Budget changes 23-07-2024-GST

In the recent budget announced on July 23, 2024, several key changes were made to the tax structure in India.

Let's understand the key changes in GST!

• Section 9 is being amended to take Extra Neutral Alcohol used in the manufacture of alcoholic liquor for human consumption out of the purview of central tax. Similar amendments are also proposed in the IGST Act and UTGST Act.
• Amendment to regularize non-levy and short-levy of central tax due to general practice Section 11A is being inserted to empower the government to regularize non-levy or short levy of central tax due to any general practice prevalent in trade.
• Similar power is being proposed in the IGST Act, UTGST Act, and GST (Compensation to States) Act.
• New sub-sections (5) and (6) are being inserted in section 16 of the CGST Act to relax the time limit to avail of input tax credit as per section 16(4) of the CGST Act with effect from 01.07.2017, as follows:
  1. In respect of the initial years of implementation of GST, i.e., financial years 2017-18, 2018-19, 2019-20, and 2020-21: In respect of an invoice or debit note for the Financial Years 201718, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take the input tax credit in any return under section 39 which is filed upto the 30th day of November 2021
  2. with respect to cases where returns have been filed after revocation: The time limit to avail input tax credit in respect of an invoice or debit note, in cases where returns for the period from the date of cancellation of registration/ effective date of cancellation of registration till the date of revocation of cancellation of the registration, will be extended till the date of filing the said GSTR-3B return, subject to certain conditions if the said return is filed by the registered person within thirty days of the order of revocation of cancellation of registration.
• Section 74A is being inserted in the CGST Act to provide a common time limit for issuance of demand notices and orders in respect of demands for FY 2024-25 onwards, for cases involving charges of fraud, suppression of facts, or wilful misstatement and the cases not involving the charges of fraud, suppression of facts or wilful misstatement, etc. Also, the time limit for the taxpayers to avail the benefit of reduced penalty, by paying the tax demanded along with interest, is being increased from 30 days to 60 days.
• Sections 107 and 112 of the CGST Act are being amended to reduce the maximum amount of pre-deposit for filing appeals with the Appellate Authority from Rs. 25 crores of central tax to Rs. 20 crores of central tax and to reduce the amount of pre-deposit for filing an appeal with the Appellate Tribunal from 20% with a maximum amount of Rs. 50 crore of central tax to 10 % with a maximum of Rs. 20 crore of central tax. Besides, the time limit for filing appeals before the Appellate Tribunal is being modified w.e.f. 1st August 2024 to avoid the appeals from getting time-barred, on account of the Appellate Tribunal not coming into operation.
• Section 128A is being inserted in the CGST Act to provide for a conditional waiver of interest and penalty in respect of demands about financial years 2017-18, 2018-19, and 2019-20, in cases where demand notices have been issued under section 73 and full tax liability is paid by the taxpayer before a date to be notified.
• Section 140(7) of the CGST Act is being amended with effect from 01.07.2017, to enable the availing of transitional credit in respect of input services received by an Input Services Distributor before the appointed day, where invoices were also received before the appointed day.
• Section 171 of the CGST Act is being amended to enable the Government to notify the GST Appellate Tribunal to handle anti-profiteering cases and to empower the Government to notify a date after which the Authority for anti-profiteering shall not accept applications for examination.
• Paragraphs 8 and 9 are being inserted in Schedule III of the CGST Act to provide that the activity of apportionment of co-insurance premiums by the lead insurer to the co-insurers in the co-insurance agreement and the services by insurers to reinsurers in respect of ceding/re-insurance commission will, subject to certain conditions, be treated neither as a supply of goods nor as a supply of services.
• An amendment is proposed in Section 13 of the CGST Act to provide for the time of supply of services where the invoice is required to be issued by the recipient of services in cases of reverse charge supplies.
• Clause (i) of Section 17 of the CGST Act is being amended to restrict blockage of input tax credit for tax paid under Section 74 for demands pertaining up to FY 2023-24.
• Section 30 of the CGST Act is being amended to enable the government to prescribe conditions and restrictions for revocation of cancellation of registration.
• Clause (f) of section 31 of the CGST Act is being amended to provide for an enabling provision to prescribe the period within which the invoice has to be issued by the recipient under the reverse charge mechanism and to clarify that a person registered solely for purpose of deducting TDS under section 51 of CGST Act shall be treated as a person not registered for clause (f) of section 31(3) of the said Act.
• Section 39 is being amended to mandate the filing of returns by TDS deductors for every month, even if no deductions are made during the said month, and also to provide for an enabling clause for prescribing the time limit for filing such returns.
• Section 54 of the CGST Act and section 16 of the IGST Act are being amended to prohibit the refund of unutilized input tax credits or integrated tax on zero-rated supply of goods, which are subjected to export duty.
• Sub-section 1A is being inserted in section 70 of the CGST Act to enable the appearance of an authorized representative on behalf of a summoned person.
• Section 109 of the CGST Act is being amended to empower the government to specify cases to be heard only by the Principal Bench of the Appellate Tribunal.
• Section 122(1B) of the CGST Act is being amended w.e.f. 01.10.2023 to restrict the applicability of penal provisions under this section to only those Electronic Commerce Operators who are required to collect tax at source under section 52.
• Sections 73 and 74 of the CGST Act are being amended to limit the applicability of these sections to demands up to FY 2023-24, since from FY 2024-25 onwards demands are to be ascertained as per provisions of newly inserted section 74A. Also, Section 75 of the CGST Act is being amended to allow for the redetermination of penalties if the charges of fraud, suppression, or wilful misstatement are not established. Further, references to section 74A or the concerned sub-sections of section 74A are being inserted in section 10, section 21, section 35, section 49, section 50, section 51, section 62, section 63, section 64, section 65, section 66, section 104, and section 127.

Conclusion

The Union Budget 2024-25 introduces significant amendments to the GST framework, aiming to streamline processes, provide clarity, and address issues arising from the initial implementation phase. Key changes include extending deadlines for ITC claims, exempting certain alcohol products from GST, and introducing provisions to regularize non-levy and short-levy of taxes. The budget also introduces mechanisms to support taxpayers through reduced penalties, revised pre-deposit amounts for appeals, and enhanced provisions for transitional credits.

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