(Amendments carried out in the Finance Bill, 2022, will come into effect from a date to be notified unless otherwise specified, as far as possible, concurrently with the corresponding amendments to the similar Acts passed by the States & Union territories with legislature.)
1. Changes in Conditions for availing ITC of GST [Section 16 ]
A new clause (ba) to sub-section (2) of section 16 of the CGST Act is being inserted to provide that input tax credit with respect to a supply can be availed only if such credit has not been restricted in the details communicated to the taxpayer under section 38.
Further, sub-section (4) of section 16 of the CGST Act is being amended so as to provide for an extended time for availment of input tax credit by a registered person in respect of any invoice or debit note pertaining to a financial year upto thirtieth day of November of the following financial year.
Key note:
a registered person can avail ITC only it is not
restricted under Section 38 – as per the details communicated to the purchaser in GSTR-2B.
Registered person can now claim ITC of any invoice or debit note pertaining to a financial year till furnishing of annual return (GSTR9) or 30th November of following financial year whichever is earlier
2. Amendment in Section 29
Clause (b) and (c) of sub-section (2) of section 29 of the CGST Act are being amended so as to provide that the registration of a person is liable for cancellation, where –
(i) a person paying tax under section 10 has not furnished the return for a financial year beyond three months from the due date of furnishing of the said return;
(ii) a person, other than those paying tax under section 10, has not furnished returns for such continuous tax period as may be prescribed.
Key Note:
Focus on timely filing of GST Returns for composition taxpayers 3months and for other tax payers, as may be prescribed
3. Extension of timeline for issue and declaration of credit notes Sub-section (2) of section 34 of the CGST Act is being amended so as to provide for an extended time for
issuance of credit notes in respect of any supply made in a financial year upto thirtieth day of November of the following financial year.
4. Relaxation in Conditions and restrictions for furnishing details of outward supplies [Section 37 ]
Section 37 of the CGST Act is being amended so as to:
(i) provide for prescribing conditions and restrictions for furnishing the details of outward supply and for communication of the details of such outward supplies to concerned recipients;
(ii) do away with two-way communication process in return filing;
(iii) provide for an extended time upto 30th day of November of the following financial year for rectification of errors in respect of details of outward supplies furnished under sub-section (1);
(iv) provide for tax period-wise sequential filing of details of outward supplies under sub-section (1).
Section 38 of the CGST Act is being substituted for prescribing the manner as well as conditions and restrictions for communication of details of inward supplies and input tax credit to the recipient by means of an auto-generated statement and to do away with two-way communication process in return filing.
Key Note:
Time limit of rectification of error extended to 30th November of the following financial year
Filling of return not allowed for tax period, if outward supply return not filed for previous period
Two way communication in return filling is done away
5. Due date for filing return by non-resident taxable person
Section 39 of the CGST Act is being amended so as to:
(i) provide that the non-resident taxable person shall furnish the return for a month by 13th day of the following month;
(ii) provide an option to the persons furnishing return under proviso to sub-section (1), to pay either the self-assessed tax or an amount that may be prescribed;
(iii) provide for an extended time upto 30th day of November of the following financial year, for rectification of errors in the return furnished under section 39;
(iv) provide for furnishing of details of outward supplies of a tax period under sub-section (1) of section 37 as a condition for furnishing the return under section 39 for the said tax period.
6. Removal of provisional availment of input tax credit
Section 41 of the CGST Act is being substituted so as to do away with the concept of “claim” of eligible input tax credit on a “provisional” basis and to provide for availment of self assessed input tax credit subject to such conditions and restrictions as may be prescribed
Key Note
The provision is being substituted so as to do away with the availment of eligible ITC on a ‘provisional’ basis. Instead the taxpayer shall be required to avail ‘self-assessed’ ITC, subject to such conditions and restrictions as may be prescribed.
Further, in respect of Input tax credit, where tax payable has not been paid by the supplier, shall have to be reversed with appropriate Interest. However, when the supplier makes payment of the relevant taxes, the taxpayer can re-avail the amount of credit so reversed.
7.Late fee for delayed filing of return where tax is collected at source
Section 47 of the CGST Act is proposed to be amended to provide for levy of late fee in case of delay in filing returns by e-commerce operators under section 52 of the CGST Act. The Finance Bill 2022 also seek to omit levy of late fee for delay in filing inward supplies as required under section 38 of the CGST Act, as the same will be auto-generated as per the newly substituted provision which introduces a robust mechanism to monitor credit availment
8. Restrictions for utilizing the amount available in the electronic credit ledger
Section 49 of the CGST Act is being amended so as to provide for prescribing restrictions for utilizing the amount available in the electronic credit ledger.
Section 49 of the CGST Act is being amended so as to allow transfer of amount available in electronic cash ledger under the CGST Act of a registered person to the electronic cash ledger under the said Act or the IGST Act of a distinct person.
Section 49 of the CGST Act is being amended so as to provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger.
9. Interest to be levied on ITC wrongly availed and if utilized
Sub-section (3) of section 50 of the CGST Act is being substituted retrospectively, with effect from the 1st July, 2017, so as to provide for levy of interest on input tax credit wrongly availed and utilized
Key Note:
With retrospective effect from 01.07.2017, interest on ITC wrongly availed will levied only if the ITC is utilized for payment of output tax
Liability
Interest Rate restricted to 18%