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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:

Budget-2020-Highlights