In the highly anticipated budget speech, Finance Minister Nirmala Sitharaman covered a wide array of topics, from fiscal policies to new reforms. However, several crucial changes in the Goods and Services Tax (GST) regime, which will significantly impact businesses and taxpayers, were not explicitly mentioned. Here, we delve into these key changes proposed in the Finance Bill 2024, shedding light on the amendments that might have flown under the radar.
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
As Per Finance Bill (No.2) 2024
Clause 110 of the Bill seeks to amend sub-section (1) of section 9 of the Central Goods and Services Tax Act, so as to not levy central tax on un-denatured extra neutral alcohol or rectified spirit used for the manufacture of alcoholic liquor for human consumption.
Clause 111 of the Bill seeks to make consequential amendments in sub-section (5) of section 10 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 112 of the Bill seeks to insert a new section 11A in the Central Goods and Services Tax Act, so as to empower the Government to regularize non-levy or short levy of central tax where it is satisfied that such non-levy or short levy was a result of general practice.
Clause 113 of the Bill seeks to amend sub-section (3) of section 13 of the Central Goods and Services Tax Act, so as to specify the time of supply of services in cases where the invoice is required to be issued by the recipient of services in reverse charge supplies.
Clause 114 of the Bill seeks to insert a new sub-section (5) in section 16 of the Central Goods and Services Tax Act, so as to carve out an exception to the existing sub-section (4) and to provide that 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 thirtieth day of November, 2021.
It also proposes to insert a new sub-section (6) in the said section so as to allow the availment of input tax credit in respect of an invoice or debit note in a return filed for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancellation of registration, filed within thirty days of the date of order of revocation of cancellation of registration, subject to the condition that the time-limit for availment of credit in respect of the said invoice or debit note should not have already expired under sub-section (4) of the said section on the date of order of cancellation of registration.
The aforesaid amendments are proposed to be made effective from the 1st day of July, 2017.
Further, it is proposed that where the tax has been paid or the input tax credit has been reversed, no refund of the same shall be admissible.
Clause 115 of the Bill seeks to amend sub-section (5) of section 17 of the Central Goods and Services Tax Act, so as to restrict the non-availability of input tax credit in respect of tax paid under section 74 of the said Act only for demands up to Financial Year 2023-24.
It also proposes to remove reference to sections 129 and 130 in the said sub-section.
Clause 116 of the Bill seeks to make consequential amendments in section 21 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 117 of the Bill seeks to insert a new proviso in sub-section (2) of section 30 of the Central Goods and Services Tax Act, so as to empower the Central Government to prescribe conditions and restrictions for revocation of cancellation of registration by rules.
Clause 118 of the Bill seeks to amend clause (f) of sub-section (3) of section 31 of the Central Goods and Services Tax Act, so as to empower the Central Government to prescribe the time period for issuance of invoice by the recipient in case of reverse charge mechanism supplies by rules.
It also proposes to insert an Explanation in sub-section (3) of the said section so as to specify that a supplier registered solely for the purposes of tax deduction at source under section 51 of the said Act shall not be considered as a registered person for the purpose of clause (f) of sub-section (3) of section 31 of the said Act.
Clause 119 of the Bill seeks to make consequential amendments in sub-section (6) of section 35 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 120 of the Bill seeks to substitute sub-section (3) of section 39 of the Central Goods and Services Tax Act, so as to mandate the electronic furnishing of return for each month by the registered person required to deduct tax at source, irrespective of whether any deduction has been made in the said month or not.
It also empowers the Government to prescribe by rules, the form, manner, and the time within which such return shall be filed.
Clause 121 of the Bill seeks to make consequential amendments in sub-section (8) of section 49 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 122 of the Bill seeks to make consequential amendments in sub-section (1) of section 50 in the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 123 of the Bill seeks to make consequential amendments in sub-section (7) of section 51 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 124 of the Bill seeks to insert a new sub-section (15) in section 54 of the Central Goods and Services Tax Act, so as to omit the second proviso to sub-section (3) and to provide that no refund of unutilised input tax credit or of integrated tax shall be allowed in cases of zero-rated supply of goods where such goods are subjected to export duty.
