Budget 2020 Proposed amendment to CGST & IGST Act, 2017.

Budget 2020 Proposed amendment to CGST & IGST Act, 2017

A simplified return shall be implemented from the 1st April 2020

• Refund process has been simplified and has been made fully automated with no human interface
• An electronic invoice is another innovation wherein critical information shall be captured electronically in a centralized system. It will be implemented in a phased manner starting from this month itself on an optional basis. It will facilitate compliance and return filing.
• Improving Compliance: Aadhaar based verification of taxpayers is being introduced. This will help in weeding out dummy or non- existent units.
• Dynamic OR-code is proposed for consumer invoices.
• GST parameters will be captured when payment for purchases is made through the QR-code.
• A system of cash reward is envisaged to incentivize customers to seek invoices.
• Deep data analytics and AI tools are being used for a crackdown on GST input tax credit, refund, and other frauds and to identify all
  those who are trying to game the system.
• Invoice and input tax credit matching is being done wherein returns having mismatch more than 10 percent or above a threshold are identified and pursued. Significant policy level changes have also been made.
• GST rate structure is also being deliberated so as to address issues like inverted duty structure.

Definition of Union Territory

A union territory is a type of administrative division in the Republic of India. Unlike states, which have their own elected governments, union territories are ruled directly by the Union Government (central government), hence the name "union territory".

Section 2(114) of CGST Act, 2017: for clause (c) and (d),following substituted-

• Dadra Nagar Haveli & Daman and Diu
• Ladakh

Thus, the definition of Union Territory gets aligned with Jammu and Kashmir Reorganization Act, 2019 and Dadra, and Nagar Haveli and Daman and Diu (Merger of Union territories) Act, 2019

Section 10- Composition Scheme

• In section 10(2) of the CGST Act, in clauses (b), (c) and (d), after the words “of goods”, the words “or services” shall be inserted
• Thus, the conditions for eligibility to pay tax under composition are harmonized and certain categories of taxable persons, engaged in making-
  • supply of services not leviable to tax under the CGST Act, or
  • inter-State outward supply of services, or
  • outward supply of services through an e-commerce operator.
• Are excluded from the ambit of the Composition scheme.

Section 16(4)- Time limit for taking credit of debit note

• In section 16(4) of the CGST Act, the words “invoice relating to such” shall be omitted.
• Thus, the date of issuance of debit note is delinked from the date of issuance of the underlying invoice for purposes of availing input tax credit.

Cancellation of a voluntary registration

You cancel your voluntary registration anytime later on after one year. However, the application for cancellation of registration by the concerned person who has registered voluntarily will be only after one year from the date of registration. Please read our in-depth article on the cancellation of GST registration.

• Section 29(1) of the CGST Act, for clause (c), the following clause shall be substituted, namely:––
• “(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to opt-out of the registration  voluntarily made under sub-section (3) of section 25:”
• Thus, now it also provides for cancellation of registration which has been obtained voluntarily under section 25(3)

Section 30(1)- Time limit for revocation of cancellation of registration

Section 30(1) of the CGST Act (Revocation of cancellation of registration)

• A time limit of 30 days to apply for revocation of cancellation of registration,
• Made extendable by the Additional Commissioner or the Joint Commissioner, as the case may be, for a period not exceeding thirty days and by the Commissioner, for a further period not exceeding thirty days.
• Section 31- Invoice
• TDS- Section 51(3) & (4)

Amendment of section 122

• In section 122 of the CGST, after sub-section (1), the following sub-section shall be inserted, namely:––
• “(1A) Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.
• Thus, it makes the beneficiary of the transactions of passing on or availing fraudulent Input Tax Credit liable for penalty similar to the penalty leviable on the person who commits such specified offenses.

Amendment of section 132

• Section 132 of the CGST Act, in sub-section (1),––
• (i) for the words “Whoever commits any of the following offenses”, the words “Whoever commits, or causes to commit and retain the benefits arising out of, any of the following offenses’’ shall be substituted;.
• (ii) for clause (c), the following clause shall be substituted, namely:–– “(c) avails input tax credit using the invoice or bill referred to in clause (b) or fraudulently avails input tax credit without any invoice or bill;”;
• (iii) in sub-clause (e), the words “, fraudulently avails input tax credit” shall be omitted.

Amendment to Section 140- Transition Provisions

• Section 140 of the CGST Act is being amended retrospectively w.e.f 01.07.17, to prescribe the manner and time limit for taking transitional credit
• Sub-sections (1), (2), (3), (5), (6), (7), (8), (9) of sec. 140 are proposed to be amended retrospectively from 1st July 2017 to enable the government to provide by rules the time limits to file TRAN-1 and for other compliances