Initially, GST intended to simplify tax estimation, reporting, claiming input tax credits, and other processes; however, many micro, small, and medium-scale businesses find it challenging to comply with the law and often receive tax demand notices. The most infamous among these notices is the tax demand under Section 74 of the CGST Act. A clear understanding of the legal ramifications under this section is essential for any entrepreneur and company. This article discusses show cause notice under section 74 of the CGST Act, its applicability, consequences and many more. Stay with us.What is Section 74 of the CGST Act? Non-payment of GST, misreporting or erroneous refund and excess appropriation of input tax credit can occur for various reasons, and an appropriate GST officer can issue show cause notices to the respective GSTIN holders. Sections under which show-cause notices can be issued are:Section 63 - For discrepancies in GST return Section 65 - short payment or non-payment detected during an audit Section 35 - failure to record transactions Section 52 - default in collecting tax at the source  However, Section 74 differs from the above sections.

After its introduction in 2017, the GST Act has undergone several rounds of review and reforms to address emerging business realities and reduce the burden of compliance on businesses of all sizes and industries. The decisions and amendments in the 53rd GST Council meeting, held on 22nd June 2024, are the latest additions to the simplification process. This article discusses the newly proposed Section 74A and its differences with erstwhile Sections 73 and 74. Stay with us. What is Section 74A of the CGST Act? Section 74A attempts to standardise the timeframe for issuing notice, tax demand, and penalty relief for any due tax liability irrespective of fraud, wilful misstatement, or suppression of facts. This section is applicable from FY 2024-25 and will supersede Sections 73 and 74. As per the newly introduced Section 74A, a proper GST officer:Can issue tax demand notice on nonpayment, short payment of tax, appropriation of excess tax refund or excess input tax credit, irrespective of an incident of fraud, wilful misstatement and suppression of facts. Cannot issue tax demand notice if the due tax liability is less than ₹1000.   Must issue notice within 42 months from the date of erroneous refund or excess input tax credit or due date of annual return in which suppression of facts, fraud or wilful misstatement occurred.Must submit material evidence to substantiate the claim of fraud, wilful misstatement or suppression of facts. Mere assumption of wrongdoing will not be sufficient to issue notice related to fraud, wilful misstatement or suppression of fact. The penalty structure as per the Section 74A:When not engaged in intentional wrongdoing, the taxpayer will need to pay 10% of the tax due as a penalty or ₹10000, whichever is the maximum. The taxpayer paying the tax due before issuance of the notice can get relief regarding the penalty.  When engaged in fraud, suppression of facts, or wilful misstatement, the taxpayer will need to pay a penalty equivalent to the tax dues.What is Section 73 of the CGST Act?  Section 73 concerns determining tax liability following an incident of nonpayment, short payment of tax, erroneous refund, or excess input tax credit received by a taxpayer.

While most of the country turned to their TV screens to learn about the personal income tax changes in the budget, there have been some benchmark amendments to the GST Act. One such move is the introduction of Section 74A in the GST covering demand. This would replace the current Sections 73 & 74, causing a significant change in how the GST demand procedure is conducted. Let's dive right in to learn about these changes in detail.What is Section 74A of the CGST Act?Section 74A of the CGST Act has been inserted to determine the tax liability and penalty in the following cases:General Cases (Earlier covered by Section 73)Cases containing Fraud, Willful Misstatement or Suppression of Facts (Earlier Covered by Section 74)The penalty is chargeable in both the above cases if:Tax is not paidTax is short-paidTax is erroneously refundedITC (Input Tax Credit is wrongly availed or utilisedChanges in GST Sections 73 and 74Sections 73 & 74 of the CGST Act will continue to determine the demand for cases up to Financial Year 2023-24. So, the new Section 74A of the CGST Act is applicable from the Financial Year 2024-25 onwards.To give you a hint, the most significant changes you will see in Section 74A of the CGST Act compared to Sections 73 & 74 are:New time-frames: The period for issuing notices has been increased to 42 months from 3 years.Proportional Penalties: Penalties have been set depending on the degree of error.

Post-sale discounts are reductions in price given by a seller to their buyers either during the transaction, after the sale is completed, or upon the achievement of specific targets. This article will discuss how post-sale discounts impact the value of supply under GST.Treatment of Post-sale Discount under GSTSection 15(3) of the CGST Act 2017 specifies that a discount can be given before, after or during the time of supply.A discount, given before or during the time of supply, must be recorded in the invoice to reduce the value of the supply.If any discount is given after the supply is complete, then to reduce the discount from the value of the supply, the following conditions must be met:Any discount given was specified in terms or agreements entered into during or before the time of supply.Discounts shall be linked to specific invoicesThe recipient shall reverse input tax credit attributable to such discount.When a supplier provides a discount related to the volume purchased by the recipient, this activity shall be considered a separate supply of services. The recipient may invoice the discount amount and charge GST on such an invoice.Where the above conditions are not met, the supplier can issue a financial credit note without charging GST. Accordingly, the recipient may claim the entire input tax credit charged on the original invoice.Can Output Liability Arise on Post-sale Discount under GSTThe impact on output liability on account of post-sale discount is as follows:If a discount is given without any further actions required by the customer which are in line with terms decided at or before the time of supply, then such a discount will be reduced from the value of supply. The supplier will need to issue a credit note to reduce the output liability of the supplier.A discount linked to the performance condition of the customer, for example, achieving a purchase target, will be regarded as a separate transaction.

