Further amendments relating to Indirect taxes proposed in Finance Bill, 2023

This tax alert summarizes the amendments proposed in the Finance Bill 2023.

The Finance Bill, 2023 was presented by the Hon’ble Finance Minister Smt. Nirmala Sitharaman on 1 February 2023. While moving the Bill for approval in Lok Sabha, the FM introduced certain amendments to the said Bill.

The key changes are:

• The amendments relating to Customs and Goods and Services Tax (GST) shall come into effect from the date to be appointed by the Central Government through notification. 
  
• The deferment of duties in respect of goods imported under Manufacture and Other Operations in Warehouse Regulations (MOOWR) is now being restricted to duties other than integrated tax (IGST) and compensation cess (Cess). In other words, IGST and Cess are payable on import of goods under MOOWR.
• Provisions of compulsory registration will not apply only where the person is exempted from obtaining registration through a notification issued under section 23(2) of Central Goods and Services Tax Act, 2017. 
• Basis the recommendation of the GST Council,
  
  • the provisions relating to GST Appellate Tribunal (GSTAT) are being amended, and
  • provision for determining place of supply of services of transportation of goods, where the supplier or the recipient is located outside India, is being omitted. 
    
• The rate of Compensation cess has been changed for pan masala and tobacco products.

Comments

• Constitution of GSTAT is likely to provide a big relief to the businesses. This may also reduce the number of writ petitions being filed before the High Courts in absence of GSTAT.
  
• Non-deferment of IGST and cess in case of import of goods under MOOWR may impact the working capital of the taxpayers.
• The place of supply of transportation of service, where the supplier or the recipient are located outside India, will now be the location of the recipient. This may provide level playing field to the Indian shipping industry.