Analysis of GST Provisions in Budget 2020

On 1st February, 2020, the Honorable Finance Minister Nirmala Sitharaman introduced the budget for the year. This budget have a major impact on the biggest tax reform ever introduced in India till now i.e., Goods and Services Tax (GST). It is considered one of the most historic reform that has restructured the tax integration in the country making it economically strong. Since its introduction GST has faced a lot of challenges. And the Finance Ministry along with the GST Council has been trying to to reolve all the issues that occurred during the period of its transition.

GST Provisions

General changes introduced in the Budget 2020:

  • From 1st April, 2020, a new improved and simplified GST Return system will be implemented in the country to make the return filing process easier for the taxpayers.
  • New features like pre-filling of returns, improved flow of Input Tax Credit, overall process simplification and Nil return filing through SMS, have been introduced.
  • Verification of taxpayers based AADHAAR have been introduced in oredr to weed out units that are non-existent.
  • To incentivize the customers for seeking invoices, a new cash reward system have been envisaged in the budget.
  • The ministry has proposed a dynamic QR-Code system for the customer invoices to capture the parameters of GST whenever payments will be made through these codes during a purcahse.

Amendments in Central Goods and Service Tax Act 2017:

The following amendments have been introduced in the CGST Act, 2017 which will come into effect immediately-

  1. Under the definition of Union Territory in Section 2(114), Ladakh has been included.
  2. The date of the issue of the debit note and date of issue of underlying invoices for availing the input tax credit has been delinked as per Section 16(4).
  3. The jurisdiction tax authorities have been empowered to extend the application date of revocation of registration cancellation in the deserving and appropriate cases as per Section 30.
  4. Manner for issuing tax invoices and cases where the taxpayers need not issue the tax invoices have been prescribed and introduced in new provisions-Section 31.
  5. In Section 51, new procedures for the issue of TDS Certificate has been proposed and late fees for its non-issuance have been omitted.
  6. In section 109, a new amendment related to introduction of provisions for Appellate Tribunal under the CGST Act, 2017 in the the two new union territory namely; Ladhakh and Jammu and Kashmir has been brought in.
  7. Restrictions have been imposed for the service suppliers who are availing and are registered with Compositon Scheme under GST. This is in line with the already existing restrictions for the goods suppliers as per Section 10(2). The following taxable persons categories have been proposed to be excluded from the composition scheme:
  • Who are engaged in inter-state outward services supply.
  • Who supply the services outwrds through e-commerce operators.
  • Who supply services that are not levied with any taxes under the CGST Act.
    1. In section 122, the levied penalties equivalent to the evaded tax or input tax credit has been proposed for the following cases-
      • Where the goods and services or both are being supplied without the issuance of any invoice.
      • Where the goods and services or both have been supplied with the issuance of a false or incorrect invoice related to it.
      • Where the input tax credit are taken or distributed in contravention of Section 20.
      • Where the input tax credits are utilized or taken in contravention with the laid provisions in the CGST Act, without the receipt of actual goods and services or both fully or partially.
      • Where the invoices and bills have been issued without supplying the goods and services or both and where it violates the laid provisions of the Act.
    2. Amendments in Section 132 has been made in order to make the availing of Input Tax Credit through fraudulent activity an cognizable and non-baillable offence and make the person commiting it liable to certain punishment.
    3. An amendment related to prescribing the manner and time limit for availing the transitional credit have been made in Section 140, that is in effect from 1st July, 2017.
    4. Under Section 66(5) and the section proviso to Section 143(1) that enables the jurisdictional commissioner to exercise their power, has been amended to make provisions in for them in Section 168.
    5. Changes have been made through amendment in Section 172 and make provisions to enable the issuance of order related to removal of difficulties for another two years which is till five years from the Acts date of commencement.
    6. An amendment regarding the cancellation of registration obtained voluntarily as per Section 291(1) has been provided.
    7. With effect from 1st July, 2017, the entries at 4(a) and 4(b) in Schedule II of the Act have been amended. It has specified to make provisions for omitting the supplies related to the transfer of assets of the business without any considerations.

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    Author: Anil Agrawal
    EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.