As you know that 50^th GST Council meeting was held on 11^th July 2023 at Vigyan Bhawan, New Delhi. We are sharing important recommendations and its impact in detail.

SUMMARY

1. Transporters will not be required to file declaration for paying GST under forward charge every year
2. No RCM on services supplied by a director of a company to the company in his private or personal capacity such as supplying services by way of renting of immovable property to the company
3. Relief for taxpayer, Govt extended the declaration procedure regarding mismatch in ITC availed in GSTR-3B and GSTR-2A for two more years i.e 2019-20 and 2020-21
4. Amnesty schemes notified vide notifications dated 31.03.2023 regarding non-filers of FORM GSTR-4, FORM GSTR-9 & FORM GSTR-10 returns, revocation of cancellation of registration extended till 31.08.2023
5. To do away with the requirement of the physical verification of business premises in the presence of the applicant
6. System-based intimation to the taxpayers in respect of the excess availment of ITC in FORM GSTR-3B vis a vis that made available in FORM GSTR-2B
7. If the sale of cinema ticket and supply of food and beverages clubbed together then GST rate of cinema ticket will apply
8. 28% GST on the value of the chips purchased in casinos, online gaming
9. GST Appellate tribunal will be started in a phased manner
10. Relaxations provided in FY 2021-22 in respect of various tables of FORM GSTR-9 and FORM GSTR-9C be continued for FY 2022-23
11. No GSTR-9 for turnover upto Rs. 2 crores
12. Amendment may be made in GST law to make ISD mechanism mandatory prospectively
13. Detailed Circular to be issued to provide clarity on liability to reverse input tax credit in cases involving warranty replacement of parts and repair services during warranty period
14. Refund of accumulated input tax credit (ITC) to be restricted to ITC appearing in FORM GSTR-2B

 

Reverse Charge Mechanism

1. GTA Service

 

1. GTAs will not be required to file declaration for paying GST under forward charge every year. If they have exercised this option for a particular financial year, they shall be deemed to have exercised it for the next and future financial years unless they file a declaration that they want to revert to reverse charge mechanism (RCM).

 

2. Option by GTAs to pay GST under forward charge shall be exercised by 31^st March of preceding Financial Year

 

1. Services by Director

 

1. Services supplied by a director of a company to the company in his private or personal capacity such as supplying services by way of renting of immovable property to the company, are not taxable under RCM.

 

2. Only those services supplied by a director of company which are supplied by him as or in the capacity of director of that company shall be taxable under RCM in the hands of the company.

 

3. Main point is to understand the scope of the word “capacity”. Renting of immovable property is just an example mentioned in the recommendation. All such services which are provided not in the capacity of director, do not fall under RCM. In other words, the deciding factor is whether services can be provided by a director even he or she resigns from the position of director. If yes, then GST is not applicable under RCM.

 

 

 

Input Tax Credit (ITC)

• Input Service Distributor (ISD)

 

1. ISD mechanism is not mandatory for distribution of input tax credit of common input services procured from third parties from July 2017 till the date of clarification.

 

2. Amendment to be made in GST law to make ISD mechanism mandatory prospectively for distribution of input tax credit of such common input services procured from third parties.

 

3. This will be applicable to all such companies which are having GST registration in more than one State.

 

4. There will be cases where some vendors, who provide common services, are raising invoice by mentioning regular GST number and rather than ISD number and therefore, 100% ITC is availed and utilised under regular GST number. There is a possibility that GST officer may raise objection on the ground of excess availment of ITC which is pertaining to other locations.

 

5. Considering above possibility, even though companies are having ISD registration it is advisable to identify vendors who are providing common services and make sure that all such vendors are raising invoice by mentioning ISD number and not regular GST number.

 

• Reversal of ITC on free replacement of goods under warranty

 

1. ITC not to be reversed in cases involving replacement of parts under warranty and repair services during warranty period without any consideration from the customers.

 

2. It is interesting to see whether there will be different treatment for FOC supply under warranty where there is no replacement.

 

1. Calculation of interest in case of wrong availment of IGST credit

 

1. As per section 50(3) of the CGST Act, 2017, interest is payable on wrong availment of ITC only if such ITC is utilised. As a practice, we are considering balance of credit only against the respective head.

 

2. It is recommended to issue a clarification in cases of wrong availment of IGST credit.

 

3. It is recommended that the balance of input tax credit (ITC) in electronic credit ledger, under the heads of IGST, CGST and SGST is to be taken together while calculating such interest liability.

