Key GST Changes Set to Take Effect from October 1, 2023: A Closer Look at Tax Changes

The world of taxation is ever-evolving, and staying informed about the latest changes is crucial for individuals and businesses alike. As we approach October 1, 2023, a significant milestone is on the horizon for the Goods and Services Tax (GST) system. This date marks the commencement of key GST changes that are poised to reshape the tax landscape in online gaming. 

In this article, we take a closer look at these impending tax changes, delving into their implications and shedding light on how they may impact various sectors of the economy. Join us as we navigate through the intricacies of these alterations to gain a comprehensive understanding of the GST revisions set to take effect in just a matter of months.

CHANGES IN CENTRAL GOODS AND SERVICES TAX ACT

Section 10 of CGST: Composition Levy

Composition levy extended to suppliers of goods under ecommerce model:

The advantage of the composition scheme, previously unavailable to registered individuals involved in goods supply via E-commerce platforms, will now be expanded to encompass them. Nevertheless, limitations will persist for registered individuals engaged in providing services through E-commerce operators.

The amendment has omitted the term ‘goods’ under Section 10 (2)(b) of CGST Act and Section 10(2A)(c). The term ‘Services’ prevails in the subsection.

Section 16 of CGST: Eligibility and conditions for taking input tax credit.

Amendment for clarification regarding payment to the supplier within 180 days

The new amendment stipulates that if a recipient does not make payment to the supplier for the supply’s value and tax within 180 days from the invoice date, the recipient must remit an amount equivalent to the Input Tax Credit (ITC) they have claimed, along with the interest payable as per Section 50 of the CGST Act.

The provision prior to the amendment required the Input Tax Credit (ITC) to be added to the output tax liability. However, following the amendment, it involves either payment or reversal of ITC. As a result, the interest liability for such reversals will be calculated based on Section 50(3) of the CGST Act, rather than Section 50(1).

The amendment of provisions of Section 16 states that “(i) in the second proviso, for the words “added to his output tax liability, along with interest thereon”, the words and figures “paid by him along with interest payable under section 50” shall be substituted; 

(ii) in the third proviso, after the words “made by him”, the words “to the supplier” shall be inserted.”

Section 17(3) of CGST: Apportionment of credit and blocked credits.

Sale of warehoused goods before filing BOE includible in value of exempt supply for reversal of common ITC u/s 17(2) and (3) r.w. Rule 42/43:

The transactions’ value, as specified for para 8(a) of Schedule III of the CGST Act (pertaining to the supply of warehoused goods to any person before clearance for home consumption), must be added to the value of exempt supplies for the purpose of reversing common input tax credit under Section 17(2) and (3) in conjunction with Rule 42/43.

Section 17(5)(fa) of CGST : ITC blocked on CSR activities:

Input Tax Credit (ITC) cannot be claimed on goods or services received by a taxable person, whether used or intended to be used for activities associated with fulfilling Corporate Social Responsibility (CSR) obligations.

Section 23(2) of CGST: Persons not liable for registration.

Retrospective overriding effect of S. 23(2) on 22 and 25 w.e.f. July 2017

A retrospective amendment, effective from July 1, 2017, has been introduced to clarify that individuals who are exempted from obtaining registration through a notification under Section 23(2) of the CGST Act are not required to obtain registration, regardless of the provisions outlined in Section 22 (threshold limit cases) or Section 24 (mandatory cases). It’s worth noting that individuals exempted from registration under Section 23(1) do not benefit from this amendment.

According to the amendment (i) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act, 2017; 13 of 2017. (ii) an agriculturist, to the extent of supply of produce out of cultivation of land.

Also, the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, specify the category of persons who may be exempted from obtaining registration under this Act.”. 

Section 30 of CGST: Time limit on application for revocation of cancelled registration:

The previously prescribed 30-day time limit under Section 30 for submitting an application to revoke the cancellation of GST registration has been removed. The new timeframe is now regulated by Rule 23, which has been extended to 90 days from the date of the cancellation order. Additionally, the Commissioner has the authority to grant an extension, not exceeding 180 days, as deemed necessary.

Section 37, 39, 44, 52 of CGST: Limitation of 3 years on filing of returns

After a period of 3 years from the due date of furnishing the relevant return, the registered individual is not permitted to submit returns in GSTR-1, GSTR-3B, GSTR-9, GSTR-9C, and GSTR-8.