Clause 125 of the Bill seeks to make consequential amendments in sub-section (3) of section 61 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 126 of the Bill seeks to make consequential amendments in sub-section (1) of section 62 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 127 of the Bill seeks to make consequential amendments in section 63 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 128 of the Bill seeks to make consequential amendments in sub-section (2) of section 64 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 129 of the Bill seeks to make consequential amendments in sub-section (7) of section 65 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 130 of the Bill seeks to make consequential amendments in sub-section (6) of section 66 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 131 of the Bill seeks to insert a new sub-section (1A) in section 70 of the Central Goods and Services Tax Act, so as to enable an authorised representative to appear on behalf of the summoned person before the proper officer in compliance with summons issued by the said officer.
Clause 132 of the Bill seeks to insert a new sub-section (12) in section 73 of the Central Goods and Services Tax Act, so as to restrict the applicability of the said section for determination of tax pertaining to the period up to Financial Year 2023-24.
It also proposes to amend the marginal heading of the said section accordingly.
Clause 133 of the Bill seeks to insert a new sub-section (12) in section 74 of the Central Goods and Services Tax Act, so as to restrict the applicability of the said section for determination of tax pertaining to the period up to Financial Year 2023-24.
It also proposes to amend the marginal heading of the said section accordingly.
Clause 134 of the Bill seeks to insert a new section 74A in the Central Goods and Services Tax Act, so as to provide for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to the Financial Year 2024-25 onwards.
It also provides for the same limitation period for issuing demand notices and orders in respect of demands from the Financial Year 2024-25 onwards, irrespective of whether the charges of fraud, wilful misstatement, or suppression of facts are invoked or not, while keeping a higher penalty, for cases involving fraud, wilful misstatement, or suppression of facts.
Clause 135 of the Bill seeks to insert a new sub-section (2A) in section 75 of the Central Goods and Services Tax Act, so as to provide for the redetermination of penalty demanded in a notice invoking penal provisions under clause (ii) of sub-section (5) of the proposed section 74A of the said Act to redetermine the penalty as per clause (i) of the sub-section (5) of the said section, in cases where the charges of fraud, wilful misstatement, or suppression of facts are not established.
It also seeks to make consequential amendments in section 75 of the said Act, so as to incorporate a reference to the proposed section 74A or the relevant sub-sections thereof.
Clause 136 of the Bill seeks to make consequential amendments in sub-section (1) of section 104 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 137 of the Bill seeks to amend clause (d) of sub-section (3) of section 107 of the Central Goods and Services Tax Act, so as to provide for pre-deposit of twenty-five per cent. of the penalty, where an order imposing a penalty under clause (ii) of sub-section (5) of the proposed section 74A is issued and the appellant files an appeal under sub-section (1) of section 107 against such order.
Clause 138 of the Bill seeks to amend sub-section (1) of section 129 of the Central Goods and Services Tax Act, so as to exclude the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to the Financial Year 2024-25 onwards from its scope.
Clause 139 of the Bill seeks to insert a new sub-section (9) in section 130 of the Central Goods and Services Tax Act, so as to exclude the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to the Financial Year 2024-25 onwards from its scope.
Clause 140 of the Bill seeks to amend sub-section (1) of section 132 of the Central Goods and Services Tax Act, so as to provide that whoever commits, or causes the commission of, or retains the benefits arising out of, any of the offences specified in clauses (a) to (d) and clause (f) of sub-section (1) of the said section without an intention to evade tax and the amount of tax evaded or input tax credit wrongly availed or utilised or the refund wrongly taken exceeds one crore rupees but does not exceed two crore rupees shall be punishable with imprisonment for a term which may extend to one year and with fine.
Clause 141 of the Bill seeks to make consequential amendments in section 138 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 142 of the Bill seeks to make consequential amendments in section 160 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Clause 143 of the Bill seeks to make consequential amendments in section 164 of the Central Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A.
Integrated Goods and Services Tax
Clause 144 of the Bill seeks to amend sub-section (2) of section 5 of the Integrated Goods and Services Tax Act, so as to not levy integrated tax on un-denatured extra neutral alcohol or rectified spirit used for the manufacture of alcoholic liquor for human consumption.
Clause 145 of the Bill seeks to amend sub-section (1) of section 12 of the Integrated Goods and Services Tax Act, so as to specify the time of supply of services in cases where the invoice is required to be issued by the recipient of services in reverse charge supplies.
Clause 146 of the Bill seeks to amend clause (b) of sub-section (8) of section 17 of the Integrated Goods and Services Tax Act, so as to provide that the return filed for the Financial Years 2017-18, 2018-19, 2019-20, and 2020-21 up to the thirtieth day of November, 2021 shall not be considered for determining the maximum refund under clause (b) of sub-section (8) of section 17.
