AMENDMENTS IN CGST RULES

Other than extension of dates for GST returns, some important amendments to CGST Rules 2017 have been covered as follows:

1. Registration: In an attempt to centralize data of an entity on records with government Authentication of Aadhar Number is mandatory while obtaining GST Registration filing from 1st April 2020. In cases, if the applicant does not have PAN Number in such cases, the application can be accepted only on physical verification at the principal place of business in the presence of the applicant within 60 days from the date of filing of the application. However, Aadhar authentication for the obtaining GST registration from 1st April 2020 does not apply to a person who is not a citizen of India and to any other class of persons not mentioned below:

1. Individual

2. Authorized Signatory of all types

3. Managing and Authorized Partner

4. Karta of a Hindu Undivided Family

2.  Physical Verification in Certain cases: In order to correct cases of fake invoicing on addresses which are not in existence, if the officer feels that physical verification is required for the principal place of business for any other reason or the applicant does not have the PAN Number, the verification report along with the photographs and other documents has to be uploaded on the common portal within 15 days of such physical verification using the Form GST REG – 30.

3. Input Tax Credit on Capital Goods: The life of capital goods for the GST purposes is considered to be five years from the date of invoice, and the amount of tax shown on the tax invoice will be reflected in the input tax credit ledger. The input tax credit claimed has to be reversed at the rate of 5% per quarter is the capital goods are used for other than taxable supplies. The tax to be reversed has to be computed separately for each tax and reported in GSTR – 3B.

4. GST Audit Threshold Limit for FY 2018-19: The GST Audit threshold for the financial year 2018-19 has been increased to Rs 5 crores in order to reduce the compliance burden on small retailers, traders, shop keepers who comprise the Medium, Small and Micro Enterprise (MSME) sector, the Union Budget proposed to raise by five times the turnover threshold for audit from the existing Rs. 1 crore to Rs. 5 crore.

5. Refund of excess payment of Taxes: If the registered taxpayer has claimed refund of the taxes paid in excess or paid wrongly in different heads, for which debit has been made from the electronic credit ledger, earlier, after inspection by  GST authorities, refund amount was credited to the applicant bank account which lead to many fraudulent cases seeking cash against credit wrongly taken, which later even if government comes to know about can’t be corrected and even liquidity was lost . Currently government has kept on hold such refunds where they had doubt and asked assessees to show documents to verify and justify their claim. To check this, now refund amount shall be re-credited to the electronic credit ledger by the proper officer through FORM GST PMT-03.

6. Zero Rated Supplies: Turnover for Zero Rated Supply has been defined, and it means the value of zero-rated supplies made during a relevant tax period under letter of credit or bond or the value which is 1.5 time of the value of like goods domestically supplied by the same or, similarly placed, supplies as declared by the supplier whichever is lesser. The change is made to ensure that undue excessive refund on itc calculated by the formula using turnover for Zero rated supply is not made by the assessee.

7. Recovery of Refund: GST Law regarding refund for export of goods or services or both was not in line with FEMA Foreign Exchange Management Act ,1999 where time limit for realizing export proceeds were specified. Taking advantage of this loophole, many exporters made money by seeking refund against fake shipping bills and export documents. In order to correct this practice, the taxpayers who have claimed a refund for export of goods or services or both have not realized the value of the goods or services exported based on the time limit prescribed under Foreign Exchange Management Act 1999, the amount of refund claimed has to be paid with interest for the pro-rated amount which is not realized. The amount has to be remitted within 30 days of the expiry of the time period prescribed else the recovery proceedings will be initiated under Section 73 or Section 74 of the CGST Act 2107. Where the sale proceeds have been written off by the Reserve Bank of India, in such cases, no recovery will be made. The amount of refund recovered from the taxpayer for non-realization will be refunded back if the exporter pays back the amount. The amount will be refunded if the exporter claims the same within three months from the date of remittance along with valid proofs.