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  • Writer's pictureShashank Mittal

Key Highlights Union Budget 2023 - GST

128. Amendment in Section 10 – Composition Taxpayers

Existing:

(2) The registered person shall be eligible to opt under sub-section (1), if :-

(d) he is not engaged in making any supply of goods or services through an electronic commerce operator who is required to collect tax at source under section 52;


Proposed:

(2) The registered person shall be eligible to opt under sub-section (1), if :-

(d) he is not engaged in making any supply of goods or services through an electronic commerce operator who is required to collect tax at source under section 52;


Impact of Amendment:

Earlier composition dealers were not allowed to supply goods though e-commerce operators like Amazon and Flipkart but with the proposed amendment small suppliers which are under composition scheme will be able to take the services of e-commerce operators in supplying goods. However, supply of services is still not allowed.


129. Amendment in Second Proviso to Section 16(2) – Input Tax Credit

Existing:

Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed


Proposed:

Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be paid by him along with interest payable under section 50 in such manner as may be prescribed


Impact of Amendment:

Earlier under this proviso the amount of ITC reversal must be discharged by adding it in output tax liability but new rule 37A which has been inserted vide Notification No. 26/2022-Central Tax dated 26.12.2022 has prescribed both the manners i.e., either discharge the same by adding it in output tax liability or by reversing the ITC. Therefore, this proviso is amended merely in order to align the same with newly inserted Rule 37A.


129. Amendment in Third Proviso to Section 16(2) – Input Tax Credit

Existing:

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.


Proposed:

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him to the supplier of the amount towards the value of supply of goods or services or both along with tax payable thereon.


Impact of Amendment:

Earlier in the proviso it was only mentioned payment made but it was nowhere mentioned as to whom the payment is to be made. Now it has been mentioned that the payment has to be made to supplier from goods or services has been procured so this amendment is clarificatory in nature.


130. Amendment in Section 17(3) – Value of exempted Supply

Existing:

(3) The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.


Explanation - For the purposes of this sub-section, the expression ‘‘value of exempt supply’’ shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule.


Proposed:

except,––

(i) the value of activities or transactions specified in paragraph 5 of the said Schedule; and

(ii) the value of such activities or transactions as may be prescribed in respect of clause (a) of

paragraph 8 of the said Schedule”;


Schedule III

5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.

8. (a) Supply of warehoused goods to any person before clearance for home consumption;


Impact of Amendment:

This explanation has been amended in order to exclude the transaction in the nature of removal of goods from one warehouse to another. Warehoused goods is a concept under Customs Act, where the goods in a warehouse are under the control of a proper officer and proper rent has to be paid by the owner of the warehoused goods to the warehouse-keeper as per the rates fixed. The owner of the goods can also inspect the goods or deal with them however permission is required from the proper officer.


130. Insertion of New Clause in Section 17(5) – Blocked Credits

(fa) goods or services or both received by a taxable person, which are used or intended to be

used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013;”.


Impact of Amendment:

This section has been amended in order to put an end to all the controversies with regards to availment of ITC in respect of CSR Expenditure being made in compliance to Section 135 of Companies Act, 2013. Input Tax Credit shall not be allowed on such expenditure.


131. Substitution of Section 23 - Registration

23. Notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section 24,––

(a) the following persons shall not be liable to registration, namely:––

(i) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act, 2017;

(ii) an agriculturist, to the extent of supply of produce out of cultivation of land;

(b) the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, specify the category of persons who may be exempted from obtaining registration under this Act.”.


Impact of Amendment:

Earlier the suppliers were liable for compulsory registration under GST if they fall under any clause given in Section 24 even if they were not liable for registration under GST as their turnover is below the threshold limit or were exclusively engaged in supply of exempted goods or services but with this amendment now the suppliers will not be liable for registration under GST even if they fall under any clause given in Section 24. They will only be liable for registration if their turnover exceeds the threshold limit and are engaged in supply of taxable goods or services.


132. Insertion of new sub-section in Section 37 – GSTR 1

133. Insertion of new sub-section in Section 39 – GSTR 3B

134. Insertion of new sub-section in Section 44 – Annual Return

135. Insertion of new sub-section in Section 52 – GSTR 8


Impact of Amendment:

This section has been amended in order to prescribe that every registered person will not be allowed to furnish the returns as mentioned above after the expiry of three (3) from the due date of furnishing such return.


136. Amendment in Section 54 – Refunds

Existing:

(6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent. of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant.


Proposed:

(6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent. of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant.


Impact of Amendment:

Earlier when GSTR-2 existed there was a provision for availment of ITC on a provisional basis since GSTR-2 has been permanently removed due to which provisional acceptance of ITC is not allowed now. Hence, this amendment is merely amended in order to align with the present scheme of ITC availment and return filing.


137. Amendment in Sec. 56 – Interest on Delayed Refund

Existing:

If any tax ordered to be refunded under sub-section (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under subsection (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax.


Proposed:

If any tax ordered to be refunded under sub-section (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under subsection (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund for the period of delay beyond sixty days from the date of receipt of such application till the date of refund to be computed in such manner and subject to such conditions and restrictions as may be prescribed.

Impact of Amendment:

This section has been amended in order to prescribe the manner of computation of period of delay for calculation of interest on delayed refunds.


138. Insertion of new sub-section in Section 122 – Penalty

(1B) Any electronic commerce operator who––

(i) allows a supply of goods or services or both through it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply;

(ii) allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or

(iii) fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act,

shall be liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.


Impact of Amendment:

This section has been amended in order to provide specific penalty for e-commerce operators in case of contravention of provisions relating to supply of goods or services through them by unregistered persons.


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For a detailed discussion and professional advisory pertaining to the applicability and compliance of the said provision of law kindly contact:


CA. Dhruv Seth

Partner – GST

dhruv@sethspro.com


CA. Shashank Mittal

HOD - GST

shashank@sethspro.com

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