Synopsis Of Proposed Changes In GST Act

Addressingto challenges faced by taxpayers, FINMIN has proposed some changes in GST provisions through Finance Bill,2020 which majorly relates to restrictions in respect of availment of input tax credit (referred to as ‘ITC’) and cancellation of voluntary registration.

To make headway against refinement of GST Act, following are amendments proposed in finance bill 2020:

  • Entry No. 118 of Finance bill reads as,in section 16 of CGST Act, in sub-section (4), the words “invoice relating to such” shall be omitted.

Above mentioned amendment was much awaitedas it relates toSection 16 that talks about eligibility and conditions for ITC. With respect to it, sub section-(4) of section16 gives view about time limit for entitlement of ITC in respect of invoice and debit note relating to such invoice.

Let’s take a quick look at Section 16(4)which can be studied as, “A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.”

Interpretation of above amendment is as follows:

Prior to amendment, ITC was available forinvoice / debit note on or before, earlier of below mentioned timelines:

  • the date of filing of return under Section 39 for the month of September following the end of financial yearor
  • the date of annual return filed for the relevant year.

Therefore, effectively the last date for claiming ITC was 20thOctober 2019 (herein 23rd April 2019). Thus,it disentitles a taxpayer to claim the ITC for the aforesaid debit note which was issued on 28th April,2019 against the invoice dated 05th August 2017.

But proposed amendment of omitting the words“invoice relating to such” would allow the taxpayers to take ITCfor debit note in the year 2019-20 on or before earlier of the following dates:

  • Last date of filing return for the month of September 2019 i.e. 20th October 2019
  • Last date of filing annual return i.e. 31st March 2020

Therefore, effectively the last date for claiming ITC on debit note relating to invoice issued in the year 2017-18 would be 20th October2019 itself.Hence, ITC would be admissible.

  • As per entry No. 119,In section 29 of the CGST Act, in sub-section (1), for clause (c), the following clause shall be substituted, namely:–– “(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to opt out of the registration voluntarily made under sub-section (3) of section 25:”.

As extracted from CGST Act, Section 29 reads as,“(1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where, (c) the taxable person, other than the person registered under sub-section (3) ofsection 25, is no longer liable to be registered under section 22 or section 24.

Cancellation of registration can be done by:

  • On the request of the taxpayer, except the person who has taken voluntary registration, when he is no longer liable to get registered under section 22 or 24.
  • Proper officer on his own motion.
  • Legal heirs in case of death of the taxpayer.

But with the substitution of clause (c) of section29(1) makes it is possible for the taxpayer to cancel the voluntary registrationobtainedundersub-section (3) of section 25.

The budget proposals made in the Finance bill 2020 related to customs has been enumerated here under:

  • Health Cess @ 5% has been imposed on import of medical equipment.
  • An Electronic Duty Credit Ledger is proposed in the Customs Automated Systems for credits of incentives for exports.
  • Specific parts of microphones have been exempted from the levy of BCD.
  • Customs duty on tableware/kitchenware made of porcelain or China ceramic, clay iron, steel, copper doubled to 20%.
  • National calamity contingent duty on cigarettes, tobacco products to be introduced.
  • On tobacco products, retrospective effect has been given to disallowance of refunds of accumulated credit on account of Inverted duty structure.

This content is meant for information only and should not be considered as an advice or opinion, or otherwise. AKGVG & Associates does not intend to advertise its services through this.

Posted by:

CA Tarun Kapoor

AKGVG & Associates

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