Finance Bill 2023 Full Description of Latest GST Changes | Academy Tax4wealth

1. FinanceBill2023Full Descriptionof LatestGSTChanges

2. FinanceBill2023FullDescriptionof LatestGSTChanges: • TheFinanceBill,2023,asintroducedinParliamentonFebruary1,2023, • suggestedseveralmodificationstoCGST/IGSTrulesunderclauses128to144of theFinanceBill,2023. • Followingisadescriptionoftheproposedchanges: • E-commerceComposition Scheme: • TheFinanceBillof2023proposestochangesections10(2)(d)and10(2A)(c)of theCGSTActof2023. • Thepurposeofthismodificationistoeliminateallreferencesto"goods"from theseprovisions. • Theseadjustmentshavebeensuggestedtoremovetheconstraintthat registeredpeopleprovidingproductsthroughelectroniccommerceoperatorsface inelectingtopaytaxundertheCompositionLevy. • Today,dealerswhoofferitemsviaanE-commerceplatformcanalsochoosea GSTcompositionplan. • ChangesinthetermsoftheInputTaxCredit: • Section16oftheCGSTAct,2017addressestheeligibilityandcriteriafor claimingtheinputtaxcredit. • TheFinanceBillof2023suggestedmodificationstoSection16provisos(2)and (3).(2). • Asaresult,thefollowingrequirementsforpost-amendmentinputtaxcreditwill apply: • Wherea recipientfails topaythe supplierofgoodsorservicesorboththe amounttowardsthe value ofsupplyand taxpayable thereonwithin a periodofone hundredand eightydaysfromthe date ofissue ofthesupplier'sinvoice,the recipientisresponsible for paying the recipient'sinput tax creditaswell asinterestpayable underSection50 in the manner thatmaybeprescribed. • Therecipientisentitled toaninputtax crediton paymentsmade tothe providerofthe amount towards the valueoftheprovisionofgoodsorservices, orboth,along withthe tax payable thereon.

3. The mentionedadjustmentsbringtheseregulationsinline withthe returnfilingsystem. • ITClimitationinthecaseofexemptsuppliers: • Section 17oftheCGSTActof2017 imposesspecificlimitson the use ofinputtax credits(ITC). • Section17(3)limitsITCon the value ofexcluding supplies, whichcurrentlydoesnotcoverthe valueofactivitiesortransactionsasdefinedinScheduleIIIoftheAct, except the saleofland andsaleofbuildings. • Clause130ofthe FinanceBill, 2023 providesanadditionalexemption, namelythe valueofsuch activities ortransactionsasmaybe regulatedabout the deliveryofwarehousedproductstoany personbeforeapproval for homeconsumption. • ITConsuchtransactionswillnowbe prohibited ifthe transactionistreatedasanexempt • supply. • No ITC onCSR Spends: • Section17(5) oftheCGSTAct,2017isproposedtobeamendedin the Finance Bill, 2023, tolimit input taxcredit for Corporate Social Responsibility(CSR) expenditure. • Businesses have CSR dutiesunder Section 135 ofthe Companies Act,2013. • Theamendmentstatesthatinputtax creditisnoteligibleforproductsorservices, orboth, obtainedbya taxableperson and usedorintendedto beutilizedforactivitiesrelatedto corporatesocialresponsibilityresponsibilitiesunderSection 135ofthe CompaniesAct, 2013. • It appearsthatthe proposedrevisionistheresultofcontradictoryjudgmentsissued bythe • AuthorityforAdvance Ruling. • RegistrationunderGSTis not required: • Section 23 oftheCGSTAct, 2017allowsforpeople whoarenotrequired toregister forGST and authorizes thegovernment to notifyexemptionsin this respect. • Section 22addressesthose whomustregister,whereasSection24mandatesregistrationin certaincircumstances. • Section 22ofthe FinanceBill, 2023, hasbeen proposedtobe amendedtoprovide thatsection • 23has precedenceover sections 22(1)and24. • Anyoverriding impactshall take effectwithretroactiveeffect on July1,2017. • NewGSTReturnDeadlines: • Thetimerestrictionfora registeredpersontoprovideGSTR-1/GSTR-3B/Annualreturn(GSTR 9)/GSTR-8 fora taxperiod isthree yearsfromtheduedate.Furthermore,itintendstocreatean enabling provision for a registered person or a class of registered people to extend the aforementionedtimelimit,subjecttospecifiedcriteriaandlimits. • In the future,taxpayerswould be barred fromfurnishingorfiling the aforementionedGST returnsafterthree yearsfromthe due date offilingsuchrespective returns, i.e., • GSTR1 accordingto Section37 (5) • GSTR3BbySection39 (11) • GSTR9(section44)(2) • GSTR8bySection52 (15) • RefundoftaxunderCGST Section56: • Section 56(6) oftheCGSTAct, 2017hasbeenamended in the Finance Bill,2023. • Itisrecommended toeliminate the referencetothe provisionallyacceptedinputtax creditin sub-section(6) toreconcile itwiththe currentmethod ofavailing oftheself-assessedinputtax credit aspersection 41(1) of theCGSTAct,2017. • Section 41statesthateveryregisteredpersonisentitledtoclaimthecreditofqualifyinginput tax,asself-assessed, inhis return, subjecttotherequirementsandlimitsprovidedand that such • amount iscreditedtohis electroniccredit ledger. • InterestCalculationonDelayedRefund: • Section 56of theCGST Act,2017allowsforinterest on delayed refundsif a refund isnotmade within 60daysof receiving an application forarefund undersection54(1) of theAct.

