Good News for Business: Latest GST Changes Effective From 1 October 2023

In the world of taxation, it is important for companies to stay up-to-date with the latest tax standards and regulations. This is especially true in the case of the Goods and Services Tax (GST), which is a crucial aspect of the Indian tax system. With the latest GST changes set to take effect on 1 October 2023, businesses need to be aware of the new amendments and how they may impact their operations. You can use Masters India GST Software to accelerate your GST compliances and reduce the time of your GST filing by half for all types of returns under GST, and make GST reconciliation, e-filing, and reports simple, efficient and convenient for your team. 

In this article, we covered the current GST amendments that came into effect on October 1, 2023, that affected a number of sections of the CGST (Central Goods and Services Tax) Act and the IGST (Integrated Goods and Services Tax) Act. 

Latest Changes to the CGST Act

• CGST Rule 64

As per the recent notification, [No. 38/2023-Central Tax, dated August 4, 2023 ], the term "non-taxable online recipient," as defined in the Integrated Goods and Services Tax Act, 2017 ("the IGST Act"), has been included in Rule 64. This change deepens the applicability of Rule 64, including a broader variety of recipient categories and, as a result, boosting better tax compliance.

• GST Section 137

Earlier, registered persons who supplied items via an E-commerce operator (ECO) were not eligible for the Composition Scheme's benefits. These advantages will now be provided to them. Certain restrictions, however, will continue to apply to registered individuals delivering services through an E-commerce operator. On August 4, 2023, the Central Board of Indirect Taxes and Customs (CBIC) published Notification Nos. 36/2023 and 37/2023 - Central Tax. These notices specify a distinctive process that E-commerce providers must follow when dealing with the supply of goods by tax-paying Composition Dealers as stated in Section 10 of the Act.

• GST Section 138

In order to align the legal language with the CGST Act's return filing system, the revised provision now states that if a recipient fails to settle the invoice amount, including taxes, to the supplier within 180 days of the invoice date, the recipient must pay an amount equal to the Input Tax Credit (ITC) claimed. This payment is in addition to the CGST Act's interest provisions, which are described in Section 50. The amendment sets new conditions for payment or ITC reversal. As a result, the evaluation of interest liability on the previously mentioned reversal will be based on Section 50(3) of the CGST Act rather than Section 50(1), but only when the improperly claimed credit is used by the registered person.

• GST Section 139

Warehoused goods sold before filing BOE are included in the value of GST-exempt supply for the purposes of changing the common ITC under Sections 17(2) and (3) of the CGST Act. This change affects paragraph 8(a) of Schedule III of the CGST Act, which deals with the supply of warehoused products to any individual before getting clearance for home use. This modification classifies it as an exempted supply for the purposes of reversing the common Input Tax Credit (ITC) under Section 17(2) and (3) in conjunction with CGST Rules 42 and 43.

• GST Section 140

From July 1, 2017, this change was effective. Individuals are excluded from the necessity to register for GST under Section 22(1) of the CGST Act and from mandatory registration under Section 24 of the CGST Act.

• GST Section 141

As per the recent notification (No. 38/2023- Central Tax dated August 04, 2023), the time limit for filing an application for revocation or cancellation of GST registration will be extended to 30 days under Section 30(1) of the CGST Act. The time limit has now been increased to 90 days from the order date of cancellation, or such additional period as the commissioner may authorize, but not more than 180 days, as provided in Rule 23 of the CGST Rules.
       

• GST Sections 142-145

According to GST Sections 142-145, registered persons are required to file their GST returns within the due date. After the expiry of three years from the due date of filing the relevant returns, the registered person shall not be permitted to file the overdue returns in Form GSTR-1, GSTR-3B, GSTR-8, GSTR-9, and GSTR-9C.

• GST Section 146

By removing the mention of provisionally accepted ITC, this change seeks to streamline the treatment of input tax credit (ITC). It complies to the self-assessment ITC procedure provided in Section 41(1) of the CGST Act.In the case of zero-rated supply, Section 54(6) allows for a provisional return of 90% of the total claimed amount, excluding the amount of provisionally accepted input tax credit.

• GST Section 148

When the Best Judgement decision is considered withdrawn, the time limitation for submitting either Form GSTR 3B or Form GSTR 10 (Final Return) would be extended from 30 days to 60 days. Furthermore, this 60-day term can be extended to 120 days by paying an extra late fee in addition to the standard late fees.

• GST Section 155

As per the recent notification, [ No. 37/2023-Central Tax, dated August 4, 2023], a new penalty section is being implemented for E-commerce operators (ECO). They could face a penalty of INR 20,000 (including both CGST and SGST) or the amount of tax involved in the supply, whichever is higher. This penalty applies in cases of violating specified provisions relating to ECO supplies made by unregistered persons or composition taxpayers.

• GST Section 156

The decriminalization applies to offences specified in clauses (g), (j), and (k) of Section 132(1) of the CGST Act. These offences include hindering or impeding an officer's performance of their responsibilities, changing or destroying material evidence or documents, failing to provide information, or providing incorrect information. Additionally, this change raises the prosecution threshold for most violations from INR 1 Crore to INR 2 Crores, with the exception of producing invoices without supplying goods or services. Therefore, for all offences, excluding those including fake invoices, prosecution proceedings will commence if the tax value exceeds Rs. 2 Crores. In the case of false invoices, prosecution will still be initiated at the former tax amount level of Rs. 1 Crore.