 

4. Thus, in case where say an assessee availed wrong IGST credit of Rs. 100,000/-. As per Electronic Credit Ledger Account, IGST credit balance is NIL however, the assessee is having balance of Rs. 25,000/- in CGST head and Rs. 90,000/- in SGST head then in that case it will be presumed that this wrong availed IGST credit of Rs. 100,000/- is not utilised (as balance in CGST and SGST is more than wrong IGST credit) and therefor, interest is not applicable.

 

5. It may be noted that this provision is applicable only in cases where there is a wrong availment of IGST credit. In other words, this provision is not applicable where there is a wrong availment of CGST or SGST credit.

 

 

• Benefit of circular 183/15/2022 extended for the period from 1-4-19 to 31-12-21 by obtaining CA certificate or self-declaration.

 

1. As per the Circular, benefit of ITC has to be given in case the supplier has paid GST however, inward supply is not reflected in GSTR-2A / GSTR-2B due to the reason that the supplier has mentioned wrong GSTIN or reported supply under B2C instead of B2B.

 

2. It is recommended that this benefit will be extended for the further period where tax invoice is pertaining to the period from 1st April 2019 to 31st December 2021.

 

3. Obtain CA certificate if the differential ITC of a particular supplier during the financial year is more than Rs. 5 lakhs.

 

4. In case the differential ITC of a particular supplier during the financial year is less than Rs. 5 lakhs then self-declaration of that particular supplier is sufficient.

 

GST Appellate Tribunal

1. GST Appellate Tribunal may be notified by the Centre with effect from August 2023.

 

2. Regarding the number of State Benches, it was decided to start them in a phase wise manner.

 

3. Once respective State Govt. starts GST Appellate Tribunal, companies who are in receipt of the Order passed by the Commissioner (Appeals) in case of Centre jurisdiction or the Order passed by the Joint Commissioner (Appeals) in case of State jurisdiction are required to file appeal before GST Appellate Tribunal within specified time.

 

Refund

 

• Refund restricted to ITC appearing in GSTR-2B

 

1. At present, companies are required to reconcile ITC with GSTR-2A for the purpose of making refund application.

 

2. As per the recommendation, refund for a tax period to be restricted to ITC on inward supplies reflected in FORM GSTR-2B of the said tax period or any previous tax period.
3. One of the impacts may be discussed with the help of below example:

GSTR-1 for the month of March 2023 filed in July 2023. This invoice is reflected in GSTR-2A for the month of March 2023 but the same will be reflected in GSTR-2B for the month of July 2023. Refund will not be allowed for the tax period of March 2023 but in July 2023.

 

• Clarification where goods are exported or foreign currency is received after prescribed time limit

 

1. Clarification to be issued regarding admissibility of refund in cases where export of goods or the realization of payment for export of services, as the case may be, is made after the time limit provided under rule 96A of CGST Rules, 2017.

 

2. As per Rule 96A, in case of export of goods, goods are to be exported within time limit of 3 months from the date of tax invoice whereas in case of export of services, foreign currency has to be received within time limit of one year from the date of tax invoice.

 

Registration

 

1. To provide that the details of bank account to be required to be furnished within 30 days of grant of registration or filing of GSTR-1 / IFF whichever is earlier; failure of which system would automatically suspend GST registration. Once submitted, system would automatically revoke suspension.

 

2. To do away with the requirement of the physical verification of business premises.

 

3. It is also recommended to provide for physical verification in high risk cases even where Aadhaar has been authenticated.

 

4. Now what is meant by “high risk case” is the “real” question.

Extension of amnesty scheme

Extend the amnesty schemes notified vide notifications dated 31.03.2023 regarding non-filers of FORM GSTR-4, FORM GSTR-9 & FORM GSTR-10 returns, revocation of cancellation of registration and deemed withdrawal of assessment orders issued under Section 62 of CGST Act, 2017, till 31.08.2023.

 

Procedure for Recovery of Tax and Interest

 

1. Issuance of FORM GST DRC-01D for recovery where output tax liability reported in GSTR-1 exceeds the output tax liability disclosed in GSTR-3B by a specified threshold.

 

2. Issuance of FORM DRC-01C for recovery where ITC in GSTR-3B exceeds ITC made available in GSTR-2B above a certain threshold.

 

3. Forms DRC-01D and DRC-01C will be issued either system generated or manual. The taxpayers will be given opportunity to explain the reasons for the said difference or take remedial action in respect of such difference.

 

4. This is going to increase headache of taxpayers as such notices may be issued / generated on month-to-month basis wherever the difference crosses the threshold limit.  Threshold amount is not prescribed in the meeting and therefore, we will have to wait for clarification.