4. Section56ofthe FinanceBill,2023, Clause137, has beenamendedtogiveenablingprovisions tospecifythemethod ofcalculatingthe delayedtimeforthe calculationofinterestondelayed refunds. • Uponlegislation, themode ofcomputationshallbeestablishedbyrules/notifications. • PenaltiesforE-commerceBusinesses: • Section 122 of the CGST Act of 2017 would be amended to include sub-section (1B), according to theFinance Bill,2023. • It stipulatesthatifregulationsaboutthesupplyofcommoditiesmanufactured throughthemby • unregisteredindividualsorcompositiontaxpayersare violated,punitivemeasureswillapplyto electroniccommerce operators. • Anyoperatorof anelectroniccommercesitewill be subjecttoapenaltyofRs.10,000 or, if • higher, the amount of tax that would have been due had the supply been made by a registered person otherthanoneexemptfromsection 10inthe followingcircumstances: • permitsthe supplyofproductsorservicesorboththroughitbyanon-person whoisnot • registered. • bya noticemade according tothisActtomake suchsupply, exemptfromregistration; • permitsa personwhoisnotauthorized tomake suchaninterstatesupplytosupplyproducts, services,orbothvia it; or • eliminatestoinclude the properinformationinthe statementrequired bysection52, subsection • (4), onanyexternalsupplyofgoodsmadeviaitbya person whoisexemptfromobtaining registration under theAct. • ProsecutionLawModificationsandDecriminalizationUnderGST: • ThefollowingchangeshavebeensuggestedintheFinanceBillof2023: • It issuggested toenhance the minimumfinefora GST prosecution fromRs. 1croretoRs. 2 crores, exceptforthe crime ofissuing invoiceswithoutmakingasupplyofgoods, services, or both. • The following suggestionsare made tonarrowthe range ofcompoundingamounts: • Minimumsrangingfrom50%to25% • A maximumrangeof 150 to100 percent • The following offensesare being advocated fordecriminalization: • Interferingwithorstopping anypolice fromdoing theirresponsibilities. • Alteringorerasing tangibleproofor documentation • Failingtoprovideinformationthatislegallynecessaryorprovidingmisleading information • Theupdateddefinitionof"Non-taxableOnlineRecipient": • The definitionofa Non-taxableOnline Recipienthas beenchanged insection 2(16) ofthe IGST Act,2017 bythe BudgetBill,2023. • So, anyunregistered individualreceiving online information and databaseaccessorretrieval • services whoissituated in the taxable territoryisconsidereda"non-taxable online recipient." • In this, aperson who hasregisteredexclusivelybySection 24(vi)of the Central Goodsand ServicesTax Act,2017,qualifiesasan "unregisteredperson." • Asa result, the requirementthatonline informationanddatabaseaccessorretrievalservices (OIDAR) beusedfor purposesother than commerce,industry, oranyotherbusinessor profession toensure thatOIDARservicesprovided byanypersonlocated in non-taxable territorytoa personreceiving the saidserviceswhoislocated ina taxableterritory aretaxable has been eliminated. • Theaforementionedchangesshalltakeeffectuponnotificationandthepassageof theBudgetAct,2023.