Composition Scheme for E-commerce
Finance Bill, 2023 has proposed to amend section 10(2)(d) and 10(2A) (c) of CGST Act, 2023. This amendment seeks to remove reference to ‘goods’ from these clauses. These amendments have been proposed so as to remove the restriction imposed on registered persons engaged in supplying goods through electronic commerce operators from opting to pay tax under the Composition Levy. Now, traders engaged in supply of goods through E-commerce platform can also opt for composition scheme under GST. (Source: Clause 128 of Finance Bill 2023)
Change in Input Tax Credit conditions
Section 16 of CGST Act, 2017 deals with eligibility and conditions for taking input tax credit Finance Bill, 2023 has proposed changes in provisos (2) and (3) of section 16 (2). Accordingly, conditions for input tax credit post amendment will be as follows: Where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be paid by him along with interest payable u/s 50 in such manner as may be prescribed. The recipient shall be entitled to avail of the credit of input tax on payment made by him to the supplier of the amount towards the value of supply of goods or services or both along with tax payable thereon. The above amendments align these provision with return filing system.
Restriction on ITC in case of exempt supplies
Section 17 of CGST Act, 2017 provides for certain restrictions on availment of input tax credit (ITC). Section 17(3) restricts ITC on value of except supplies which presently does not include value of activities or transaction as per Schedule III of the Act except ‘sale of land and sale of building’. Clause 130 of Finance Bill, 2023 proposes to add one more exception, i.e. value of such activities or transactions as may be prescribed in respect of supply of warehoused goods to any person before clearance for home consumption. Now, ITC on such transactions shall also be restricted treating such transaction as exempt supply. (Source: Clause 130 of Finance Bill, 2023)
No ITC on CSR Spends
The Finance Bill, 2023 has proposed to amend section 17(5) of the CGST Act, 2017 to restrict input tax credit on Corporate Social Responsibility (CSR) expenditure. CSR obligation are prescribed under section 135 of the Companies Act, 2013 for companies. The amendment provides that input tax credit shall not be available in respect of goods or services or both received by a taxable person, which are used or are intended to be used for activities relating to obligations under the Corporate Social Responsibility as per Section 135 of the Companies Act, 2013. The proposed amendment appears to be the outcome of contrary rulings pronounced by the Authority for Advance Ruling.
Non-requirement of Registration under GST
Section 23 of CGST Act, 2017 provides for persons not liable for registration under GST and empowers Government to notify exemptions in this regard. Section 22 deals with persons liable for registration while section 24 provides for compulsory registration in specified cases. Finance Bill, 2023 has proposed to amend section 22 so as to provide for an overriding effect of section 23 over section 22(1) and 24. Such overriding effect shall come into force from retrospective effect w.r.e.f. 01.07.2017. (Source: Clause 131 of Finance Bill, 2023)
New Time lines for GST Returns
Time limit upto which GSTR-1/GSTR-3B/Annual return (GSTR 9) /GSTR-8 for a tax period can be furnished by a registered person is three years from the due date. Further, it also seeks to provide an enabling provision for extension of the said time limit, subject to certain conditions and restrictions, for a registered person or a class of registered persons. In future, taxpayers will not be permitted to furnish or file the above GST returns after the expiry of 3 years from due date of filing such respective returns, i.e., GSTR 1 under section 37(5) GSTR 3B under section 39(11) GSTR 9 under section 44(2) GSTR 8 under section 52 (15)
Calculation of Interest on Delayed Refund
Section 56 of the CGST Act, 2017 provides for interest on delayed refunds, if refund is not made within 60 days from the date of receipt of application for refund under section 54(1) of the Act. Clause 137 of the Finance Bill, 2023 has proposes an amendment to section 56 so as to provide for an enabling provisions to prescribe manner of computation of delayed period for the purpose of calculation of interest on delayed refunds. The manner of computation shall be prescribed by way of rules / notifications after enactment.
