On 22 December 2020, the Central Government had issued Notification No.94/2020-Central Tax to amend the CGST Rules, 2017. A Corrigendum to this notification was published on 28 December 2020. In this article, we will discuss these amendments:
|Rule Heading||Brief Description of the Rule (before Notification)||Amendment to the Rule (after Notification)|
|Rule 1 –
Short title and Commencement
|With effect from 22 June 2017, the rules listed shall be called the Central Goods and Services Tax Rules, 2017.||● The rules listed shall be called as the Central Goods and Services Tax (Fourteenth Amendment) Rules, 2020
● The rules listed shall come into force on the date of their publication in the official gazette, i.e., 22 December 2020
|Rule 8 (4A) –
Application for Registration
|With effect from 1 April 2020, the applicant shall complete an Aadhaar authentication during the registration process.||With effect from a date that is yet to be notified:
● When the applicant has opted to authenticate his/her Aadhaar number, the application will be followed by a biometric-based Aadhaar authentication and photograph.
● When the applicant has not opted for authentication of Aadhaar number, the application will be followed by taking biometric information, a photograph, and other KYC documents as applicable.
The application will be deemed to be complete only after the above process is completed.
|Rule 9 (1) –
Verification of the application and approval
|● The proper officer will examine the application of a new taxpayer. If appropriate, approval shall be granted for registration within three working days from the date of submission of the application.
● Where the applicant does not undergo Aadhaar authentication or where the Department opts to carry out physical verification of the place of business, registration shall be granted within sixty days from the date of submission of the application.
|● Hereafter, the approval shall be granted within seven working days from the date of submission of the application.
● Hereafter, in such cases, the registration shall be granted within thirty days from the date of submission of the application.
|Rule 9 (2) –
Verification of the application and approval
|If the application of a new taxpayer lacks in terms of any information or when the proper officer requires any clarification regarding any information provided, then the said officer may issue a notice electronically in Form GST REG-03 within three working days from the date of submission of the application.
|● Hereafter, the notice should be issued within seven working days from the date of submission of the application.
● A new proviso has been included under sub-rule 2:
Where the applicant does not undergo Aadhaar authentication or where the Department opts to carry out physical verification of the place of business, notice in Form GST REG-03 should be issued within thirty days from the date of submission of the application.
|Rule 9 (5) –
Verification of the application and approval
|If the proper officer fails to take any action
● Within three working days from the date of submission of the application; or
● Within seven working days from the date of receipt of information, clarification or documents submitted by the applicant under Rule 9(2) above,
the application for ‘Grant of Registration’ shall be deemed to have been approved.
|● Hereafter, the time limit will be (within) seven working days from the date of submission of the application.
● Hereafter, the time limit will be (within) thirty working days from the date of receipt of information, clarification, or documents.
|Rule 21 –
Registration to be cancelled in certain cases
|The registration granted to an applicant shall be cancelled on various grounds listed under CGST Rules, 2017.||Additional grounds have been included through the notification:
● Availing of Input Tax Credit (ITC) in violation of provisions of Section 16 of the CGST Act, 2017 (Eligibility and conditions for taking ITC) or the rules made thereunder.
● Amount of outward supplies furnished in Form GSTR-1 (under Section 37 of the CGST Act, 2017 – Furnishing details of outward supplies), for one or more tax periods is more than the amount of outwards supplies declared in the GST return (under Section 39 of the CGST Act, 2017 – Furnishing of returns) for the said tax periods.
● Provisions of Rule 86B of the CGST Rules 2017 (Restrictions on use of amounts available in electronic credit ledger) are violated.
|Rule 21A – Suspension of registration||If the proper officer has reasons to believe that the registration of an applicant is cancellable under section 29 of the CGST Act 2017 (Cancellation or suspension of registration) or Rule 21 of the CGST Rules 2017 (Registration to be cancelled in certain cases), the said officer may suspend the registration after providing a reasonable opportunity to be heard to the said person.
|● Hereafter, no opportunity of being heard will be provided to the taxpayer.