Clause 147 of the Bill seeks to make consequential amendments in sub-section (1) of section 20 of the Integrated Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A of the Central Goods and Services Tax Act, 2017.
Union Territory Goods and Services Tax
Clause 148 of the Bill seeks to amend sub-section (1) of section 7 of the Union Territory Goods and Services Tax Act, so as to not levy Union territory tax on un-denatured extra neutral alcohol or rectified spirit used for the manufacture of alcoholic liquor for human consumption.
Clause 149 of the Bill seeks to make consequential amendments in section 21 of the Union Territory Goods and Services Tax Act, so as to incorporate a reference to the proposed new section 74A of the Central Goods and Services Tax Act, 2017.
Goods and Services Tax (Compensation to States)
Clause 150 of the Bill seeks to amend sub-section (1) of section 8 of the Goods and Services Tax (Compensation to States) Act, so as to not levy cess on un-denatured extra neutral alcohol or rectified spirit used for the manufacture of alcoholic liquor for human consumption.
Clause 151 of the Bill seeks to make consequential amendments in sub-section (1) of section 10 of the Goods and Services Tax (Compensation to States) Act, so as to incorporate a reference to the proposed new section 74A of the Central Goods and Services Tax Act, 2017.
As Per Memorandum
Amendments in the CGST Act, 2017 as Proposed in the Finance (No. 2) Bill, 2024
Clause 110 to 146 of Finance Bill
| S. No. | Amendment |
|---|---|
| 1 | 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. |
| 2 | Sub-section (5) of section 10 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said sub-section. |
| 3 | 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. |
| 4 | Amendment is proposed in sub-section (3) of 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. |
| 5 | Sub-section (5) is being inserted in section 16 of the CGST Act to carve out an exception to the existing sub-section (4) and to provide that in respect of an invoice or debit note under the said sub-section, 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 filed up to November 30, 2021. Sub-section (6) is being inserted to allow the availment of input tax credit in respect of an invoice or debit note in a return filed for the period from the date of cancellation of registration or the effective date of cancellation of registration, till the date of order of revocation of cancellation of registration, filed within thirty days of the date of order of revocation of cancellation of registration, subject to the condition that the time limit for availment of credit in respect of the said invoice or debit note should not have already expired under sub-section (4) on the date of order of cancellation of registration. These amendments are effective from July 1, 2017. Further, where the tax has been paid or the input tax credit has been reversed, no refund shall be admissible. |
| 6 | Sub-section (5) of section 17 of the CGST Act is being amended to restrict the non-availability of input tax credit in respect of tax paid under section 74 only for demands up to Financial Year 2023-24. It also removes reference to sections 129 and 130 in the said sub-section. |
| 7 | Section 21 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 8 | A new proviso in sub-section (2) of section 30 of the CGST Act is being inserted to provide for an enabling clause to prescribe conditions and restrictions for revocation of cancellation of registration. |
| 9 | Clause (f) of sub-section (3) of section 31 of the CGST Act is being amended to incorporate an enabling provision for prescribing the time period for issuance of invoice by the recipient in case of reverse charge mechanism supplies. Explanation in sub-section (3) of the said section is also inserted to specify that a supplier registered solely for the purposes of tax deduction at source under section 51 shall not be considered a registered person for the purpose of clause (f) of sub-section (3) of section 31. |
| 10 | Sub-section (6) of section 35 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 11 | Sub-section (3) of section 39 of the CGST Act is being substituted to mandate the electronic furnishing of returns for each month by the registered person required to deduct tax at source, irrespective of whether any deduction has been made in the said month or not. It also empowers the Government to prescribe by rules, the form, manner, and time within which such return shall be filed. |
| 12 | Sub-section (8) of section 49 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 13 | Sub-section (1) of section 50 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 14 | Sub-section (7) of section 51 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 15 | Sub-section (3) is being amended and a new sub-section (15) is being inserted in section 54 of the CGST Act to provide that no refund of unutilised input tax credit or integrated tax shall be allowed in cases of zero-rated supply of goods where such goods are subjected to export duty. |
| 16 | Sub-section (3) of section 61 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 17 | Sub-section (1) of section 62 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 18 | Section 63 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 19 | Sub-section (2) of section 64 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 20 | Sub-section (7) of section 65 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 21 | Sub-section (6) of section 66 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 22 | Sub-section (1A) is being inserted in section 70 of the CGST Act to enable an authorised representative to appear on behalf of the summoned person before the proper officer in compliance with summons issued by the said officer. |
