RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

Amid Covid pandemic, India has successfully crossed 100 crore benchmark in Covid vaccination, the second highest number of doses, after China- a mammoth effort towards inoculation which will have far reaching positive impact on our economy and health care.

Post –Covid Economic recovery is ongoing in India amid risk of inflation. Economy is witnessing a ‘W’ shaped recovery and India can be said to be in last stage of W shaped economic recovery. It is expected to register a growth of 10.5% in current fiscal. Growth can be 8% on a sustained basis from financial year 2023, but there are risks too. There is still an uncertainty over domestic demand, capex by states, bad loans etc.

According to Reserve Bank of India, the Indian economy is picking up steam, although the recovery is uneven and trudging through soft patches, amidst an accentuation of global risks. Domestic demand is gaining strength while aggregate supply conditions are recouping, powered by the robust performance of Kharif agricultural production and revival in manufacturing and services. Looking ahead from here, the main downside to the prospects for the Indian economy, abstracting from the pandemic, is the possibility of a sudden accentuation of global risks.

According to MoF, the fast-paced vaccination roll-out and enhanced mobility, currently around 90 percent of pre-pandemic level, have placed the economy on the path to swift recovery, which gained further momentum in September. Sustained and robust growth in agriculture, sharp rebound in manufacturing and industry, resumption of services activity and buoyant revenues suggest that the economy is progressing well.

The Central Government is likely to exceed the budgeted tax collection target of ₹ 22.2 trillion for the current fiscal year, led by better indirect tax mop-up, compliance measures, and recovery in most sectors following the second wave of the Covid pandemic. It may overshoot the target by ₹ 2.5 trillion.

The Goods and Services Tax (GST) mop-up is expected to remain above the ₹ 1.1 trillion mark a month as the festive season is set to see an improvement in consumer spending. Besides, a sharp increase in duty on petrol and diesel continued to keep excise revenue on an upswing.

GSTN has been issuing advisories for taxpayers from time to time. It has released FAQs on GSTR-2B which is an auto generated ITC statement. It has also clarified on availability of ITC in GSTR-2B and GSTR-9 for the Financial Year 2020-21.

In one of the advance rulings coming from AAR, Gujarat, it has been opined that canteen charges collected from employees shall be outside the gamut of GST. The GST will not be applicable on the amount collected from employees towards canteen charges which are paid to the canteen service provider. Where company does not make profit from such charges, GST cannot be levied. NCLAT has ruled that Committee of Creditors (CoC) cannot exercise judicial powers and revision of GST order is outside the purview of resolution professional in insolvency cases.

ITC availability for Financial Year 2020-21

• GSTN has advised as follows on availability of input tax credit (ITC) for financial year 2020-21:

• Records (invoice or debit notes) pertaining to Financial Year 2020-21 reported in GSTR-1 after due date of GSTR-3B of September 2021 will not reflect as ‘ITC Available’ in GSTR-2B of the recipients. Such records will reflect in “ITC Not Available” section of GSTR-2B and such ITC shall in turn not be auto-populated in GSTR-3B.
• Records (invoice or debit notes) pertaining to Financial Year 2020-21 reported in GSTR-1 after due date of GSTR-3B of September 2021 will also not reflect as ‘ITC as per GSTR-2A’ in Table-8A of GSTR-9 of the recipients.

• Taxpayers have been advised to:
  • Ensure that their records pertaining to Financial Year 2020-21 are reported on or before the due date of their GSTR-3B for the month September 2021, or for the quarter of July to September 2021 in case of quarterly GSTR-3B filers.
  • Availment of ITC by the recipients contrary to the legal provisions in GST may entail action by the tax administrations in accordance with law.

(Source: GSTN Advisory dated 17.10.2021)

GSTN Advisory on GSTR- 2B

• GSTN has issued an advisory in form of FAQs relating to Form GSTR-2B which is an auto-drafted ITC statement generated for normal taxpayers based on the information furnished by their suppliers in their GSTR-1, GSTR-5, GSTR 6.
• GSTN has clarified on several issues relating to GSTR-2B like when GSTR-2B is generated, what are the inputs for generating GSTR-2B and cut-off dates for GSTR-2B generation etc.
• Form GSTR-2B summary is bifurcated into following two summaries:
  • ITC Available: A summary of ITC available as on the date of its generation and is divided into credit that can be availed and credit that is to be reversed (Table 3)
  • ITC not Available: A summary of ITC not available and is divided into ITC not available and ITC reversal (Table 4)
• This indicates availability and non-availability of input tax credit to the taxpayer against each document filed by their suppliers and is made available to the taxpayers on the afternoon of 14th day of every month.

Generation of Form GSTR-2B

• Form GSTR-2B will be generated for each month on the 14th day of the succeeding month. For example, for the month of July 2020, the statement will be generated and made available to the registered person on 14th August 2020.
• Please note that Form GSTR-2B will consist of all documents filed by suppliers/ISD in their Form GSTR-1, 5 & 6, between the cut-off dates. It will also consist import data for the period which are received within 13th of the succeeding month.
• In case of monthly Form GSTR-1, the cut-off date is 00:00 hours on 12th of the relevant month to 23:59 hours, on 11th of the succeeding month. Whereas for quarterly Form GSTR-1/IFF, Form GSTR-5 and Form GSTR-6, the cut-off date is 00:00 hours on 14th day of relevant month to 23:59 hours, on 13th day of succeeding month.

Reflection of details filed in Form GSTR-1 and Form GSTR-6 in Form GSTR-2B

• The details filed in Form GSTR-1 & 5 (by supplier) & Form GSTR-6 (by ISD) would reflect in the next open Form GSTR-2B of the recipient irrespective of supplier’s/ISD’s date of filing. For e.g., if a supplier files a document INV-1 dated 15.07.2020 on 11th August, it will get reflected in GSTR-2B of July (generated on 12th August). If the document is filed on 12th August, 2020 the document will be reflected in Form GSTR-2B of August (generated on 12th September).

(Source: GSTN Advisory dated 18.10.2021)