Every time New Year comes with new happiness, new stories in our life. The same happens in our law. Whenever the new law comes into existence, for the next few years, substantial changes also came. Since it took time to adjust with the market and lawmakers to prepare the law which shall be beneficial for the taxpayer as well as revenue. We have already seen the example in this regard which is the “Companies Act, 2013”. When this act came into force, from that year till now, in every year there are some amendments that have been applicable. Now, the same is being happened with GST law. GST Act was applicable from 1st July 2017, and from that day, every few times, we see major changes in this law.
In this article, we will study about the major changes applicable under the GST from New Year 2020 and it includes Powers of Commissioner to block ITC under new Rule 86A, Restriction on claim of ITC, Blocking of generation of E-way Bill, if GSTR-1 not filed, Creating QR codes for B2C supplies, Mandatory E-Invoicing under GST, New GST Returns system, Waiver of late fees for Non-filing of GSTR-1 and GST Audit and Annual Return for F.Y 17-18 & F.Y 18-19, Reverse Charge (RCM) on Renting of Motor Vehicles, Quoting of DIN Mandatory by the Department in all Communications, SOP for Non-Filers of GST Return, Extension of last date for filing of TRAN-1 & TRAN-2. So let’s Begin:
1. ITC can be claimed up to a limited Rate
There was a time when the recipient can claim the ITC irrespective of whether the supplier has booked his liability in this regard or not. Let me tell you with an example:
We all know that the government wants to issue 3 forms i.e. GSTR-1 for outward supply (Filed by the supplier)
GSTR-2 for inward supply (Filed by the recipient)
GSTR-3 for Summary Return for payment of Tax (Filed by the supplier)
However, due to a lot of compliance and lack of knowledge about the new law, the government has issued only 2 forms i.e. GSTR-1 for outward Supply (Filed by supplier) and
GSTR-3B for summary return (Also Filed by supplier)
In this case, there is no form was prescribed for Recipient and many people took the benefit for this by claiming the ITC in respect of supplies which in actual never been made. The department has to face a lot of difficulties to identify this kind of person.
Although, sometimes, the supply was actually made the supplier forgot to enter the details of such supplies in the return and due to which the recipient could not claim the ITC.
To remove this discrepancy, the government has reduced the rate of ITC for availment, in respect of supplies which were not shown by the supplier in GSTR-1, by issuing a notification vide Notification No. 75/2019 – Central Tax dated December 26, 2019.
From 1st January 2020, the rate shall be 10%. In simple words, In case, the supplier has not mentioned the details of supplies made by him in the returns, then in respect of such supplies, the recipient of such supply shall be eligible to take the credit of ITC only up to the 10% of total amount of ITC which shall be eligible to the recipient in case, the supplier has mentioned the details in his return.
Earlier vide Notification No. 49/2019 – Central Tax dated October 9, 2019, inter alia, inserted a new sub-rule (4) to Rule 36 of the CGST Rules, the government has notified the rate of 20% however, now the rate shall be 10%. Here the supply includes debit notes.
2. Blocking of ITC by the commissioner under new Rule 86A
As per new Rule 86A of the CGST Rules, inserted vide Notification No. 75/2019- Central Tax dated December 26, 2019, if the commissioner has a reason to believe that the recipient has:
- Availed the credit fraudulently i.e. the recipient has taken the supplies from the non-existing persons or from a person not conducting any business from any place for which registration has been obtained.
For Example, Mr. A is a trader. He obtained the GSTN number of his servant by giving the false documents and taken the invoices from him and took the credit in this regard. Hence, if the commissioner has made the assessment of his servant then he shall come to know that the whole transaction was made for fraudulent intention.
- Availed without receipt of goods or services: Even today, we have seen a lot of people who charged the GST but they did not pay back the tax to the government. The said notification shall catch such type of person and levy the penalty and interest.
- Claimed the ITC as per the tax invoices received from the supplier in respect of which the tax charged by him, has not been paid to the Government.
Then he shall disallow such ITC by debiting the amount in the electronic credit register which would be otherwise used for discharging of tax liabilities or claiming a refund of any unutilized amounts in the tax register. However, the said provision shall be applicable only when the commissioner has a reason to believe in this regard.
