The Finance Bill, 2024 seeks to amend certain provisions of Central Goods and Services Tax Act, 2017 (‘CGST Act’). In particular, these amendments focus on redefining the role and responsibilities of Input Service Distributors (ISDs) and introducing penalties for non- compliance with special procedures related to the registration of machines in the manufacturing sector.
Section 2(61) - Input Service Distributor Definition
|“Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office.
|“Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices towards the receipt of input services, including invoices in respect of services liable to tax under sub-section (3) or sub-section (4) of section 9, for or on behalf of distinct persons referred to in section 25, and liable to distribute the input tax credit in respect of such invoices in the manner provided in section 20.
Provides clarity and specific criteria, ensuring a more precise understanding of the role and responsibilities of Input Service Distributors. Further, from now onwards the registration of Input Service Distributor (ISD) has become mandatory.
ISD mechanism has been made mandatory for distribution of Input tax credit of common input service incurred from third party.
|Section 20 - Registration and Obligations of Input Service Distributor
|No specific details on the registration and obligations of Input Service Distributors.
|Mandates registration of offices receiving tax invoices for input services as Input Service Distributors under clause (viii) of section 24. It also specifies the obligation to distribute input tax credit in a prescribed manner.
|Establishes a structured framework for the registration and functioning of Input - Service Distributors. It brings clarity and separate section 20 from Rule 36 of CGST Act, 2017.
- Penalties for failure to register machines used in manufacture of specified goods
|No provision for penalties related to the registration of machines in manufacturing.
122A, imposing penalties of one lakh rupees per
unregistered machine used in manufacture of specified goods i.e. pan masala, tobacco & related tobacco products and allowing for the seizure and confiscation of unregistered machines. Provides a grace period for compliance after the penalty notice.
Acts as a deterrent against non-
compliance with machine registration procedures in manufacturing, promoting adherence to specified protocols. Enhances regulatory oversight and discourages potential malpractices.
This comparison with the original sections, amendments, and impacts illustrates how the amendments bring about clarity, structure, and regulatory enforcement within the Central Goods and Services Tax Act. The impact analysis emphasizes the positive outcomes, including enhanced transparency, accountability, and deterrence against non-compliance.
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