Gst Changes In Budget 2020

The Finance Minister, Shri. Nirmala Sitharaman presented the Budget 2020-21 on 1

st February 2020. The present article highlights the Budget Speech relating to Goods and Service Tax and important proposed amendments to Central Goods and Service Tax Act, 2017.

Points Covered in the Budget Speech

Simplified GST return shall be implemented from 1

st April 2020 with the following features:

NIL return filing through SMS.
Return Pre-filling.
Improved input tax credit flow.
Electronic invoice
- The electronic invoice shall be implemented in a phased manner.
- The implementation will start from February 2020 on an optional basis.
- The electronic invoice will facilitate both compliance and return filing.

Aadhaar based verification of the taxpayers is being introduced to clear out the dummy/non-existing units.
Dynamic QR Code is proposed for the consumer invoice. GST parameters would be captured when payment for the purchases are made through the QR code.
A system of cash reward is foreseen to incentivize customers to seek invoices.
Matching of invoice and input tax credit would be done, and returns having a mismatch of more than 10% above a threshold would be recognized and pursued.

Highlighting important Proposed Amendments to the Central Goods and Service Tax Act, 2017

Definition of ‘Union Territory’ provided under Section 2(114) has been amended to include ‘Ladakh’ as ‘Union Territory’.
Amendments proposed under the composition scheme for Supply of service Section 10
- The registered person, engaged in the Supply of service, shall be eligible to opt for the composition scheme only if:
  - The person is not engaged in the Supply of service, which is not leviable to tax under the CGST Act.
  - The person is not involved in any inter-state Supply of service.
  - The person is not engaged in making any supply of goods through e-commerce operator liable to collect TCS under section 52.

The above conditions are already applicable to the registered person engaged in the Supply of goods, however, it has proposed to make applicable to a person engaged in the Supply of service as well.

Revocation of Cancellation of Registration - Section 30

When the registration has been cancelled by the proper officer on his own motion, the registered person can apply for revocation within 30 days from the date of service of the cancellation order. However, it is proposed that such time limit of 30 days can be extended (only on sufficient cause being shown and for the reasons recorded in writing) by:

The Additional or Joint Commissioner for a period not exceeding 30 days.
The Commissioner for a further period not exceeding 30 days.

Penalty for Certain Offences - Section 122

New Sub-section (1A) inserted. As per new sub-section, the person who retains the benefits of following transactions and at whose instance the transactions are conducted shall be liable to the penalty:

Supply of goods or services without the issue of invoice or with the issue of an incorrect invoice.
Issuance of invoice or bill without actual Supply of goods or services.
Avail or utilizes input tax credit without actual receipt of goods or services.
Avails or distributes input tax credit in contravention of provisions of Section 20.

The penalty amount shall be an amount equal to the tax evaded /input tax credit availed or passed on.

Punishment for Certain Offences - Section 132

Amendment to the section has now made the person, whoever even causes to commit or retain any benefits arising out of the offences, liable for punishment.
The section is amended to include, fraudulent availment of input tax credit without any invoice/bill as an offence.

Transitional Arrangements for Input Tax Credit - Section 140

The amendment is made effective retrospectively from 1

st July 2017. Various amendments are made to prescribe the manner of transitional credit and time limit for taking the transitional credit.

Removal of Difficulties - Section 172

The proviso to Section 172(1) has been amended. As per the amendment, the removal of difficulties order can now be issued until five years (earlier it was three years) from the date of commencement of this Act. The feature of Budget-2020 can be accessed below:

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Frequently Asked Questions

Common questions about GST Changes in Budget 2020.

The Electronic Invoice System will be implemented in a phased manner starting from February 2020 on an optional basis. This system aims to facilitate compliance and return filing for taxpayers under the Goods and Services Tax (GST) regime. It is expected to bring in more transparency and efficiency in the GST process.

The Budget 2020 has proposed the introduction of Aadhaar-based verification of taxpayers to weed out dummy or non-existent units registered under the GST regime. This measure is expected to enhance the authenticity and accuracy of the GST database.

The Budget 2020 has proposed the introduction of Dynamic QR Codes for consumer invoices. These QR Codes will capture GST parameters when payments for purchases are made through them. This measure aims to facilitate better tracking of invoices and input tax credit matching.

The Budget 2020 has envisioned a system of cash rewards to incentivize customers to seek invoices from businesses. This measure is expected to encourage compliance and discourage the practice of not issuing invoices for transactions.

The Budget 2020 has proposed amendments to the Composition Scheme for service providers under the GST regime. The proposed amendments aim to make the eligibility conditions for service providers similar to those applicable to suppliers of goods.

The Budget 2020 has proposed amendments to extend the time limit for applying for the revocation of cancellation of GST registration beyond the current 30 days. This extension will be subject to the approval of the appropriate authorities and upon showing sufficient cause.

The Budget 2020 has proposed the insertion of a new sub-section (1A) in Section 122 of the CGST Act, 2017. This amendment aims to penalize persons who retain the benefits of transactions conducted without proper invoicing, availing input tax credit without actual receipt of goods or services, or distributing input tax credit in contravention of provisions.

The Budget 2020 has proposed amendments to Section 132 of the CGST Act, 2017, to include the fraudulent availment of input tax credit without any invoice or bill as an offense punishable under the GST laws. It has also made persons who cause or retain benefits arising out of such offenses liable for punishment.

The Budget 2020 has proposed retrospective amendments to Section 140 of the CGST Act, 2017, effective from July 1, 2017. These amendments aim to prescribe the manner and time limits for claiming transitional input tax credit under the GST regime.

The Budget 2020 has proposed an amendment to the proviso of Section 172(1) of the CGST Act, 2017, extending the time limit for issuing orders to remove difficulties in the implementation of the GST laws from three years to five years from the date of commencement of the Act.