Key changes declared in CGST Notification 12/2024 dated 10th July 2024-Part 1

On June 22, 2024, the 53rd GST Council meeting was held in Delhi, with Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, presiding. The council proposed various adjustments to GST rates, introduced trade facilitation measures, and sought to streamline GST compliance.

Many circulars and notifications are issued after this meeting to implement changes suggested in the meeting. One such important notification is Notification 12/2024 dated 10th July 2024- Central Tax!

Let’s understand the key changes in this notification.

Notification 12/2024- Central Tax dated 10th July 2024-

1. While applying for GST Registration, If a person does not opt for aadhaar authentication, the following steps would still be needed at one of the facilitation centers:

a. Taking a photo of the applicant / key management of the entity

b. Verification of original copy of documents uploaded on the portal

2nd proviso to Rule 8(4A) of the CGST Rules is newly added in this regard as follows:

"Provided further that every application made under sub-rule (4) by a person, other than a person notified under sub-section (6D) of section 25, who has not opted for authentication of Aadhaar number, shall be followed by taking a photograph of the applicant where the applicant is an individual or of such individuals about the applicant as notified under sub-section (6C) of section 25 where the applicant is not an individual, along with the verification of the original copy of the documents uploaded with the application in FORM GST REG-01 at one of the Facilitation Centers notified by the Commissioner for this sub-rule and the application shall be deemed to be complete only after successful verification as laid down under this proviso.".

2. GSTR-1A has been introduced to rectify errors in GSTR 1. In Rule 59(1) of CGST Rules, 2017, a proviso has been inserted in this regard:

"Provided that the said person may, after furnishing the details of outward supplies of goods or service or both in FORM GSTR-1 for a tax period but before filing of return in FORM GSTR-3B for the said tax period, at his option, amend or furnish additional details of outward supplies of goods or services or both in FORM GSTR-1A for the said tax period electronically through the common portal, either directly or through a Facilitation Centre as may be notified by the Commissioner."

Also, new sub-rule 4A is inserted as follows:

"(4A) The additional details or the amendments of the details of outward supplies of goods or services or both furnished in FORM GSTR-1A may, as per the requirement of the registered person, include the -

a. Invoice wise details of -

• Inter-State and intra-State supplies made to the registered persons; and
• Inter-State supplies with invoice value of more than one lakh rupees made to the unregistered persons;

b. Consolidated details of -

• Intra-State supplies made to unregistered persons for each rate of tax; and
• State-wise inter-State supplies with invoice value up to one lakh rupees made to unregistered persons for each rate of tax;

c. Debit and credit notes, if any, issued during the month for invoices issued previously".

3. Rule 28 of the CGST Rules, 2017 specifies the determination of the value of supply of goods or services or both between distinct or related persons, other than through an agent. Its sub-rule 2 states that the value of supply of services by a supplier to a recipient who is a related person, by way of providing a corporate guarantee to any banking company or financial institution on behalf of the said recipient, shall be deemed to be one percent of the amount of such guarantee offered, or the actual consideration, whichever is higher. This sub-rule was inserted on 26th October, 2023 by way of Notification No. 52/2023 - Central Tax. Now, the words “located in India” and “per annum” are added to it as follows:

“Notwithstanding anything contained in sub-rule (1), the value of supply of services by a supplier to a recipient who is a related person [located in India], by way of providing a corporate guarantee to any banking company or financial institution on behalf of the said recipient, shall be deemed to be one percent of the amount of such guarantee offered [per annum], or the actual consideration, whichever is higher.” This brings more clarity to the interpretation as follows:

a. This sub-rule applies only when the service recipient is located in India.

b. While calculating the value of supply by applying this rule, the amount of guarantee offered per annum should be taken.

Also, a proviso has been inserted in Rule 28 that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the value of said supply of services. It clearly means that if full ITC is available to the buyer, invoice value shall be taken as the value of supply. In this case, no sub-rule of it shall apply.

• There are certain changes in the calculation of the distribution of ITC by Input Service Distributor (ISD). Therefore, wordings of Rule 39 of the CGST Rules, 2017 are changed accordingly. One of such major change is ITC in respect of reverse charge is also to be distributed as common credit if the same is attributable to any other GSTIN. Such distribution would be only for RCM paid by another distinct person/branch registered in the same state as that of ISD.
• The due date for filing GSTR 4 by composition taxpayers was 30th April of the next Financial Year till FY 2023-24. Such due date is changed to 30th June of the next Financial Year from FY 2024-25 onwards. A new proviso has been inserted in Rule 62 of the CGST Rules, 2017 as follows:
• “Provided that the return in FORM GSTR-4 for a financial year from FY 2024-25 onwards shall be required to be furnished by the registered person till the thirtieth day of June following the end of such financial year.”
• A new proviso has been inserted in Rule 88B of the CGST Rules, 2017 stating that where any amount has been credited in the Electronic Cash Ledger as per provisions of sub-section (1) of section 49 on or before the due date of filing the said return, but is debited from the said ledger for payment of tax while filing the said return after the due date, the said amount shall not be taken into consideration while calculating such interest if the said amount is lying in the said ledger from the due date till the date of its debit at the time of filing return. It means interest will not be levied if GST is paid before the due date of GSTR 3B and is lying in the Electronic Cash Ledger of the taxpayer, but GSTR 3B is filed late.

Conclusion

The CGST Notification 12/2024 dated 10th July 2024 introduces several crucial amendments aimed at improving GST compliance and streamlining processes for taxpayers. Key changes include the new steps for GST registration without Aadhaar authentication, the introduction of GSTR-1A for rectifying errors, and updates to the value determination for corporate guarantees and ITC distribution by ISD. These modifications, including the extension of the GSTR-4 filing deadline and changes to interest calculation rules, reflect the GST Council's commitment to enhancing the GST framework's efficiency and clarity.

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