Key Goods and Services Tax Amendments from Union Budget 2022

The Union Budget 2022, presented on February 1, 2022, introduced several significant amendments to the Goods and Services Tax (GST) framework. These modifications will become effective upon notification by the Central Board of Indirect Taxes and Customs (CBIC). The following sections detail the key revisions.

Changes to Input Tax Credit (ITC) Provisions

A new clause (ba) was incorporated into Sub-section (2) of Section 16, specifying that Input Tax Credit (ITC) for any supply is claimable only if it is not restricted through communication under Section 38 or GSTR-2B to the registered entity.

Registered taxpayers are now barred from utilizing ITC on invoices or debit notes beyond November 30th of the subsequent financial year, or the date of annual return filing, whichever occurs earlier.

Previously, this section limited ITC claims on invoices or debit notes for a specific financial year if not utilized before the September return filing due date or the annual return submission, whichever came first.

Amendments to GST Registration Cancellation by Officers

Section 29 was modified in Budget 2022, empowering officers to cancel GST registration under specific conditions:

• For composition taxable persons (paying tax under Section 10), failure to file GSTR-4 for a financial year by April 30th of the subsequent financial year.
• For individuals other than composition taxable persons, not filing a return for a financial year over a continuous period, as stipulated periodically.

Extended Time Limit for Credit Note Issuance

The deadline for issuing credit notes has been extended until November 30th following the end of the financial year, or the annual return filing date, whichever is sooner.

Modifications in Furnishing Outward Supply Details

New conditions were introduced for submitting outward supply details in GSTR-1 and for communicating these details to recipients through GSTR-2B.

The two-way communication mechanism previously used during return filing was discontinued, largely due to the suspension of the GSTR-2 return.

The period for correcting errors in outward supplies reported in GSTR-1 was extended until November 30th of the subsequent financial year.

The requirement for sequential filing of outward supplies was established, preventing taxpayers from skipping tax periods.

Revision of Section 38 for ITC Claims

Section 38(1) was revised to stipulate terms and conditions for providing inward supply and ITC details to recipients via an auto-generated statement, thereby eliminating the previous two-way communication method during return submission.

Updates to GST Return Filing Provisions

Non-resident taxable persons are now required to file their monthly GSTR-5 return by the 13th day of the subsequent month.

Individuals filing returns under the proviso to Sub-section (1) were given the option to pay either the self-assessed tax or the prescribed amount.

The deadline for correcting errors in Form GSTR-3B was extended until November 30th of the financial year immediately following.

Filing GSTR-1 became a prerequisite for submitting GSTR-3B for the corresponding tax period.

Modification of Section 41 and Deletion of Sections 42, 43, and 43A

Sec-tion 41, concerning ITC claims, was replaced to eliminate the provisional ITC claim concept, instead allowing self-assessed ITC according to stipulated terms and conditions.

Sections 42 (matching, reversal, and reclaim of ITC), 43 (matching, reversal, and reclaim of output tax liability reduction), and 43A (procedure for furnishing returns and availing ITC) of the CGST Act were removed.

Changes in Electronic Credit Ledger Utilization

Conditions were outlined for utilizing the balance present in the electronic credit ledger.

The transfer of funds from one person's electronic cash ledger to another was permitted.

The maximum permissible proportion of output tax liability payable via an electronic credit ledger was specified.

Amendments to Unutilized ITC Refund Claims

It was explicitly clarified that any balance in the electronic cash ledger could only be refunded in the manner prescribed.

Claims for ITC refunds on inward supplies are now restricted to a two-year window from the final day of the quarter in which the supply was received.

The scope of this sub-section was expanded to encompass all categories of refunds.

Miscellaneous GST Amendments

Regarding director resignations, the reference to Section 38 was removed from the relevant provision.

Provisions for levying late fees for delayed GSTR-8 filing were modified.

Interest will not be charged on wrongly claimed but unutilized ITC under Section 50 of the CGST Act, with retrospective effect from July 1, 2017.

The deadline for rectifying errors in TCS values within GSTR-8 was extended until November 30th of the subsequent financial year.

The mention of Section 38 was eliminated from Sub-section (2) of Section 48.

Notification No. 9/2018 (Central Tax) dated January 23, 2018, was amended to designate www.gst.gov.in as the official common electronic portal for GST. This portal will manage all functions specified in the CGST Rules, 2017, excluding those pertaining to e-way bills and e-invoicing.

A retrospective amendment, effective from July 1, 2017, was introduced to Notification No. 13/2017 (Central Tax), Notification No. 6/2017 (Integrated Tax), and Notification No. 10/2017 (Union Territory Tax). This change lowered the interest rate on delayed payments of CGST, IGST, and UTGST from 24% per annum to 18% per annum.

Notification No. 01/2017 (Central Tax, Integrated Tax, and Union Territory Tax) was amended to exempt the supply of unintended waste produced during fish meal manufacturing, excluding fish oil. This exemption applied from July 1, 2017, to September 30, 2019, with no refunds provided if tax had already been collected.

Notifications No. 25/2019 (Central Tax Rate), No. 24/2019 (Integrated Tax Rate), and No. 25/2019 (Union Territory Tax) were given retrospective effect from July 1, 2017. These specified that services involving the granting of a liquor license, whether through license or application fees, are not considered a supply of goods or services. However, if tax was already collected, no refund would be issued.