CBIC notifies effective date for amendments in CGST Act and modifies CGST Rules

This Tax Alert summarizes recent Notifications^[1] issued by Central Board of Indirect Taxes and Customs (CBIC).

Vide Finance Act, 2022, Government had proposed various amendments in the Central Goods and Services Tax Act, 2017 (CGST Act). The following amendments have been now made effective from 1 October 2022:

• Conditions for availing input tax credit (ITC)
  
  
• Levy of late fees for delayed furnishing of tax collected at source (TCS) return
  
  
• Timelines for the following compliances linked to due date for filing September return shifted to 30 November:
  
  • Availment of ITC
    
    
  • Disclosure of credit note 
    
    
  • Rectification of error or omission in GSTR-1, GSTR-3B and TCS return
• Omission of provisions related to ITC matching mechanism
  
  
• Due dates for furnishing of returns by non-resident taxable person 
  
  
• Cancellation of GST registration for default in return filing
  

CBIC has also made consequential amendments to Central Goods and Services Tax Rules, 2017 (CGST Rules) effective 1 October 2022.

Comments:

• Bringing into effect the amendments for extending the timelines for various compliances is a welcome move and taxpayer friendly measure. 
   
  Its applicability for the financial year 2021-22 may however, need to be evaluated.
  
  With respect to revised timelines, clarity is required whether such compliances can be done in GSTR-3B filed for the month of November of the following financial year. 
  
  
• The amended provisions of Section 38 provides that ITC will not be available if the same is restricted in auto-generated statement on account of supplier’s default.
  
  Taxpayers are likely to face challenges in claiming credit if these restrictions are imposed as they are beyond recipient’s control. This may also result in blockage of working capital. 
  
  
• Currently, taxpayers are required to reverse proportionate ITC due to non-payment of consideration to the vendor within 180 days. However, amendment to Rule 37 does not explicitly provide for reversal on a proportionate basis.
  
  
• Basis the amended provisions of Section 41, if the supplier has not paid tax in respect of a supply, ITC will have to be reversed along with interest. While credit can be re-availed, provisions are silent regarding re-credit/ refund of interest.  
  

^[1] Notification No. 18 to 20/2022- Central Tax all dated 28  September 2022