KEY HIGHLIGHTS FROM BUDGET 2023-24 on GST LAW

Budget 2023 was presented by Nirmala Sitharaman on 1st February 2023 and it was indeed a revolutionary budget, especially for the taxpayers and middle class. In this article, we have highlighted key highlights of Budget 2023 on GST with Interpretation and analysis by an industry experts. One of the major changes in the GST law in Budget 2023 was the decriminalization of certain offences. For this, Sections 132 and 138 of the CGST Act were amended.

Let’s detail the GST Law highlights from Budget 2023 in detail:

1.) Amendment in section 10 of CGST Act, 2017

In the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the Central Goods and Services Tax Act), in section 10 -:

• in sub-section (2), in clause (d), the words “goods or” shall be omitted;
• in sub-section (2A), in clause (c), the words “goods or” shall be omitted.

ASC Interpretation:

Now, according to the amendment, the Composition Dealer registered under GST and who is required to collect tax at source under section 52 is allowed to engage in the supply of goods through an e-commerce operator. 

2.) Amendment in section 16 of CGST Act, 2017 

In section 16 of the Central Goods and Services Tax Act, in sub-section (2) -:

• in the second proviso, for the words “added to his output tax liability, along with interest thereon”, the words and figures “paid by him along with interest payable under section 50” shall be substituted;
• in the third proviso, after the words “made by him”, the words “to the supplier” shall be inserted.

ASC Interpretation:

Now, it has been clarified that interest shall be paid as per Sec. 50 i.e. @18%.
Further, it has been clarified that the recipient shall be entitled to avail input tax credit on payment made by him to the supplier for the purchases made.

3.) Amendment in section 17 of CGST Act, 2017

a)in sub-section (3), in the Explanation, for the words and figure “except those specified in paragraph 5 of the said Schedule”, the following shall be substituted, namely–

“except –

• the value of activities or transactions specified in paragraph 5 of the said Schedule; and
• the value of such activities or transactions as may be prescribed in respect of clause (a) of paragraph 8 of the said Schedule”

ASC Interpretation:

Earlier, common ITC was required to be reversed only on activities covered under para 5 (Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of the building) of Schedule III of CGST Act, 2017 however, now common ITC reversal is also required for activities covered under Para 8

• (Supply of warehoused goods to any person before clearance for home consumption) of Schedule III. 
• in sub-section (5), after clause (f), the following clause shall be inserted, namely:

“(fa) goods or services or both received by a taxable person, which are used or intended to be used for activities relating to his obligations under corporate social responsibility (CSR) referred to in section 135 of the Companies Act, 2013;”. 

ASC Interpretation:

A new clause has been inserted in section 17(5) of CGST Act, 2017, due to which now companies will not be able to avail ITC on CSR activities performed by them.

4.) Substitution of new section for section 23

For section 23 of the Central Goods and Services Tax Act, the following section shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July, 2017, namely – 

Persons not liable for registration:
 
“23. Notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section 24 –

(a)  the following persons shall not be liable for registration, namely –

• any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act, 2017;
• an agriculturist, to the extent of supply of produce out of cultivation of land”

ASC Interpretation:

Now, Section 23 (Persons not liable for registration) will overrule the Section 22 (Persons liable for registration) and Section 24 (Compulsory registration in certain cases).

5.) Amendment in section 37 (GSTR-1), section 39 (GSTR-3B), section 44 (GSTR-9 – Annual Return) and section 52 (GSTR 7 – TCS return) of the CGST Act, 2017

“A registered person shall not be allowed to furnish its return for a tax period after the expiry of a period of three years from the due date of furnishing the said details”

ASC Interpretation:

Extended time limit for filing GSTR-1, GSTR-3B, GSTR-9- Annual Return and GSTR-7- TCS return is now three years from the due date of furnishing the return.

6.) A new insertion of section 122 (1B) under CGST Act, 2017 related to penalties on E-Commerce Operator has been made for the following acts committed by it:  

• allows a supply of goods or services or both through it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply;
• allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or
• fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act, ASC Interpretation:

After the insertion of the above sub-section, E-Commerce Operator will be penalised Rs.10,000 or an amount equivalent to the amount of tax involved made by a registered person other than a person paying tax under section 10, whichever is higher shall be imposed if mentioned acts are committed.

7.) Retrospective exemption to certain activities and transactions in Schedule III to the Central Goods and Services Tax Act.

• In Schedule III to the Central Goods and Services Tax Act, paragraphs 7 and 8 and the Explanation 2 thereof (as inserted vide section 32 of Act 31 of 2018) shall be deemed to have been inserted therein with effect from the 1st day of July, 2017.
• No refund shall be made of all the tax which has been collected, but which would not have been so collected, had subsection been in force at all material times.

ASC Interpretation:

Activities covered under para 7 (i.e. sale from non-taxable territory to another place in the non-taxable territory without such goods entering into India) and para 8 (i.e. High sea sales) shall neither be treated as supply of goods nor supply of services w.e.f. 01st July 2017.

Further, if tax has been paid on sales which are covered under para 7 & 8 then a refund on such sales shall not be provided considering that para 7 & 8 were in force from 01st July 2017.

8.) Amendment of section 12 of IGST Act, 2017

In section 12 of the Integrated Goods and Services Tax Act, in sub-section (8) (Place of Supply in relation to transportation or courier of goods outside India), the proviso shall be omitted.

ASC Interpretation:

Earlier, according to the above-referred proviso, the place of supply of services by way of transportation of goods, including by mail or courier to a place outside India was a place of destination of goods i.e. Outside India and the Service provider needs to charge IGST, however after removal of the said proviso, the place of supply of such goods will be the location at which such goods are handed over for their transportation, So the service provider needs to charge CGST/SGST in case the Service recipient and Provider are situated in the same state. 

NOTE: All the above amendments will come into force whenever CBIC will issue Notification for all the cases. 

If you need any clarification regarding the Budget 2023 highlights, analysis, implementation, and how it will impact you and your business, feel free to contact the ASC Group.

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