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Key-highlights of GST Proposals in Finance Bill 2022

Key-highlights of GST Proposals in Finance Bill 2022 –

  • ⦁ Time-limit to avail ITC u/s 16 (4) extended till 30th November of next year from 30th September.
  • ⦁ Additional Condition for availing of ITC u/s 16 (2)- ITC can be availed only if the same is not restricted to GSTR-2B.
  • ⦁ Composition Tax Payer’s Registration can be canceled suo-moto if they have not filed their GSTR-4 return of 3 months from the due date.
  • ⦁ Credit Notes in respect of a supply made in a financial year can be issued by 30th November of next financial year (currently allowed till 30th September).
  • ⦁ Any rectification of an error in GSTR-1/ GSTR-3B is now permitted until 30th November of the next financial year (currently allowed till 30th September).
  • ⦁ The two-way communication process in filing GST returns is scrapped.
  • ⦁ The due date for filing a return by a non-resident taxable person is prescribed as the 13th day of next month.
  • ⦁ Section 41 of the CGST Act is being substituted so as to do away with the concept of “claim” of ITC on a “provisional” basis.
  • ⦁ Section 47 of the CGST Act is being amended to provide for a levy of late fees for delayed filing of TCS returns.
  • ⦁ Section 49 of the CGST Act is being amended so as to provide for restrictions for utilizing the amount available in the electronic credit ledger.
  • ⦁ Section 49 of the CGST Act is being amended so as to allow transfer of amount available in the E-cash ledger of a registered person to the E-cash ledger of a distinct person;
  • ⦁ Section 49 of the CGST Act is being amended so as to provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger.
  • ⦁ Section 50 (3) of the CGST Act is being substituted retrospectively, with effect from the 1st July 2017, so as to provide for levy of interest on input tax credit wrongly availed and utilized. (Meaning, thereby, interest will not be levied if ITC is not utilized).
  • ⦁ Refund claim of any balance in the electronic cash ledger shall be made available.
  • ⦁ Rate of interest u/s 50 (3) prescribed as 18% in all cases.
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Restrictions on availment of ITC as per GSTR-2A/2B from 1st, January 2022.

Availment of ITC as per GSTR-2A/2B –

The taxpayer had been allowed to claim ITC based on the 4 conditions mentioned in section 16.
However, in section 16 of the Central Goods and Services Tax Act, in sub-section (2), after clause (a), CBIC has inserted 5th condition via clause (aa) namely, “the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37”.
Now, this provision will apply from 1st Jan 2022, and 100 percent invoice matching with GSTR 2A will come into place.

On which basis taxpayer used to claim ITC till date?

Till date, taxpayers used to claim ITC based on either of the following two methods –

  • ⦁ Method 1: Claim ITC in return for that period to the extent of appearing
    in GSTR 2A.
  • ⦁ Method 2: Claim Full ITC based on amount appearing in the purchase
    invoice booked.

Now taxpayers will be allowed to take ITC only to the extent of the amount appearing in GSTR 2A.

What are the reasons due to which ITC of the genuine taxpayer can be disallowed because of insertion of the above new clause?

Following are the reasons due to which ITC of the genuine taxpayer can be disallowed:

  • ⦁ Your supplier has not filed GSTR 1 within the due date.
  • ⦁ Your supplier has filed GSTR 1 but mentioned the wrong GST number.
  • ⦁ Your supplier has filed GSTR 1 but mentioned the transaction as B2C instead of B2B.
  • ⦁ Many more reasons which are not in control of taxpayer.

What action department can take if any taxpayer claims ITC in excess of appearing in GSTR 2A?

⦁ The GST department has already started issuing a notice in the Form of ASMT 10 for FY 2017-18 and FY 2018-19 against the dealer who has claimed excess ITC than that appearing in GSTR 2A / Table 8 of GSTR 9. Such notices have been sent to all dealers by mail and are also available on the GST portal. The notice needs to be replied to, otherwise, the GST department can recover the tax along with interest and penalty.