3. Blocking of a generation of E-way Bill, if GSTR-1 not filed
As per the Notification No. 75/2019 – Central Tax dated December 26, 2019, Rule 138E of the CGST Rules, from 11th January 2020, in case, any taxpayer did not file his GSTR-1 for a consecutive period of 2 months or quarter as the case may be, then after that, he shall not be able to generate the E way Bill until he filed the return with interest. Hence it is advisable for the taxpayer to timely file it’s GSTR-1 and GSTR-3B in the year 2020 to avoid the penalty and interest.
4. Mandatory E-Invoicing under GST
In terms of Notification No. 70/2019 – Central Tax dated December 13, 2019, w.e.f. April 01, 2020, those registered people whose aggregate turnover (including exempt supplies) exceeds Rs. 100 crores in a financial year, on PAN India basis, shall compulsorily generate e-invoices in the case of B2B supplies and report to the notified common portals of GST.
5. Creating QR codes for B2C supplies
In terms of Notification No. 71/2019 – Central Tax and Notification No. 72/2019 – Central tax, both dated December 13, 2019, w.e.f. April 01, 2020, It becomes mandatory for the registered person, having an aggregate turnover exceeding Rs.500 crore, for creating Quick Response Code (“QR Code”) to an unregistered person (B2C invoice).
6. Replacing old returns with new returns from April 2020
In the GST Council 31st meeting, it has been decided that a new simplified GST return system will be applicable for taxpayers from 1st April 2020. It will increase the statutory compliance and will help to reduce the tax evasion to its maximum possible extent. In order to smoothen the transition to the new return system, a transition plan was approved by the Council and the same was released for information vide a press release dated June 11, 2019.
The major change brought is automation. As per the new return system, 2 new forms have been issued i.e., GST FORM ANX- 1 and GST FORM ANX- 2 which shall be applicable from April 1, 2020. These forms shall be filed as annexures to the main return form which is GST RET-1/ RET-2/ RET-3.
GST ANX- 1 (Annexure of supplies) shall contain the details of outward supplies, import of goods and services and inward supplies taken but which are liable under reverse charge mechanism.
GST ANX-2 (Annexure of inward supplies) shall have the details of inward supplies from registered persons, imports made, and supplies received from an SEZ unit/developer.
7. DIN is mandatory to quite on all the Department’s Communications
To increase the transparency and accountability in indirect taxation, the government has used information technology and in the CBIC vide Circular No. 122/41/2019- GST dated November 5, 2019, CBIC has implemented a system for electronic (digital) generation of Document Identification Number (“DIN”).
Do not confuse it with the director identification number since that number was used in filing the forms to ROC under the companies act, 2013. However, this form is used for making any communication by the department like on search authorizations, summons, arrest memos, inspection notices, etc., to begin with. However, as per the CBIC vide Circular No. 128/47/2019- GST dated December 23, 2019, government has directed that quoting of DIN shall be done in respect of all kind of communications (including e-mails) sent to taxpayer and other concerned persons by any office of the CBIC and this was already effective from December 24, 2019.
If any Communications has been issued without DIN which is not covered in the exceptional cases mentioned in Paragraph 3 of the Circular No. 122/41/2019- GST dated November 5, 2019, then such communication shall be treated as invalid and it shall be deemed that they have never been issued.
8. SOP for Non-Filers of GST Return
Before explaining this change, let me tell you some of the provisions of CGST Act, 2017
- As per section of CGST Act, 2017, if a person has not filed the return then the department may send the notice to such person and ordered that to file the return within 15 days from the date of the notice.
- As per section 62 of the CGST Act, 2017, if the person has not filed the return within the time as prescribed under section 46, then the notice under section 62 shall be sent to him to file the return otherwise his tax liability shall be assessed as per the best judgment.
- As per section 47 of the CGST Act, 2017, if the taxpayer has not filed the annual return then he shall be liable for the late fees as specified under this section.
Now let’s come to the amendment
Where the person has not filed his return under section 39 (GSTR-3B) or 44 (Annual Return) or 45 (Final Return) of the CGST Act, 2017 (“CGST Act”) the CBIC, vide Circular No. 129/48/2019 – GST dated December 24, 2019, has provided the following guidelines:
- An automated system generated message shall be sent to all registered persons 3 days before the due date of filing of the return, informing them to file their returns for the tax period by the due date.
