GST Amendments Announced in Union Budget 2020

The Union Budget 2020 was presented on 1 February 2020 by the Union Finance Minister Smt. Nirmala Sitharaman. Even though there are no major changes to the GST law, the government focused on procedural aspects to strengthen the enforcement of the law. The GST legislative changes to Finance Bill, 2020 were already recommended by the GST Council. In this article, we discuss the GST amendments introduced through the Budget 2020.

The new union territory, Ladakh has been included in the definition of Union Territory. Similarly, Jammu & Kashmir will have its appellate tribunal.

Section 122 of the CGST Act has been amended to include that the person involved/benefited out of fake ITC shall also be liable for a penalty of 100% of the tax involved. The penalty will be levied on any person who retains the benefit of a fraudulent supply of goods and/or services and on a person at whose instance such fraudulent transactions are executed. However, it would be expedient for the enforcement authorities to ensure that bonafide people or recipients do not have to pass through the rigours of such stringent provisions.

Section 132 of the CGST Act has been amended to make the offence of a fraudster availing input tax credit without any invoice or bill as cognisable and non-bailable. The law is amended to extend the imprisonment to those ‘who causes to commit’ and ‘person retaining the benefit’. Earlier the punishment was restricted only to the person who committed the fraud.

The date of the debit note will be considered for availing input tax credit. With this, ITC in respect of a debit note issued in, say, FY19 for an invoice of FY18 can now be claimed by the recipient by the due date of September 2019 return or the annual return of FY19, whichever is earlier.

Also Read: Budget 2020: Punitive Measures in GST Law to Weed Out Fake ITC

Composition scheme cannot be availed by taxpayers supplying services outside the state, making exempt supplies, or making supplies through e-commerce operators who are liable for Tax Collected at Source (TCS). The applicability of 6% CGST rate (total of 12% IGST rate) for the supply of pulley, wheels, and products used in Agri machinery between 1 July 2017 to 31 December 2018.

Refunds due to inverted tax prevalent for tobacco products is barred with a retrospective effect from 1 July 2017. Also, the retrospective effect has been given for transition provisions from 1 July 2017 to nullify the decision of Gujarat High Court in the case of Siddhartha Enterprises.  

A new provision has been included to provide for the cancellation of voluntary GST registration of distinct people. The power to condone the delay in applying for revocation of cancellation has been given to Additional Commissioners and Commissioners for 30 days.

The supply of fishmeal provided a retrospective GST exemption from 1 July 2017 to 30 September 2019. The powers provided to notify the form of TDS certificate and late fee (Rs.200 per day, maximum of Rs.5,000) for non-issuance of TDS certificate has been waived off.

CBIC extended the time limit to issue the removal of difficulty order from earlier three-year limit to five years w.e.f 1 July 2017. Also, the board’s approval is not required for the order to determine the expense in special audit and extension of the time limit to return the inputs and capital goods from job worker.

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