Important changes have been introduced with amended GST rules being introduced. The applicability of such changes is w.e.f 22 Dec , 2020 unless otherwise specified (1st January for some amendments). The changes (in brief) are explained in a simplified manner as follows
Suspension/Cancellation of Registration in case of discrepancies in GSTR3B & 1/2A/2B
The rules have now been revised to allow suspension/cancellation of GST registrations if there are significant discrepancies in your GST Returns i.e. GSTR 3B compared with GSTR1 / 2A / 2B.
A notice would be issued before cancellation where one can explain the reason for such differences/anomalies to the tax officer. A time period of 30 days would be given to explain the same.
At Least 1% tax liability to be paid in cash
The recent notification modifies rules to limit the ITC being utilized while discharging your monthly GST liability. Currently 100% ITC can be used to pay your tax liability. But w.e.f 1st January 2021 ITC portion would be limited to 99%. Thus a taxpayer would have to pay at least 1% of his liability in Cash.
However this only applicable if the taxable outward supplies in a month exceed Rs 50 lakhs. Accordingly exempt and zero rated supplies have to be excluded.
Further the restriction would not apply for the following registered person
- Income tax paid is more than Rs 1 lakh for last 2 financial years by the person or the proprietor or karta or the managing director or any of its two partners, whole-time Directors, Members of Managing Committee of Associations or Board of Trustees, as the case may be OR
- has received a refund amount of more than one lakh rupees in the preceding financial year on account of unutilised input tax credit (Refund under clause (i) or clause (ii) of first proviso of subsection (3) of section 54) OR
- Government Department, Public Sector Undertaking, a local authority, a statutory body
If the person has paid more than 1% of his total cumulative liability via Cash upto the month in financial year then the above restriction shall NOT apply.
For e.g.
| MONTH | Tax Liability | Cumulative Tax Liability | Paid by ITC (Electronic Credit Ledger) | Paid by Cash (Electronic Cash Ledger) | Cumulative Paid via Cash |
| April | 10,00,000 | 10,00,000 | 9,00,000 | 1,00,000 | 1,00,000 |
| May | 10,00,000 | 20,00,000 | 10,00,000 | 0 | 1,00,000 |
| June | 1,00,00,000 | 1,30,00,000 | 1,28,70,000 | 1,30,000 | 2,30,000 |
Thus in this case 99% restriction in the month of May would not apply as more than 1% of cumulative tax liability (April & May) has been paid in cash (i.e. Rs 1,00,000).
Where as for June 99% restriction would apply as cash portion of cumulative tax liability (April, May & June)is less than 1%
Restriction on filing of GSTR1 if 3B is not furnished
A person will not be allowed to furnish GSTR 1/ IFF (Invoice Furnishing Facility) if GSTR 3B remain unfiled for
- Monthly GSTR 3B – Last 2 months 3B not furnished
- Quarterly GSTR 3B – Last quarter 3B not furnished
However for a person on whom restriction of 99% of ITC is applicable, the limit shall be last month GSTR 3B instead of 2 months.
110% of ITC changed to 105% of ITC
Currently a person can avail up to 110% of ITC as reflected in GSTR 2B. This will change to 105% of ITC as reflected in GSTR 2B w.e.f 1st January,2021
Changes in Registration
Biometric-based Aadhaar authentication, photograph is being introduced while taking GST registration. Further changes are being introduced which would result in a longer time period to get GST Registration.
E-way bill
The validity of the E-way bill is being changed to 200km/day from 100km/day w.e.f 1st January ,2021.
The detailed notification can be read here