The Central Board of Indirect Tax & Custom (CBIC) has rolled out a New Notification dated, December 22nd 2020- Notification No. 94/2020.
In this Notification the CGST Rules are amended as the Fourteenth Amendment of these rules.
Via this notification the CBIC has made various changes to the CGST rules and we have listed down 10 of the most essential changes that you must know.
Read till the end to know all these changes & what they mean-
Input Tax Credit Updates
Provisional Input Tax Credit Restricted to 5%
Earlier taxpayers were allowed to claim 10% of the eligible Input Tax Credit for the missing Invoices in GSTR-2A & GSTR-2B. This count has been reduced to 5% via this rule. Meaning taxpayers will be allowed to claim a total of 105% of the available ITC.
This has increased the need for vendor compliance as recipients can face huge losses for invoices that their suppliers don’t furnish in their GSTR-1.
Also with the introduction of GSTR-2B which is not editable in the same tax period, recipients need to ensure that they deal with sincere & compliant suppliers only.
Note- Claiming more that 105% ITC will lead to legal disputes for the taxpayers as the same will be a violation of the rule.
ITC Restriction as per Rule 86B
Rule 86B will implement from January 1st 2021 wherein restriction has been placed on setting off of more than 99% of tax liability from Input tax credit under GST where the value of taxable supplies other than exempt supply and zero rated supply exceeds INR 50 Lakhs in a month.
However, there are a few exceptions to this rule, these are as follows:
Watch our video on Input Tax Credit:
e-Way Bill & GSTR Updates
E-Way Bill Validity Update
As it is known that earlier transporters were allowed to cover 100 Km a day as per the e-Way Bill Rules. This distance has now been increased to 200 Km. Now transporters can cover up to 200 Km per day using the e-Way Bills.
Blocking of GSTR-1 in case of non-filing of two consecutive GSTR-3B & Rule 86B
Synchronizing GSTR-1 & GSTR-3B
Taxpayers are now required to sync their GSTR-1 & GSTR-3B Tax liabilities & Taxable values. In case liability declared in GSTR 3B is less than that declared in GSTR 1 in a particular month, the tax department may now proceed with cancellation of GSTIN.
GSTIN & Registration Updates
Cancelation of GSTIN
Clause (e) has been inserted in Rule 21 of CGST Rules 2017 as per which the tax officials can now proceed for cancellation of GSTIN where a taxpayer avails Input Tax Credit (ITC) exceeding than what is permissible in Section 16.
Cancelation of GST Registration Without the opportunity of being heard
From now on, no opportunity of being heard shall be given to a taxpayer for suspension of GSTIN, where the proper officer (PO) has reasons to believe that the registration of person is liable to be cancelled.
The words “opportunity of being heard” has been omitted from clause (2) of Rule 21A.
Changes in GST REG 31
The Department shall now serve a notice in FORM GST REG 31 to call explanation as to why GSTIN should not be cancelled in case of significant deviation/anomalies between details of outward supply between GSTR 3B and GSTR1 or inward supplies (ITC) between GSTR 3B and GSTR 2B which indicate contravention of Act.
Taxpayer shall be required to submit his reply within 30 days of such notice being served to him.
No Refund for suspended GSTIN
Where a GSTIN is suspended, then under section 54 of CGST Act 2017 no refund can be availed by the taxpayer.
This means that taxpayers first have to close GSTIN Suspension proceedings before applying for any refunds.