• GST Section 157

1. Compounding offences do not cover cases involving bogus invoices.
2. Except for fake GST invoice-related violations, a reduction of compounding amounts requires reducing both the minimum and maximum compounding thresholds, as shown below:

• GST Section 158

According to the new notification, No. 38/2023-Central Tax, dated August 4, 2023, this provision allows the sharing of information submitted by taxpayers such as details in the registration application, returns, e-invoice, e-waybill on the GST Common portal with other systems, subject to the taxpayer's consent.

• GST Section 159

To address ongoing or possible litigations where a taxpayer has not paid tax on specific supplies, the following Schedule III (non-taxable supplies) entries are regarded to have been introduced with retroactive effect beginning July 1, 2017:

1. Goods supplied from one location outside the taxable territory to another location outside the taxable territory without entering India (high seas sales).
2. Supply of warehoused commodities to any individual before clearance for home consumption.
3. No tax refund will be given for transactions or activities falling within this category, provided that tax was already paid for those transactions or activities over the period from July 01, 2017, to January 31,

Latest Changes to the IGST Act

• GST Section 123

On July 31, 2023, the CBIC made a significant change by issuing Notification No. 27/2023-Central Tax. This modification clarifies supplier eligibility for zero-rated status, ensuring that only supplies intended for authorized operations within an SEZ unit or by a developer qualify as zero-rated. Previously, before claiming a refund of accumulated Input Tax Credit (ITC) or Integrated Goods and Services Tax (IGST), a supplier operating in the Domestic Tariff Area (DTA) had to obtain an endorsement from the designated SEZ officer under Rule 89. 

• GST Section 160

Section 160 of the GST Act has been revised to broaden the scope of Online Information and Database Access or Retrieval Services (OIDAR). The term "non-taxable online recipient" has been modified. Beginning October 1, 2023, every unregistered individual in India's taxable jurisdiction who receives OIDAR services for any reason would be regarded as a non-taxable online recipient. Previously, OIDAR services provided by enterprises in non-taxable foreign jurisdictions were excluded from taxation when received for non-business reasons by the central government, state government, government authorities, or individuals. 

• GST Section 161

 According to notification 13/2023 - Integrated Tax (Rate), dated September 26, 2023, this change removes the provision in Section 12(8) of the IGST Act that covers determining the place of supply for transportation commodities, regardless of destination, in circumstances when both the service supplier and recipient are located in India. The POS will now be the location of the service recipient, given the recipient is a registered individual.

• Section 162 of the Financial Act of 2023 - Section 13(9) of the IGST Act

Section 13(2) of the IGST Act is the default provision that applies to Section 13(9) of the IGST Act, which determines the place of supply for services associated with the transportation of goods (excluding mail or courier services). This means that if either the service provider or recipient is located outside India, the place of supply will be considered to be the location of the service recipient. Therefore, services provided to recipients outside India will be considered exports, and services received from providers outside India will be classified as imports of services, regardless of the destination of the goods being transported. This information is provided in Notification 11/2023 – Integrated Tax (Rate) issued on September 26, 2023.

• Sections 16(3) and (4) of the IGST Act

The updated default option is to provide goods and services under a Letter of Undertaking (LUT) without making an upfront tax payment, and then request a refund of accumulated Input Tax Credit (ITC). The government has the right to designate which groups are permitted to make IGST payments and how the refund process should be carried out. The CBIC has authorized tax payments for all exports of goods and services, except for certain goods such as cigarettes, pan masala, and other tobacco-related items, under Notification No. 1/2023-Integrated Tax dated July 31, 2023. 

• Three Notifications of IGST 11/2023, 12/2023, and 13/2023

Three Notifications under the Integrated Tax (Rate), namely 11/2023, 12/2023, and 13/2023, all dated September 26, 2023, have introduced modifications to the Rate, Exemption, and Reverse Charge Mechanism (RCM) notifications of the Integrated Goods and Services Tax (IGST). These modifications seek to eliminate the liability implemented on importers for services supplied by entities that operate in non-taxable territories, specifically foreign shipping lines, to individuals located in non-taxable territories (foreign suppliers). This applies to the transportation of goods by vessel from a point outside India to a customs clearance station in India for CIF imports where reverse charge procedures were previously in existence.

Conclusion

In conclusion, the latest GST changes effective from 1 October 2023 bring several positive reforms to the existing tax system in India. These changes aim to simplify processes, reduce the compliance burden, enhance transparency, and foster the growth of businesses across the country. It is crucial for businesses and taxpayers to understand these changes and adapt their operations accordingly to ensure a smooth transition and compliance with the updated GST framework.

By embracing these changes and complying with the updated regulations, businesses can position themselves for success in the evolving GST landscape and contribute to the overall growth of the Indian economy. Masters India is an entirely automated GST Software for return filing, which along with other functionalities also ensures that you always remain in the good books of the government by maintaining a high GST compliance rating. If you have any questions or would like to know more, feel free to reach us at Masters India.

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