India exports a wide range of commodities, such as engineering goods, petroleum products, pharmaceuticals, and ready-made garments, to 200 countries. The export business was valued at over $430 billion in 2025. Overall, exports of goods and services account for 23% of the country’s GDP. The government introduced duty exemption and remission schemes to increase the overall growth in exports and foreign reserves.Objectives of the SchemeThe primary goal of any duty exemption and remission scheme was to eliminate or refund customs duty paid on goods ready for export. This improves profit margin for exporters, thereby encouraging domestic industrial production and job creation.

GSTN is scheduled to launch the new invoice management functionality IMS (Invoice Management System) on 1st October 2024 for ITC computation and claim process. This new feature will streamline many tasks for taxpayers, help reduce compliance errors, and change the future of GST compliance. It's natural for people to have questions. FAQs on IMS in GST answer all the queries from the industry leaders to our representatives about this eagerly expected feature. Basics of the Invoice Management System (IMS)  What is the Invoice Management System (IMS)?The Invoice Management System, or IMS, is a dashboard functionality within the GST portal that streamlines communication of invoices and CDNs saved/submitted/filed by suppliers. It facilitates recipients' checking of the status of invoices and CDNs and provides the option to accept, reject, or keep them pending for a period in a single window.When will IMS be made available to taxpayers?GSTN will launch the IMS facility on the 1st October portal. However, from 14th October 2024 onwards, users will be allowed to take action on invoices/CDNs.   Which records will be available in IMS for taking action?The IMS dashboard will make available the following records related to the invoices saved or filed by the suppliers through GSTR-1/1A/IFF.B2B - InvoicesB2B - Invoices (Amendments)B2B - Debit NotesB2B - Debit Notes (Amendments)B2B - Credit Notes B2B - Credit Notes (Amendments)Eco [9(5)] InvoicesEco [9(5)] Invoices (Amendments)However, invoices and CDNs that are not eligible for ITC because of the POS rules or as per Section 16(4) of the CGST Act will not appear on the IMS dashboard.

The newly introduced invoice management system (IMS) inside the GST portal requires taxpayers to act on invoices, choosing either accept, reject, or pending. Otherwise, the system considers an invoice 'deemed accepted', causing incorrect information to flow to GSTR-2B and leading to compliance issues.This article explains what a rejected invoice is in the IMS dashboard and how to check a rejected invoice in the Invoice Management System. What is a rejected invoice in the IMS dashboard?In IMS, a rejected invoice is an invoice that a recipient taxpayer has chosen to REJECT inside the IMS dashboard before the GSTR-2B gets generated because of discrepancies between a purchase order and an invoice. Other reasons behind the rejection of invoices can also exist, such as suppliers mistakenly entering invoices in the portal. Unless corrected, rejected invoices result in excess tax liability for suppliers or under-reporting of Input Tax Credit (ITC) claims for the buyer, as the invoice does not appear in GSTR-2B. So, suppliers need to view rejected invoices in the IMS dashboards and take the necessary actions.How to view rejected invoices in IMS?Once a buyer rejects an inward invoice, the portal reflects the same in the supplier's IMS dashboard. The supplier must make amendments in the GSTR-1 or through GSTR-1A and take other necessary steps to avoid excess tax liability, penalty, and compliance issues. It is equally important for buyers to keep track of invoices that they have rejected and check whether the supplier has modified their GSTR-1 or issued credit notes, etc. For suppliers: How to view rejected invoices in IMS Step 1: Enter the GST portal using login credentials. Step 2: Once logged in, navigate to the 'Services' tab and click 'Returns' from the drop-down menu.

The Goods and Services Tax Network is constantly streamlining its GST portal and introducing new features to simplify compliance and auditing for taxpayers. The latest is the Invoice Management System (IMS), which went live on 14th October 2024. It aims to help significantly manage the process of ITC claims more accurate and faster.  This article discusses the key features and benefits of the Invoice Management System and explains how it works. Stay with us. Latest Updates19th June 2025GSTN via advisory has clarified the impact and resolution for wrongly rejected documents on IMS on both supplier and recipients.7th June 2025GSTN via advisory will implement hard-locking of auto-populated sales liability values in GSTR-3B from July 2025 tax period (filed in August 2025) onwards.

An e-way bill is an important document that is required along with the tax invoice. It tracks the movement of goods invoiced over Rs 50,000. The article will discuss how a GST-registered taxpayer can verify an e-way bill generated by other taxpayers and how a taxpayer can cancel these e-way bills if necessary.Importance of Checking e-Way Bills Generated by OthersThe buyer, seller, or transporter can generate an e-way bill. Hence, a taxpayer must also check whether other parties have generated e-way bills. Checking e-way bills generated by others helps a taxpayer promptly verify the correctness of such e-way bills from invoices, debit and credit notes recorded in their books of accounts.

The government has introduced hard-locking in GSTR-3B to prevent tax evasion and make the entire GST return filing process more transparent. The change was initiated for the first time via an advisory dated 17th October, 2024. The GST Network made the auto-populated liability fields non-editable from January 2025, which was later postponed. In this article, we will discuss what is hard locking of GSTR-3B, the timeline so far and the best practices a business should follow to stay ahead of the curve.What is Hard-Locking in GSTR-3B?GSTR-3B is the summary return that taxpayers must file regularly to show details of outward supplies, Input Tax Credit (ITC) claims, tax liability, refunds, etc, recorded on their GSTIN. The details of outward supplies are auto-filled from the already filed GSTR-1/IFF and that of ITC claims are auto-filled from GSTR-2B. The government, in order to remove the discrepancies between the data filed by the supplier through GSTR-1/IFF and the recipient via GSTR-2B, introduced hard locking of GSTR-3B by making the auto-populated liability field non-editable, as the first step. Earlier, the taxpayers could manually edit such auto-filled fields in GSTR-3B.