Section 54 & 56 of CGST: Refunds and Interest on delayed refunds

Section 54: Technical amendment made merely to align the same with present scheme of availment of ITC on self-assessment basis.

Section 56: Interest on delayed refunds will be granted subject to certain conditions & restrictions and in the manner which will be prescribed.

Section 62 of CGST: Assessment of unregistered persons

The time frame for submitting Form GSTR 3B or Form GSTR 10 (Final Return) has been extended from 30 days to 60 days in cases of Best Judgment Assessment, which allows for the deemed withdrawal of the best judgment order. If the submission extends beyond 60 days, an additional 60-day period (from day 61 to day 120) is available, provided an extra late fee is paid in addition to the standard late fee.

Section 122(1B) of CGST : Penalty for certain offences

Introduces penalties that apply to E-commerce operators (ECOs) in the event of violations of provisions related to the supply of goods by unregistered persons or composition taxpayers through them.

Section 132 of CGST : Punishment of certain offences

Removing Criminalization of Certain Offenses: Eliminating the designation of offenses listed in clause (g), (j), and (k) from Section 132(1) of the CGST Act, 2017.

The revised monetary threshold for initiating prosecution has been raised from Rs. 1 Crore to Rs. 2 Crore, except in cases related to counterfeit or bogus invoices. Therefore, for offenses unrelated to fake invoices, imprisonment may be pursued if the value exceeds Rs. 2 Crores, while prosecutions for fake invoices will continue to apply as per the previous threshold of Rs. 1 Crore.

Section 138 of CGST: Compounding of offences

No Compounding of offences: Fake/bogus invoice cases excluded from the option of compounding of offences.

Reduction in Compounding fees: Reduction of amount for compounding of various offences except offence of fake invoice, by reducing the minimum and maximum amount for compounding.

Section 158A of CGST : Insertion of Section 158A for allowing sharing of information or details furnished by a taxable person on the GST common portal with such other systems as may be notified by government. This is consent based sharing of information.

Schedule III of CGST: Retrospective applicability of Para 7, 8(a) and 8(c) of Schedule III

CHANGES IN INTEGRATED GOODS AND SERVICES TAX ACT (IGST Act)

Section 2(17) of IGST: Definition of OIDAR amended to widened the scope of services, by removing the condition of “essentially automated” and “involving minimal human intervention”

Section 12(8) and 13(9) of IGST: Place of Supply in relation of Transportation of Goods:

Place of supply of transportation of goods, including by mail or courier (Section 12(8) of IGST Act): To remove the Proviso to Section 12(8) in order to determine the place of supply, regardless of the goods’ destination, when both the service provider and recipient are situated in India. In such cases, the Place of Supply (POS) will be the location of the registered recipient. This change means that half of the tax will be attributed to the State where the recipient is registered, as opposed to the previous arrangement where the entire tax went to the Union in the case of goods destined for locations outside India.

Place of supply of transportation of goods, other than by mail or courier (Section 13 of IGST Act): Section 13(9) of the IGST Act, 2017, has been removed. This change establishes that the place of supply of services related to the transportation of goods, excluding mail or courier services, will be governed by the default provision in Section 13(2) of the IGST Act. In cases where either the service provider or the service recipient is located outside India, the place of supply will be the location of the service recipient. Consequently, services provided to recipients outside India will be categorized as exports, and services received from providers outside India will be considered imports of services, regardless of the destination of the goods involved.

Section 16(1)(b) of IGST: Zero-rated supplies to SEZ for authorised operations:

The words “for authorised operations” have been added to clause (b) of Section 16(1) to remove the ambiguity that only the supplies made for authorised operations to SEZ units or developers shall qualify as zero-rated supplies.

Section 16(3),(4) of IGST: Zero-rated supplies not permitted with payment of IGST until notified

Notification 11 – IGST (Rate): Notified exemption of 5% GST under RCM on Ocean Freight

Read Notification: Central Govt Exempts 5% GST on Ocean Freight Imports w.e.f. October 1st

CHANGES RELATED TO E WAY BILL

As per the Notification No. 78/2020 dated 15th Oct 2020, the taxpayers, having Aggregate Annual Turnover (AATO) above Rs 5 Crore, shall use at least 6 digit HSN code in the e-invoices and e-Waybills and other taxpayers shall use at least 4 digit HSN code in E-invoices and E-Way Bills. This will be made Mandatory from October 01, 2023, in e-Waybill and e-Invoice Systems.

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