Changes related to GST in Union Budget 2022

The Union Budget 2022 was announced on 1st February 2022. These changes will come into effect from the date that CBIC notifies.  Below are some of the changes made in GST through Union Budget 2022:

Changes to ITC provisions

• A new clause (ba) to Sub-section (2) of section 16 was added stating that Input Tax Credit (ITC) for any supply can be availed only if it is not restricted via communication under section 38 or GSTR-2B to the registered person.
• A registered taxpayer will not be able to utilise ITC on any invoice or debit note after the 30th of November following the end of the financial year to which such invoice pertains to or filing of annual return whichever is earlier.

Earlier this section restricted claiming ITC on any invoice or debit note pertaining to a particular financial year if it is not taken before the due date of filing of return for the month of September or filing of annual return, whichever is earlier. 

Changes to cancellation of GST registration by officers

Budget 2022 amended Section 29. It states that the GST registration will be cancelled by the officer if:

• If a composition taxable person (paying tax under Section 10) has not filed GSTR-4 for a financial year by 30th April of the following financial year.
• A person other than a composition taxable person has not filed a return for a financial year for such a continuous period as prescribed from time to time.

Extension of time limit for issuance of credit notes

It provided an extended time limit for issuance of credit notes up to the 30th of November following the end of the financial year or the date of filing the annual return, whichever is earlier.

Changes in furnishing details of outward supplies

• It stated conditions for providing details of an outward supply in GSTR-1 and communication of such details to the recipients via GSTR-2B.
• The two-way communication process while filing the return was cancelled due to the suspension of the GSTR-2 return.
• An extended time limit up to 30th November of the following financial year was provided for rectification of errors regarding outward supplies as reported in GSTR-1.
• It provides for sequential filing of outward supplies without skipping tax periods.

Revamp of Section 38 on ITC claims

Section 38(1) is revamped by prescribing terms and conditions for detailing inward supplies and ITC to the recipient by way of an auto-generated statement and thus doing away with the two-way communication process while filing the return.

Changes to the provisions regarding furnishing of GST returns

• A non-resident taxable person should file a monthly return in GSTR-5 by the 13th of the following month.
• Provide an option to the person filing a return under proviso to Sub-section (1) by either paying the self-assessed tax or the amount prescribed. 
• Provide an extension of time up to the 30th of November of the following financial year for rectification of errors in Form GSTR-3B.
• The filing of GSTR-1 was added as a condition for filing GSTR-3B for the said tax period.

Section 41 was modified and Sections 42, 43 and 43A were removed

• Section 41 regarding claiming ITC was substituted to dissolve the concept of “claim” of eligible ITC on a provisional basis and provided for availing self-assessed ITC as per prescribed terms and conditions.
• Sections 42 regarding matching, reversal and reclaim of ITC, 43 regarding matching, reversal and reclaim of reduction in output tax liability and 43A regarding the procedure for furnishing returns and availing ITC of the CGST Act are deleted.

Changes to the utilisation of balance available in the electronic credit ledger

• It prescribed conditions for availing the balance available in the electronic credit ledger.
• It allows the transfer of an amount from the electronic cash ledger of one person to another.
• It prescribed the maximum proportion of output tax liability which may be discharged through an electronic credit ledger.

Changes to the provision of claiming refund of unutilised ITC

• It explicitly provides that the refund of any balance in the electronic cash ledger can be availed only in the prescribed manner.
• The refund claim of ITC on inward supplies can be made only within 2 years from the last day of the quarter in which supply was received.
• To extend the scope of this sub-section for all types of refunds.

Miscellaneous amendments

• Changes to the provision of the resignation of the director: It removed the reference of section 38 therefrom. 
• Changes are made to the provision of levy of late fees for delay in filing GSTR-8.
• No levy of interest on ITC claimed wrongly but not utilised under section 50 of the CGST Act. It will be implemented retrospectively from 1st July 2017.
• It provided for an extension of the time limit up to the 30th of November of the following financial year for rectification of errors in TCS values in GSTR-8.
• Reference to section 38 was removed in Sub-section (2) of section 48.
• Amendment of Notification No. 9/2018 dated 23rd January 2018- Central Tax and notify the common electronic portal for GST as “www.gst.gov.in”. This portal shall be used for all the functions as prescribed in CGST Rules, 2017 other than those required for e-way bills and e-invoicing. 
• A retrospective amendment from 1st July 2017 of Notification No. 13/2017- Central Tax, Notification No. 6/2017- Integrated Tax and Notification No. 10/2017- Union Territory Tax was made by notifying the rate of interest on delayed payment of CGST, IGST and UTGST from 24% per annum to 18% per annum.
• Amendment of Notification No. 01/2017- Central Tax, Integrated Tax and Union Territory Tax by exempting the supply of unintended waste generated during the production of the fish meal except fish oil. This exemption is given for the period starting from 1st July 2017 to 30th September 2019. But, if tax is already collected then a refund will not be provided. 
• Notification No. 25/2019- Central Tax (Rate), Notification No. 24/2019- Integrated Tax (Rate) and Notification No. 25/2019- Union Territory Tax have been given retrospective effect from 1st July 2017. These notifications state that service by the grant of a liquor license by way of license fee or application fee shall neither be treated as supply of goods nor supply of service. But, if tax is already collected then a refund will not be provided.