What care should be taken by the taxpayer?

⦁ Now it is the responsibility of every taxpayer to check whether the supplier is filling GSTR 1 accurately and in a timely manner and after the auto-population of GSTR 2A of the following month the taxpayer shall reconcile ITC on purchases accounted in books with ITC reflected in GSTR 2A. If the same is not reflected in GSTR-2A, then a follow-up must be taken by the taxpayer with the supplier so that the same can be availed by the taxpayer.

Our previous article on the same issue – https://akhilamitassociates.com/blog/only-itc-reflecting-in-gstr-2b-gst-returns-can-be-claimed-from-01-01-2022-best-gst-ca-in/

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GST for restaurants selling online

E-Commerce Operators liable to pay GST on Restaurant Services W.E.F. 01-01-2022:-

The GST Council, in its 45th meeting held on 17th September 2021, recommended notifying *Restaurant Service* under section 9(5) of the CGST Act, 2017. Accordingly, to effectuate this recommendation, *Notification No. 17/2021 (CTR)* dated 18.11.2021 has been issued, and now a separate clarification vide *Circular No. 167 / 23 /2021–GST*, dated: 17-12-2021, also has been issued to the extent that the e-commerce operators (ECO) are liable to pay GST on restaurant services.

So, the scenario is as ‘restaurant service’ has been notified under section 9(5) of the CGST Act, 2017, *the ECO shall be liable to pay GST* on restaurant services provided, with effect from the *1 January 2022*, through ECO. The ECOs will *no longer be required to collect TCS* and file GSTR 8 in respect of restaurant services on which it pays tax in terms of section 9(5). On other goods or services supplied through ECO, which are *not notified u/s 9(5)*, ECOs *will continue to pay TCS* in terms of section 52 of CGST Act, 2017 in the same manner at present. As ECOs are already registered under rule 8(in Form GST-REG 01) of the CGST Rules, 2017 (as a supplier of their own goods or services), there would be *no mandatory requirement of taking separate registration* by ECOs for payment of tax on restaurant service under section 9 (5) of the CGST Act, 2017.

The aggregate turnover of a person supplying restaurant service through ECOs shall be computed as defined in section 2(6) of the CGST Act, 2017, and shall include the aggregate value of supplies made by the restaurant through ECOs. Accordingly, for threshold consideration or any other purpose in the Act, *the person providing restaurant service through ECO shall account for such services in his aggregate turnover*.

It may also be noted that on restaurant service, ECO *shall pay the entire GST liability in cash*. No ITC could be utilized for payment of GST on restaurant service supplied through ECO. ECOs provide their *own services as an electronic platform and an intermediary* for which it would acquire inputs/input service on which ECOs avail input tax credit (ITC).

The ECO charges commission/fee etc. for the services it provides. The ITC is utilized by ECO for payment of GST on services provided by ECO on its own account (say, to a restaurant). The situation in this regard remains unchanged even after ECO is made liable to pay tax on restaurant service. ECO would be eligible to ITC as before. Accordingly, ECO *shall not be required to reverse ITC on account of restaurant services* on which it pays GST in terms of section 9(5) of the Act. Well!!! These clarifications issued well ahead of the date of implementation will go a long way in a correct understanding of the legislative requirements and compliance of the same.

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Only ITC Reflecting in GSTR-2B (GST Returns) can be claimed from 01-01-2022.

First: – Section 16(2)(aa) notified from 1 Jan 2022

(aa) the details of the invoice or debit note referred to in clause (a) have been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37.

It means from 1 Jan 2022 Input available only as when as come in GSTR-2B

Effects of New Sub-clause 16(2)(aa)
• ITC cannot be availed beyond GSTR-2B.
• No concept of Provisional Credit.
• If GSTR-1 is filled by the supplier beyond the cutoff date, then ITC will not be available in the same month.

In simple language, we can claim only that amount of ITC in GST Returns, which is reflected in GSTR-2B.

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