GST Amendments under Union Budget 2020

GST Amendments under Union Budget 2020

During presentations of Union Budget 2020, the Finance Minister (FM) presented the Finance Bill, 2020 on February 1, 2020. The Finance Minister has emphasised on the implementation of e-invoicing, along with other features like dynamic QR code, cash rewards to customers seeking invoices, and other features. She also emphasised on the implementation of a new simplified GST return structure from April 1, 2020 and various other simplification measures such as auto-population of Goods and Services Tax (GST) returns, automation of refund process, Aadhaar based verification of taxpayers, improved input tax credit flow, and many more.

Here is a summary of GST proposals made in the Finance Bill, 2020:

  • Manner of issuance of invoice: Enabling provision introduced to specify the time and manner of issuance of tax invoice for supply of specified taxable services.
  • Transitional credit: Retrospective amendment made with effect from July 1, 2017 to prescribe the manner and time limit for taking transitional credit [in order to nullify the decision of Gujarat High Court in the case of Siddharth Enterprises vs. The Nodal Officer - 2019 (9) TMI 319].
  • Stringent provision to curb the availment of fake Input Tax Credit (ITC): Any taxpayer, being beneficiary of passing or availing fraudulent ITC, will be liable for similar penalty leviable to the person who commits specified offences. Amendment of the provisions was proposed to make the offence of fraudulent availment of ITC without an invoice or bill, a cognisable and non-bailable offence, and also, to make any taxpayer who commits or causes the commission and retains the benefit or transactions arising out of specified offences liable for punishment.
  • ITC on debit notes: Delinking the date of debit notes from the date of issuance of underlying invoice for availment of ITC was proposed.
  • TDS certificate: Removal of the requirement to issue TDS certificate by the deductor was proposed. Further, any failure to issue TDS certificate will not trigger any late fees.
  • Composition scheme: Exclusion of the following categories of taxpayers from the ambit of the composition scheme was proposed:

a. inter-state supply of services; of services not leviable to GST; and of services through an e-commerce operator, where TCS is deductible.

  • Transfer of business assets without consideration: Schedule II to the CGST Act has been retrospectively amended with effect from July 1, 2017, to exclude supplies relating to transfer of business assets without any consideration.
  • No refund of compensation cess: Refund on account of accumulated credit of compensation cess arising from the inverted duty structure for tobacco and tobacco products has been restricted retrospectively with effect from July 1, 2017.
  • Removal of difficulty order: The time period provided for issuance or removal of difficulty order has been extended from 3 years to 5 years, with effect from July 1, 2017.
  • Union Territory: Amendments have been made to update the definition of Union Territory to give force to the Jammu and Kashmir Reorganisation Act, 2019 and Dadra and Nagar Haveli and Daman and Diu (Merger of union territories) Act, 2019.
  • Cancellation of GST registration: Enabling provision inserted for cancellation of voluntary GST registration for distinct persons.
  • Others: Provision for enabling the Jurisdictional Commissioner to exercise powers:

a. For determination of expense/remuneration in special audit [Section 66(5)]

b. Extension of time period (i.e., 1 year to 3 years) for returning the inputs and capital goods from job worker

  • Rate amendment: Retrospective amendment has been made to exempt the following:

a. Concessional GST rate of 12% has been prescribed on supply of pulley, wheels and other parts (under heading 8483) and used as parts of agriculture machinery (under heading 8432, 8433 and 8436) from July 1, 2017 to December 31, 2018. Further, no refund would be granted of the tax collected on such supplies.

b. Supply of fishmeal (HSN 2301) from July 1, 2017 to September 30, 2019. Further, no refund would be granted of the tax collected on such supplies.

The aforesaid proposed changes in the GST law will come into effect from the date when the same will be notified, unless otherwise specified.

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