximum amount of Rs. 50 crores CGST and Rs. 50 crores SGST to 10% with a maximum of Rs. 20 crores CGST and Rs. 20 crores SGST.
In the said rules, in FORM GST APL-01, with effect from the 1st day of November, 2024.–
(a) in entry number 15,– (i)in clause (a), in the Table, in the first column relating to “Particulars”, in item (b) relating to “pre-deposit”, for the brackets, letters, words and figures “(b) Pre- deposit (10% of disputed tax /cess but not exceeding Rs. 25 crore each in respect of CGST, SGST or cess or not exceeding Rs.50 crore in respect of IGST and Rs. 25 crore in respect of cess)”, the brackets, letters, words, and figures
“(b) Pre- deposit (10% of disputed tax /cess but not exceeding Rs. 20 crore each in respect of CGST, SGST, cess, and not exceeding Rs. 40 crore in respect of IGST)” shall be substituted; (ii)in clause (b), in the opening portion, for the brackets, words, figures and letters “ (pre-deposit 10% of disputed tax and cess but not exceeding Rs. 25 crore each in respect of CGST, SGST or cess or not exceeding Rs.50 crore in respect of IGST and Rs. 25 crore in respect of cess)”, the brackets, words, figures and letters “(pre- deposit 10% of disputed tax and cess but not exceeding Rs. 20 crore each in respect of CGST, SGST, cess, and not exceeding Rs. 40 crore in respect of IGST)” shall be substituted
Updated Penalty Provisions
- Penalties for e-commerce operators have been revised to adapt to the evolving digital commerce landscape.
Amendment was recommended to be made in section 122(1B) of CGST Act retrospectively w.e.f. 01.10.2023, so as to clarify that the said penal provision is applicable only for those e-commerce operators, who are required to collect tax under section 52 of CGST Act, and not for other e-commerce operators.
Transitional Credit for Services
- Transitional credit for service invoices received before the appointed date is now allowed retroactively from July 1, 2017.
The Council recommended amendment in section 140(7) of CGST Act retrospectively w.e.f. 01.07.2017 to provide for transitional credit in respect of invoices pertaining to services provided before appointed date, and where invoices were received by Input Service Distributor (ISD) before the appointed date.
IPC Sections Replaced by Bharatiya Nyaya Sanhita
he said rules, in FORM GST INS-01, in paragraph (C), for the words and figures “section 179, 181, 191 and 418 of the Indian Penal Code”, the words, figures and brackets “section 214, 216, 227 and sub-section (3) of section 318 of the Bharatiya Nyaya Sanhita, 2023 (45 of 2023)” shall be substituted.
| Before (IPC Sections) | After (Bharatiya Nyaya Sanhita Sections) |
|---|---|
| Section 179, 181, 191, 418 of the IPC | Section 214, 216, 227, and sub-section (3) of Section 318 of Bharatiya Nyaya Sanhita, 2023 |
Inclusion of Co-Insurance Premiums
- Co-insurance premiums and re-insurance commissions are now included in Schedule III the CGST Act, simplifying transactions.
Co-insurance premium apportioned by lead insurer to the co-insurer for the supply of insurance service by lead and co-insurer to the insured in coinsurance agreements, may be declared as no supply under Schedule III of the CGST Act, 2017 and past cases may be regularized on ‘as is where is’ basis.
Transaction of ceding commission/re-insurance commission between insurer and re-insurer may be declared as no supply under Schedule III of CGST Act, 2017 and past cases may be regularized on ‘as is where is’ basis.
GST liability on reinsurance services of specified insurance schemes covered by Sr. Nos. 35 & 36 of notification No. 12/2017-CT (Rate) dated 28.06.2017 may be regularized on ‘as is where is’ basis for the period from 01.07.2017 to 24.01.2018.
GST liability on reinsurance services of the insurance schemes for which total premium is paid by the Government that are covered under Sr. No. 40 of notification No. 12/2017-CTR dated 28.06.2017 may be regularized on ‘as is where is’ basis for the period from 01.07.2017 to 26.07.2018.
Visit www.cagurujiclasses.com for practical courses
