Budget and GST rules

Mohan R Lavi

Discussions on the Budget have invariably been on choosing between the new scheme of personal taxation vis-à-vis the old scheme. The provision for tax collection at source on foreign remittances and travel has also dominated discussions.

In the midst of all these discussions, the fact that the Budget has also proposed a few important changes to GST laws should not be forgotten. Formally, these proposals will be run through the GST Council for their blessings soon.

The numbers tell the story. GST revenues are turning out to be a cash cow for the government. Last year’s Budget estimates of CGST revenues of ₹6,60,000 crore have been revised to ₹7,24,000 crore. Estimated revenues for 2023-24 are ₹8,11,600 crore — an increase of 12 per cent. Some proposals in the Budget have been made to ensure that this target is met without much problem.

GST Amendments

One of the most important proposals has been an amendment to Section 17(5) of the CGST Act, 2017 to provide 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 intended to be used for activities relating to his obligations under corporate social responsibility referred to in Section 135 of the Companies Act, 2013.

While this provides clarity, it is doubtful whether the last word has been heard on this. Some taxpayers are bound to argue that they are obliged to incur CSR obligations due to a statutory mandate as per the Companies Act, 2013. Denial of input tax credit restricts their cash flow just because they are abiding with a provision of law.

New sections are being introduced in GST laws that provide for a time limit of three years from the due date for filing a variety of returns. GSTR 1, GSTR 3B, GSTR 9 and GSTR 8 would need to be filed within a period of three years from their respective due dates. A welcome proposal is an amendment to Section 19(2A) to remove the restriction imposed on registered persons engaged in supplying goods through e-commerce operators from opting to pay tax under the Composition Levy.

Thus upon this amendment being enforced the person engaged in supply of goods through ECOs will also be eligible to composition scheme, subject to fulfilment of other conditions. Section 16(2) of the CGST Act has been amended to provide for payment of tax along with in respect of ITC availed and payment not made to supplier within 180 days.

Another proviso to the above section is also amended to specifically provide that upon payment made to supplier ITC can be availed. These amendments have been made to align the said sub-section with the return filing system provided in the Act. A new Section 122(1B) of the CGST Act is being inserted so as to provide for penal provisions applicable to Electronic Commerce Operators in case of contravention of provisions relating to supplies of goods made through them by unregistered persons or composition taxpayers.

Section 56 of the CGST Act is being amended so as to provide for an enabling provision to prescribe manner of computation of period of delay beyond 60 days from the date of receipt of application till date of refund, for calculation of interest on delayed refunds.

Section 132(1) of the CGST Act is being amended to decriminalise offences such as obstructing or preventing any officer in the discharge of his duties, tampers with or destroys any material evidence or documents and fails to supply any information. The monetary threshold for launching prosecution for the offences under the said Act is being increased from ₹1 crore to ₹2 crore except for the offences related to issuance of invoices without supply of goods or services or both.

The consistent surge in GST revenues could help the Finance Minister balance her books.

The writer is a chartered accountant

COMMENT NOW