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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:

  • Where the taxpayer has paid Income Tax exceeding INR 1 lakh in two preceding financial year.
  • Where taxpayer has received refund exceeding INR 1 lakhs u/s 54 of CGST Act 2017.
  • Where taxpayer has used electronic cash ledger to pay of liability on outward supplies which cumulatively makes 1% of the total liability up to the said month
  • Where a person is a Government Department, Public Sector Undertaking (PSU), local authority or a statutory body.

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

  • For all taxpayers that fail to furnish GSTR-3B for 2 previous consecutive tax periods, Filing the GSTR-1 will be blocked. Meaning, if you have not filed GSTR-3B in August & September then you cannot file GSTR-1 for October.
  • Additionally, for taxpayers who are restricted from claiming ITC under Rule 86B will also be not able to file their GSTR-1, given they not filed their GSTR-3B for 2 previous consecutive tax periods.

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.

Time Limit for GST Registration

  • The time for system-based registration has been enhanced from 3 days to 7 days. This means that the Tax officials can review and grant registration within 7 days instead of 3 days as provided earlier from the date of filing of registration application.
  • In cases hasn’t done Aadhaar Authentication or where the tax department feels fit to carry out physical verification the time limit for granting of registration shall be 30 days instead of 7 days.

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.


pallavi.pathak

About the author

Pallavi is currently associated with GSTHero as a Senior Executive-Indirect Tax. She has industry experience as a Financial Controller with a demonstrated history of working with Fin-tech industries. Her expertise includes GST Law, GST Software Development, Business Planning & Development, Corporate Finance, Accounting & Income Tax.

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