The 48th GST Council Meeting, held on 27 June 2021, recommended certain amendments to the Central Goods and Services Tax (CGST) Rules. Some of the key amendments proposed are:
1. E-invoicing: The e-invoicing system, which was earlier applicable to businesses with an annual turnover of over Rs. 50 crores, will now be extended to businesses with an annual turnover of over Rs. 10 crores from 1 January 2022. The scope of e-invoicing has also been expanded to cover certain other transactions.
2. Dynamic QR code: A dynamic Quick Response (QR) code will be introduced on the e-invoice from 1 October 2021. The QR code will contain details of the invoice, and will help in checking the authenticity of the invoice.
3. Cancellation of registration: The procedure for cancellation of registration has been simplified. Now, registered persons can file an application for cancellation of registration on the GST portal, instead of having to visit the tax office.
4. ITC reversal for non-payment of suppliers: The rules for the reversal of input tax credit (ITC) for non-payment of suppliers have been modified. Now, if a supplier has not been paid within 180 days from the date of invoice, the recipient will have to reverse ITC availed in respect of such invoices.
5. Time limit for filing refund applications: The time limit for filing refund applications has been reduced from 2 years to 1 year from the relevant date.
6. GST rate on COVID-19 related goods: The GST rate on certain COVID-19 related goods, such as medical oxygen, oxygen concentrators, and testing kits, has been reduced from 12% to 5% till 30 September 2021.
7. GST rate on specified goods for renewable energy: The GST rate on specified goods used for generating renewable energy, such as solar power-based devices, wind turbine, etc., has been reduced from 5% to 1.5% till 31 March 2022.
8. Extension of due dates: The due dates for various GST compliances, such as filing of GST returns, payment of tax, etc., have been extended for the months of May, June and July 2021, due to the COVID-19 pandemic.
9. Restriction on filing of GSTR-1: In case the taxpayer fails to furnish the details of outward supplies in GSTR-1 for two consecutive tax periods, the facility to furnish details in GSTR-1 will be blocked.
These amendments have been made with the objective of reducing compliance burden, improving ease of doing business and providing relief during the COVID-19 pandemic.
In the GST regime, a registered person can claim Input Tax Credit (ITC) of the GST paid on the purchases made for business purposes. However, the ITC claimed is subject to certain conditions and restrictions. One such condition is that the supplier must have paid the tax charged on the supplies to the government.
If the supplier of goods or services has not paid the tax charged on the supplies to the government, the recipient of such supplies cannot claim the ITC. In such cases, the recipient is required to reverse the ITC claimed earlier and pay the tax liability along with interest.
The CGST rules have been amended several times to provide clarity on the reversal of ITC in the case of non-payment of tax by the supplier. The latest amendment was made pursuant to the 39th GST Council Meeting held on 14th March 2020. The amendment provides that a recipient who has availed ITC on the invoices or debit notes, the tax on which has not been paid to the government, can re-avail the ITC if the payment to the supplier is made within 180 days from the date of the invoice.
However, if the recipient fails to pay the amount to the supplier within 180 days, the ITC availed earlier will be added to the output tax liability of the recipient along with interest. In addition, the recipient may also be liable to pay a penalty. Therefore, it is important for the recipients to ensure that they do not avail ITC on the invoices on which the tax has not been paid to the government by the supplier. If they have already availed such ITC, they should make sure to pay the amount to the supplier within 180 days to avoid any additional tax liability.
The discrepancy between GSTR-1 and GSTR-3B arises when the details furnished by the taxpayer in both the returns do not match. GSTR-1 is a monthly or quarterly return that summarizes all the outward supplies of goods and services made by the taxpayer. On the other hand, GSTR-3B is a monthly summary return that reflects the summary of all inward and outward supplies along with the input tax credit (ITC) availed and tax liability.
The discrepancy between the two returns can occur due to various reasons, such as:
1. Errors in the taxpayer's accounting software or manual records
2. Incorrect classification of goods or services
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