Key highlights of changes in GST Proposed in Finance Act 2023

Key highlights of changes in GST Proposed in Finance Act 2023:

• Composite Levy- Clause (d) of sub-section (2) and Clause (c) of sub-section (2A) in section 10 of the CGST Act is being amended so as to remove the restriction imposed on registered persons engaged in supplying goods through electronic commerce operators from opting to pay tax under the Composition Levy.
• Blocked or Denied credit- Explanation to sub-section (3) of section 17 of the CGST Act , the value of exempt supply to include certain transactions specified in para 8(a) of Schedule III of the said Act in additions to para 5 of Schedule III
• Blocked or Denied credit- Further, sub-section (5) of said section 17 is also being amended to deny ITC for corporate social responsibility referred to in section 135 of the Companies Act, 2013.
• Persons not liable to register- section 23 of the Central Goods and Services Tax Act relating to persons not liable for registration will have an overriding effect to over sub-section (1) of section 22( registration) and section 24( Mandatory registrations) of the said Act
• new sub-section (5) in section 37( GSTR -1)  to provide a time limit of three years upto which the details of outward supplies under sub-section (1) of the said section for a tax period can be furnished by a registered person. 
• new sub-section (11) in section 39( GSTR- 3B) of the Central Goods and Services Tax Act so as to provide a time limit of three years upto which the return for a tax period can be furnished by a registered person.
• new sub-section (2) in section 44( GSTR-9) of the Central Goods and Services Tax Act so as to provide a time limit of three years upto which the annual return under sub-section (1) of the said section for a financial year can be furnished by a registered person
• new sub-section (15) in section 52( GSTR 8) of the Central Goods and Services Tax Act so as to provide a time limit of three years upto which the statement under sub-section (4) of the said section for a month can be furnished by an electronic commerce operator
• sub-section (6) of section 54( Refund) of the Central Goods and Services Tax Act amended to remove the reference to "the provisionally accepted input tax credit"
• In section 56( Interest on delayed refunds) of the Central Goods and Services Tax Act, for the words “from the date immediately after the expiry of sixty days from the date of receipt of application under the said subsection till the date of refund of such tax”, the words “for the period of delay beyond sixty days from the date of receipt of such application till the date of refund of such tax, to be computed in such manner and subject to such conditions and restrictions as may be prescribed” shall be substituted.
• In section 122( Penalty for offences), after sub-section (1A), the following sub-section shall be inserted, namely:––

“(1B) Any electronic commerce operator who––

(i) allows a supply of goods or services or both through it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply;

(ii) allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or

(iii) fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act,

shall be liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.

• amendment of  sub-section (1) of section 132( Punishment of certain offences) to decriminalise offences specified in clauses (g), (j) and (k) of the said sub-section and to increase the monetary threshold from 100lakh rupees to 200 lakh rupees for launching prosecution for the offences under the said Act, except for the offences related to issuance of invoices without supply of goods or services or both.
• amendment first proviso to sub-section (1) of section 138( Compounding of offences) to exclude the persons involved in offences relating to issuance of invoices without supply of goods or services or both from the option of compounding of the offences under the said Act. and It further seeks to amend sub-section (2) so as to rationalise the amount for compounding of various offences by reducing the minimum as well as maximum amount for compounding
• Consent based sharing of information furnished by taxable person- a new section 158A inserted to provide for sharing of the information furnished by the registered person in his application for registration or in his return filed or in his statement of outward supplies, or the details uploaded by him for generation of electronic invoice or E-way bill or any other details, as may be provided by rules, on the common portal with such other systems, as may be notified
• amendment of  Schedule III to give retrospective applicability to paragraphs 7(High-sea sales) and 8( supplies before home consumption) and the Explanation 2 to the said Schedule with effect from the 1st day of July, 2017
• Definition of under sec 2(16) of IGST Act is amended as “non-taxable online recipient” means any unregistered person receiving online information and database access or retrieval services located in taxable territory" where the expression “unregistered person” is those who are required to deduct tax under section 51, whether or not separately registered under this Act( Sec 24(vi) CGST Act)
• Sub-section (8) of section 12( Place of supply of services by way of transportation of goods) IGST Act is omitted to remove the confusion regarding availment of input tax credit and other matters

As these changes proposed in Finance Bill 2023, we have to watch out for more actions forward in these directions until its parliament's approval and GST notification to take effect.

Stay tuned for more useful updates.

-- LDR