India is facing a steep decline in government revenue and an increase in income for at least two quarters as the corona virus affects the entire country’s economic activities. The fall in investor sentiment affects privatization schemes, government, and industry. The economic impact of COVID-19 is alarming. Majority of the people was able to afford its side effects. Many amendments have been made through these rules, making the GST registration process along with CGST Regulations. In this blog, you shall be observing the points that were covered and mentioned under the fourteenth amendments under CGST Rules 2020.
It is observant that the economies of more than 100 countries have been destroyed, some of which have sought monetary help from the IMF. Businesses worldwide, such as hospitality, entertainment, aviation, etc., have seen a huge negative impact. Various sports such as IPL and Olympics have been postponed. People were not going to buy daily essentials, and all these affected the world economy somewhere.
Post Lock-Down GST Collection
On GST collection, post-lock due to covid 19, the economy is opening up, and hence tax collection is also increasing. GST collections started increasing from July 2020 and remained in the range of Rs. 87000 – 105000 crores. In October 2020, the collection made more than one lakh crore rupees and Rs. 105155 crores in November 2020
About 71.31 percent of businesses deal with low cash flow during the lockdown, where the manufacturing sector having mostly affected in that scenario. Additionally, delays and cancellation of projects have also been a major cause for concern, particularly in tertiary sectors, particularly retail, nonprofits, consultancy, education, and financial services.
Read our article:Everything you Need to Know about Benefits of GST Registration
Fourteenth Amendment under CGST Rules 2020
The below mentioned points are the fourteenth amendments under CGST Rules 2020. Many amendments have been made through these rules, making the registration process and input tax credit strict. Further conditions have been imposed for registration and the ITC limit has also been reduced to only 5%.
A Series of Notifications
CBIC had issued a series of notifications under CGST on dated 22.12.2020, those are as follows:-
- 94/2020-Central tax date – seeks to make the Fourteenth Amendment(2020) under CGST Rules.2017.
- 93/2020-Central Tax Date- Attempts to waive late fees for filing Form GSTR-4 at UT’s Ladakh for the financial year 2019-20 under CGST.
Notification No. 93/CT -2020
Notification No. 93/2020-Central Tax G.S.R. 785 (E)- In the exercise of the powers conferred by section 128 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereinafter referred to as the said Act), read with section 148 of the CGST Act, the Government, on the propositions of the Council, further makes the following amendments:-
- In the Ministry of Finance[1] (Department of Revenue), No. 73/2017 – Government of India notification in Central Tax, dated 29 December 2017, published in the Gazette of India
- Extraordinary, Part II. , Section 3, Sub-clause (i) No. GSR 1600 (E), dated December 29, 2017, namely: –
FORM GSTR-4 for the Financial Year 2019-20
In the said notification, after the third proviso, the following proviso shall be inserted, namely: –
- Provided also that the late fee payable for delay in furnishing of FORM GSTR-4 for the Financial Year 2019-20 under section 47 of the CGST, from the 1st day of November, 2020 till the 31st day of December, 2020 shall stand waived for the registered person whose principal place of business is in the Union Territory of Ladakh.
- Waives late fees payable for delay in filing of GSTR 4 for FY 2019-20 by Composition Dealers in the UT of Ladakh from 01.11.2020 to 31.12.2020.
Major Changes made vide Notification No. 94/CT-2020
The below discussed are the major changes made through notification no. 94/CT 2020:-
Changes in Rule 36(4)
- There was a limit to claim ITC in GSTR 3b. The limit was auto-populated ITC +10%.
- Rule 36(4) in respect of Restriction on claim of ITC wherein it has revised the limit to 5% instead of earlier 10%.
- Mandatory payment of 1% from cash ledger if taxable supply exceeds 50 lakhs.
New rule 86B- Restriction on use of ITC under CGST
Provided that the said restriction shall not apply where –
- The said person or proprietor or ‘karta’ or managing director or any of his two companions, full-time directors, members of the managing committee of associations or board of trustees, as the case may be, has paid more than one lakh rupees each in the last two financial years. For the tax under the Income Tax Act, 1961 (43 of 1961) for which the return of income has expired under sub-section (1) of section 139 of the said Act; or
- The registered person has received a refund amount exceeding one lakh rupees in the preceding financial year on account of unutilized input tax credit under clause (i) of the first provisional subdivision (3) of section 54; or
- The registered person has received a refund amount exceeding one lakh rupees in the preceding financial year on account of unutilized input tax credit under clause (ii) of first sub-section (3) of section 54; or
- The registered person has discharged his liability towards the output tax through electronic cash bookkeeping, which is more than 1% of the total production tax liability, cumulatively applied up to the said month in the current financial year. ; or
Provided that the Commissioner or an officer in this regard may remove the said restriction after such verification and such safeguards as he may see fit.
Returns
- Restriction on GSTR 1 if GSTR 3b is not filed under CGST
- A registered person shall not be allowed to furnish details of external supply of goods or services or both under Section 37 in Form GSTR-1 if he has not furnished the return in Form GSTR-3B for a period of two months before.
- A registered person is required to furnish returns for every quarter under proviso to sub-section (1) of section 39, outward supply of goods or services or not allowed to furnish details under section 37 in FORM GSTR-1 will be given. Or using invoice submission facility, if it has not furnished the return in FORM GSTR-3B for the preceding tax period;
- A registered person is prohibited from using the electronic credit ledger amount to discharge his liability towards tax over 99%. Under Rule 86B, such tax liability, external supply of goods or services, or use of the facility to submit invoice or invoice under section 37 in FORM GSTR-1 will not be allowed if it has not filed the return in FORM SSTR tax.
- Rule 59 (5) is Inserted in the Notification under CGST
Rule 59 (5) is inserted in the notification stating that no registered person shall be allowed to furnish details of external supply of goods or services under Section 37 in FORM GSTR-1 if he has entered FORM GSTR- Returns are not presented.
Conclusion
Although markets have responded positively to vaccine news, increasing cases in the second/third of covid may be adversely affected. However, the increase in the e-way bill and GST collection justifies such a notion given by eminent economist and former Governor of Reserve Bank of India. According to Rangarajan, the economy may return to pre-covid levels by the end of 2021-22 as signs of economic recovery appear after a series of unlocked down phases.
The MOF also expects the economy to pick-up and may also announce the next tranche of incentives. India is set to recover rapidly and reach pre-covid levels by the end of the year — preventing a second wave caused by fatigue with social disturbances.
Read our article:The Migration to the New Tax Structure under GST Transition Process
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