Budget Analysis - GST

Hon’ble Finance Minister Smt. Nirmala Sitharaman presented Union Budget 2022 on 1st-February 2022 in the Lok Sabha. Though there have not been any re-alignment of the tax slabs or there does not appear to has been any particular change to cater to any specific sector from the Union Budget speech delivered by the hon’ble Finance Minister, there are certain take takeaways from the Finance Bill 2022.

The Time limit for availment of ITC is extended:

Time limit to avail ITC u/s. 16(4) has been extended from 30th-September of next financial year to 30th –November of next financial year. This is one of the most welcome amendments in the Budget 2022 as this gives taxpayers 2 more months for reconciliation and rectifications of ITC.

Time limit to issue Credit Notes extended:

Time limit to issue credit notes in respect of a supply made in a financial year has been extended from 30th -September of the next financial year to 30th-November of the next financial year.

The time limit for GSTR 1/GSTR 3B was extended:

Time limit for rectification of GSTR1/ GSTR 3B errors or omissions has been extended from 30th-September of next financial year to 30th-November of the next financial year.

Interest to be levied on wrong utilization of ITC:

As per this welcome move in the Budget 2022, no interest would be charged on the wrong availment of ITC. Interest would only be charged on the wrong availment AND utilization of ITC against payment of output tax liability @ 18% p.a. The section has been amended with retrospective effect.

Transfer of Balance in Electronic Cash Ledger:

Unutilised balance in Electronic Cash Ledger under the head CGST and IGST is proposed to be allowed to be transferred between the entities having the same PAN but registered under different states or same state without opting for refund procedures.

An additional restriction on ITC availment:

Section 16(2)(ba) of the CGST Act is proposed to be inserted to provide that ITC would not be available if the same is restricted in the details provided in GSTR 2B under section 38 of the CGST Act.

Restriction on utilization of ITC against Outward Tax liability:

Section 49(12) is proposed to be inserted which will restrict 100% utilization of Input Tax Credit for payment of output liability. This provides a legal sanction to Rule 86B of the CGST Rules, 2017, as per which a minimum of 1% of output tax liability shall be discharged in cash for certain prescribed taxpayers.

Registration Cancellation on non-filing of GST Returns:

Composition Tax Payer’s registration can be cancelled sue moto if he has not filed their GSTR 4 return beyond 3 months from the due date. Normal Tax Payer’s registration can be cancelled if he has not furnished the returns for such continuous tax period as may be notified.

Omission of Section 42, 43, 43A:

Sections 42, 43 and 43A are proposed to be omitted which deal with two-way communication between taxpayers.

Restrictions on the filing of returns:

Section 37(4) of the CGST Act is proposed to be amended to restrict filing of GSTR 1 for a tax period if GSTR 1 for the previous tax period has not been filed. Section 39(10) of the CGST Act is proposed to be amended to restrict the filing of GSTR 3B for a tax period if GSTR 3B for the previous tax period or GSTR 1 for the said tax period has not been filed.
It is also proposed to exempt certain registered persons or classes of registered person by way of notification.
Time limit for furnishing of return by a non-resident taxable person has been reduced from 20 days to 13 days after the end of the calendar month or within 7 days after the surrender of registration whichever is earlier.

Levy of Late Fees:

Late fees shall be imposed on delayed filing of return under section 52 of the CGST Act (i.e. Tax Collection at source)

Notification of common portal:

www.gst.gov.in has been notified as to the common Goods and Services Tax electronic portal retrospectively from June 22, 2017.

Refund related amendments:

To claim a refund of balance the in electronic cash ledger, it is proposed that an application needs to be filled in as prescribed.
The time limit for filing of refund application on GST paid on inward supplies by Consulate or Embassy of foreign countries or person or class of persons notified under section 55 is proposed to be increased from six months to two years from the last day of the quarter in which such supply was received.

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