- An automated system generated mail or message shall be sent immediately to all such person who makes the default in filing of return under section 39 of CGST Act, 2017 (GSTR-3b).
- This provision is very much similar to section 46 in which notice in shall be issued to all defaulter, electronically in form GSTR-3A within 5 days after the due date of furnishing return to any person and ordered him to furnish such return (GSTR-3B) within 15 days.
- Even then the return has not been furnished by the person then section 62 shall be applicable in which the proper officer shall assess the liability of the said defaulter to the best of his judgment by which he has gathered or by taking into account all the relevant material which is available and issued order under Rule 100 of the CGST Rules in FORM GST ASMT-13. After that, the proper officer shall be required to upload the summary thereof in FORM GST DRC-07.
- For the purpose of assessment of liability as per the best of his judgment under Section 62 of the CGST Act, the proper officer shall consider:
- Details of the outward supplies available in a statement furnished under Section 37 of the CGST Act (FORM GSTR-1),
- The information available from E-way bills,
- Details of supplies auto-populated in FORM GSTR-2A,
- Any other information is available from any other source, which includes the information from inspection under Section 71 of the CGST Act.
- Continue with section 62, If in case defaulter has furnished the return with interest, penalty and late fees within 30 days of service of assessment order in FORM GST ASMT-13 then the said assessment order of best judgment shall be deemed to have been withdrawn as per Section 62(2) of the CGST Act. However, if the said return remains unfurnished within the period of 6 months from the issuance of an order in FORM GST ASMT-13 then the department officer may initiate proceedings may pass the best judgment order and use methods as specified under section 79 of CGST Act, 2017 for the recovery of dues pending from him.
- Although in some cases, the Commissioner may even order for the provisional attachment to protect revenue under Section 83 of the CGST Act before issuance of FORM GST ASMT-13.
- Further, the proper officer may cancel the registration where the return has not been filed within the period as specified under section 29 of the CGST Act, 2017.
Note: As per section 29 of the CGST Act, 2017, if a person registered as a composition supplier fails to file its return for 2 consecutive periods, then the proper officer may cancel his registration.
If a person registered under a normal scheme and fails to furnish the return for a consecutive period of 6 months then his registration may be canceled by the proper officer.
9. Reverse Charge (RCM) on Renting of Motor Vehicles
There is one more entry has been added in the reverse charge Mechanism as per Notification No. 13/2017-Central Tax (Rate) dated June 28, 2017 (“RCM Notification”) RCM shall be applicable on the service by way of renting of any motor vehicle used to carry passengers and where the cost of fuel is being included in the consideration where the service recipient is a body corporate and supplier is other than a body-corporate and does not issue an invoice charging GST @12% from the service recipient; and
Hence, if the supplier is charging GST @ 12% on the invoice then normal mechanism shall be applicable and the supplier shall be liable for the payment of tax.
Also, it has been clarified that this entry has been applicable from October 1, 2019
10. Extension of due date for filing of TRAN-1 & TRAN-2
The last dates for filing of Form TRAN-1 and Form TRAN-2 have been increased to March 31, 2020, and April 30, 2020, respectively.
11. Waiver of late fees for Non-filing of GSTR-1
Recently the government has given a major benefit to all the taxpayers which state that if any person who has not filed any return from July 2017 but he was liable for filing the same then he has the last chance to file such returns within 10th January 2020 without any interest.
NOTE: The Period has been extended to 17th January 2020.
Note: The wavier has been given for interest however, the late fees still shall be chargeable. For this, the taxpayer may file an application to the proper officer under section 128 of the CGST Act, 2017. If the proper officer found the genuine reason for not filing the return, then he may also waive off the late fees amount.
12. Extension of filing of GST Audit and Annual Return for F.Y 17-18 & F.Y 18-19
The due date for filing GST Annual Return (GSTR – 9) and Audit Report, Reconciliation Statement (GSTR – 9C) for the F. Y. 2017-18 has again been extended to January 31, 2020.
Also, the due date for filing GSTR – 9 and GSTR – 9C for the F.Y 2018-19 has been extended to March 31, 2020.