| 23 | Sub-section (12) is being inserted in section 73 of the CGST Act to restrict the applicability of the said section for the determination of tax pertaining to the period up to Financial Year 2023-24. |
| 24 | Sub-section (12) is being inserted in section 74 of the CGST Act to restrict the applicability of the said section for the determination of tax pertaining to the period up to Financial Year 2023-24. |
| 25 | Section 74A is being inserted in the CGST Act to provide for the determination of tax not paid or short-paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to the Financial Year 2024-25 onwards. It also provides for the same limitation period for issuing demand notices and orders in respect of demands from the Financial Year 2024-25 onwards, irrespective of whether the charges of fraud, wilful misstatement, or suppression of facts are invoked or not, while keeping a higher penalty for cases involving fraud, wilful misstatement, or suppression of facts. |
| 26 | Sub-section (2A) is being inserted in section 75 in the CGST Act to provide for the redetermination of the penalty demanded in a notice invoking penal provisions under clause (ii) of sub-section (5) of the proposed section 74A to redetermine the penalty as per clause (i) of sub-section (5) of section 74A in cases where the charges of fraud, wilful misstatement, or suppression of facts are not established. It also amends section 75 to incorporate a reference to the sub-sections (2) and (7) of section 74A or the sub-sections thereof, in the relevant sub-sections of this section. |
| 27 | Sub-section (1) of section 104 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 28 | Sub-section (6) of section 107 of the CGST Act is being amended to reduce the maximum amount of pre-deposit for filing an appeal before the Appellate Authority from rupees twenty-five crores to rupees twenty crores in central tax. It also amends sub-section (11) to incorporate a reference to the proposed new section 74A in the said section. |
| 29 | Section 109 of the CGST Act is being amended to empower the Government to notify types of cases that shall be heard only by the Principal Bench of the Appellate Tribunal. |
| 30 | Sub-sections (1) and (3) of section 112 of the CGST Act are being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 31 | Section 122 of the CGST Act is being amended to make consequential changes in sub-sections (1) and (2), and in clauses (iii) and (iv) of sub-section (3) of the said section for incorporating a reference to the proposed new section 74A in the said section. |
| 32 | Sub-section (2) of section 132 of the CGST Act is being amended to incorporate a reference to the proposed new section 74A in the said section. |
| 33 | A new sub-section (2A) is being inserted in section 160 of the CGST Act to provide that in the case of a change in the constitution of a business, any penalty imposed on the predecessor under the provisions of this Act shall be deemed to be the penalty imposed on the successor in case the change is on account of amalgamation or de-merger. |
| 34 | Schedule I of the CGST Act is being amended to restrict the scope of entry (iv) relating to import of services to exclude the activities of supply of goods in customs bonded warehouses. |
| 35 | Schedule II of the CGST Act is being amended to provide that if goods, forming part of the assets of a business, are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, such transfer or disposal shall be deemed to be a supply of goods by the person in the course or furtherance of business. |
| 36 | Paragraph 8 is being inserted in Schedule III to the CGST Act, so as to provide that the activity of apportionment of co-insurance premium by the lead insurer to the co-insurer for the insurance services jointly supplied by the lead insurer and the co-insurer to the insured in coinsurance agreements shall be treated as neither supply of goods nor supply of services, provided that the lead insurer pays the tax liability on the entire amount of premium paid by the insured. Paragraph 9 is being inserted in Schedule III to the CGST Act, so as to provide that the services by the insurer to the re-insurer, for which the ceding commission or the reinsurance commission is deducted from reinsurance premium paid by the insurer to the reinsurer, shall be treated as neither supply of goods nor supply of services, provided that tax liability on the gross reinsurance premium inclusive of reinsurance commission or the ceding commission is paid by the reinsurer. |
| 37 | No refund shall be made of all the tax paid or the input tax credit reversed, which would not have been so paid, or not reversed had the said clause 114 been in force at all material times. |
As Per Budget Speech
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.
Insertion of Section 74A: One of the most significant changes is the introduction of Section 74A, which deals with the determination of tax not paid or short paid, erroneously refunded, or input tax credit (ITC) wrongly availed or utilized for any reason from the Financial Year 2024-25 onwards.
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. |
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.
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. It also proposes to remove reference to sections 129 and 130 in the said sub-section.
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 50, section 51, section 62, section 63, section 64, section 65, section 66, section 104 and section 127.
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