The Changes proposed in GST Laws (CGST and IGST) via the Finance Bill,2023 are explained briefly in this blog.
To read about changes in Income Tax , visit our other blogpost
ITC on CSR spending to be Blocked Credit
As per Section 135 of the Companies Act, 2013 , certain companies are under obligation to spend a portion of profits on Corporate Social Responsibility. There are different opinions on the eligibility of Input Tax credit on the amount spent under CSR.
It is proposed in bill that such ITC on amount spent under CSR will be disallowed under Section 17(5) by inserting clause fa.
Composition Scheme extended to Supplier of goods to E-Commerce Operator
At present, a person who supplies goods or Services to an E-commerce operator (ECO) is not eligible for opting Composition Scheme.
It is proposed in the bill that if he supplies goods to ECO, he will be able to opt for the Composition scheme.
However, there is no change for a Service provider.
Time Limit for Filing GST Returns/ TCS Return
At present, there is no outer limit prescribed in the Act for filing GST Returns (GSTR-1, GSTR-3 GSTR-8, and GSTR -9).
It proposed not to allow filing of GSTR-1, GSTR-3B, GSTR-8, and GSTR -9 after 3 (three) years from the due date of the respective return.
Further, the government, on the recommendation of Council may prescribe, by notification, allow registered persons or class of registered persons to furnish details (return) even after expiry of three years from the due date of furnishing of return.
ECO to pay penalty for contravention of provision
It is proposed to provide for penal provisions applicable to electronic commerce operators in case of contravention of provisions relating to supplies of goods or services made through them by unregistered persons or composition taxpayers. to the extent ten thousand or 50% tax involved, which is higher.
Restriction of ITC on warehoused goods cleared for home consumption
Section 17(3) amend to include currently restricts ITC in respect of sale of land and sale of building post receipt of completion certificate. The said section is now proposed to be amended to include the value of transactions referred to in Para 8(a) (Goods warehoused before to any person before clearance for home) of the Schedule III of the CGST Act.
ITC reversal will now include ITC attributable to such supply of goods
Registration not required , if person is engaged in Exempt Supply only
The person who supplies only exempt supplies of Goods or Services or both, he is not will not required to register. Even agriculturist , to the extent of supply of produce out of cultivation of land
Interest on refund to be calculated beyond 60 days of submission of refund application.
The interest for delay in refund ,will be calculated from the 61st date of submission of the refund application.
Changes leading to decriminalization of certain offences
Following offences are removed from Section 132 (Punishment / imprisonment)
- Obstructs or prevent any officer in the discharge of his duties
- Tampers with or destroys any material evidence or documents
- Fails to supply any information
Further for arrest the minimum limit has been raised to Rs 2 crore except in case of fake invoicing.
The limit remains Rs 1 crore in cases involving fake invoicing.
Compounding Charges reduced
The compounding changes payable to escape from prosecution are reduced to 25% to 100% (from 50% to 150%) excluding the offence of fake bill.
Scope of OIDAR is increased by amending the Definition
The new definition of Non taxable online recipient 2(16) now includes only unregistered persons. earlier it includes
The definition of OIDAR amended to exclude the condition “essentially automated and involving minimum human intervention”.
Change in Place of Supply of Goods where Transport of Goods is place outside India
The Proviso to Sub section 8 of Section 12 of IGST is omitted. The place of supply will be the location of the registered person receiving such transport service.