Amendments Comparison Table – Pre Budget Vs Post Budget

For the benefit of readers provided below detailed explanation for above stated amendments in a lucid manner.

GST Composition Scheme – E Commerce

Under the GST law, there is a simplified composition scheme for smaller taxpayers that offers the benefit of a flat GST rate with minimum documentation and compliance requirements subject to eligibility conditions, until now persons supplying goods or services through E commerce operators are not eligible to opt composition scheme. Through The Finance Bill, 2023 Govt proposing to extend the Composition Scheme benefits to persons who are supplying goods through e-commerce operators. This benefit is only for persons who are supplying goods and does not seem to extend to persons supplying any services.Under the GST law, there is a simplified composition scheme for smaller taxpayers that offers the benefit of a flat GST rate with minimum documentation and compliance requirements subject to eligibility conditions, until now persons supplying goods or services through E commerce operators are not eligible to opt composition scheme. Through The Finance Bill, 2023 Govt proposing to extend the Composition Scheme benefits to persons who are supplying goods through e-commerce operators. This benefit is only for persons who are supplying goods and does not seem to extend to persons supplying any services.

This move by Govt enables small business who are supplying goods through E Commerce operators to opt composition scheme subject to fulfilment of other conditions laid down in GST Law, there by reduce compliance burden to a greater extent. However, as per existing law registered person engaged in interstate supply cannot opt composition scheme benefit, that means registered person engaged in interstate supply through ecommerce operation cannot avail the composition benefit.

Input Tax Credit on CSR Activities

Under Company Law, few companies (as covered u/s 135 of Companies Act,2013) need to spend a portion of their profits toward social benefit which is familiar as Corporate Social Responsibility (CSR). Through Finance Bill, Govt proposed to block GST Input Tax credit on goods or services that are been meant for CSR activities. This amendment provided much needed clarification as divergent practices were being followed by industry currently thereby reducing the unwanted litigation

Time limit to File GST Returns

Through Finance Bill, 2023 Govt has proposed to fix maximum time limit of three years from actual due date as applicable, by which GST returns should be filed. To put it simple after expiry of three years from the actual due date, return cannot be filed. Provided list of returns which are subject to the condition.

Decriminalization of certain offences

Govt has proposed to increase the threshold for the punishment of imprisonment and fine for Tax evasion u/s 132 from existing INR 1 Crore to 2 Crore. But however, Govt retained threshold of INR 1 Crore in case of invoice issuance without actual supply.

And also proposed to withdraw below mentioned offences from the purview of Sec 132 of CGST Act.

• Obstructing or preventing any officer from discharge of his duties
• Tampering or destroying any material evidence or document
• Fails to supply any requisite information or supply any false information

Rationalised Amount for Compounding Offences

In connection with the compounding of offences, proposal is to reduce the amount of compounding from minimum 50% of tax and maximum 150% of tax to minimum 25% of tax and maximum 100% of tax. Reducing the amount limits for compounding there will be surge in compounding of offences under GST thereby reduces prolonged litigation.

Further proposed to withdraw compounding of tax evasion offences covered u/s 132 of CGST Act.

Transactions not liable for GST – Clarified

Proposal is to clarify that certain entries in schedule III of the CGST Act which were inserted wef 1 st February 2019 shall be deemed to have been inserted wef 1 st July, 2017
These entries pertain to

• Goods supplied from one non taxable territory to another without goods entering India
• Sale of warehoused goods before clearance for home consumption
• High Sea Sale
  (Schedule III contains list of transactions on which GST is not leviable)
• This proposal further clarifies that if a taxpayer has paid tax on such transaction, no refund of the same shall be granted

ITC Reversal wrt supply of Custom Warehoused Goods

Sub section 3 of section 17 of CGST Act, 2017 has been amended to include value of supply of warehoused goods before clearance for home consumption for computing the value of exempt supply for apportionment of ITC in case a registered person supplies both exempt and taxable supply.

That means registered supplier needs to reverse ITC on exclusive & common inward supplies pertaining to supply of warehoused goods with customs before clearance.

Place of Supply for Transportation of Goods

Proposal is to remove the proviso to sub section 8 of section 12 of IGST Act, 2017. This proposal leads to clarify that place of supply for transportation of goods in case destination of goods is outside India shall be in India when both the supplier (Transport agency) and recipient (Goods sender) are in India. This proposal would facilitate ITC to the recipient of services in these case as the place of supply (PoS) of such transportation services would be State where registered service recipient is located otherwise which may be classified as ineligible ITC. It benefits persons engaged in Exports as PoS will be their business location post this amendment.

Amendment to Non-Taxable online recipient definition

arlier if any unregistered person obtained Online information and database access or retrieval services(OIDAR) from person located outside India for reason other than business, commerce, or profession; GST on the respective service need to be discharged by concerned service provider and in all other cases service recipient needs to discharge liability. For the benefit of readers, OIDAR services include cloud based storage, information, ebooks, music & video content received through network medium.

Now Govt proposed to cover all the cases irrespective of purpose i.e., whether or not meant for business or profession, if OIDAR services are received by unregistered person from service provider located outside India, then GST on respective service needs to be collected & discharged to Govt by service provider. Thereby reduced compliance burden to unregistered service recipient, otherwise who are mandated to get registered under GST law to deposit GST on Reverse charge mechanism. Therefor now the responsibility is with OIDAR service provider who locates outside India to collect & discharge GST liability in all cases where recipient is unregistered.

In general when a person located in India receives service from outside India, respective service recipient needs to discharge GST liability on RCM basis except cases where services are of OIDAR and service recipient is unregistered. This will reduce compliance burden to small tax payers receiving online services from outside India who otherwise not required to get registered under GST Law.