● A new sub-rule 2A has been included which states the following:
○ When the GST registration of taxpayer is cancelled because the details furnished by the taxpayer (under Section 39 of the CGST Act, 2017 – Furnishing of returns), does not match with the details of outward supplies provided in Form GSTR-1 or the details of inward supplies derived from the GSTR-1 filed by their suppliers of the said person, the taxpayer will receive an intimation in Form GST REG-31 electronically.
○ They may also receive a communication via email highlighting the said mismatches and asking them for an explanation as to why the registration should not be cancelled, within thirty days.
○ Format of new Form GST REG-31 has been introduced in this notification.
● A new sub-rule 3A has been included which states the following:
○ During the period of suspension of registration, under sub-rule 2 or 2A, the registered person shall not be granted any refund under section 54 of the CGST Act, 2017 (Refund of Tax).
|Rule 21A (4)– Suspension of registration||The proper officer can revoke the suspension of registration upon completion of proceedings.||The proper officer can now revoke the suspension of the registration any time during the pendency of the proceedings (for cancellation).|
|Rule 22 – Cancellation of registration||Rule 22 has been updated to include the provisions of newly notified Rule 21(2A).||The proper officer can pass an order in Form GST REG-19 or Form GST REG-20 (as the case may be) as per the show cause notice issued under Rule 21 (2) and the newly introduced Rule 21(2A).|
|Rule 36(4) –
Documentary requirements and conditions for claiming input tax credit
|The ITC availed by a registered person, in respect of invoices/ debit notes not furnished by the supplier in their GSTR-1 or by using the invoice furnishing facility, is restricted to 10% of the credit available in the said persons’ GSTR-2B.||With effect from 1 January 2021, the ITC that can be claimed in this situation has been reduced from 10% to 5%|
|Rule 59(5) –
Form and manner of furnishing details of outward supplies
|Rule 59 has been updated to include a new sub-rule (5).||A registered person will not be able to file GSTR-1 or use the invoice furnishing facility:
● If they have not filed GSTR-3B for the past two months (in case of monthly filers) or the preceding tax period (in case of quarterly filers).
● If they are restricted from using the electronic credit ledger to pay off their tax liability above 99% (ninety-nine per cent) under Rule 86B (Restrictions on use of the amount available in electronic credit ledger).
|Rule 86B –
Restrictions on use of amount available in the electronic credit ledger
|With effect from 1 January 2021, Rule 86 has been updated to include a new sub-rule 86B.||A registered person is restricted from using the credit lying in the electronic credit ledger to discharge their tax liability above ninety-nine per cent of such tax liability in cases where the value of taxable supply, other than exempt and zero-rated supply, in a month, exceeds fifty lakh rupees.
However, certain exceptions have been provided for where such restrictions will not be applicable (Rule 86B in Notification 94/ 2020 – Central Tax). The proper officer may remove these restrictions after due verification.
|Rule 138(10) –
Information to be furnished prior to the commencement of movement of goods and generation of E-way bill
|With effect from 1 January 2021, an E-way bill’s validity has been increased from 100 km. per day to 200 km. per day.||● Hereafter, the validity of E-way bills covering a distance up to 200 km will be 1 day (except in cases of over-dimensional cargo or multimodal shipment).
● For every 200 km. or part thereof after that, one additional day will be allowed.
|Rule 138(E) –
Restriction on furnishing of information in PART A of FORM GST EWB-01
|A registered person, (other than a person paying tax under the composition levy scheme) who has not furnished the returns for two consecutive months, shall not be allowed to furnish information in Part A of Form GST EWB-01.||● Hereafter, a registered person, (other than a person paying tax under the composition levy scheme), who has not furnished the returns for two consecutive tax periods, will not be allowed to furnish information in Part A of Form GST EWB-01.
● Rule 138 has been updated to include a new clause (d) which states the following:
○ A Registered person whose registration has been suspended under Rule 21A (1) or (2) or (2A), shall not be allowed to furnish information in Part A of Form GST EWB-01.