RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

MOF expects economy to pick-up and it may also announce next tranche of stimulus. India stands poised to re-cover at a fast pace and reach pre-Covid levels by the end of the year- barring the incidence of second wave that may be triggered by the fatigue with social distancing. According to Dr. C. Rangarajan, noted economist and former RBI Governor, economy may be back on pre-Covid levels by 2021-22 end as the signs of economic recovery are visible after series of unlock down phases.

On Compensation Cess, Pondicherry and Rajasthan have accepted the proposal of borrowing as per Central Government proposal – Option-1. Rajasthan becomes first congress ruled state to opt the scheme. The centre has borrowed and transferred the second installment of ₹ 6000 crore to 16 states and 3 UT’s.

CBIC has issued a series of Notifications on 10.11.2020 (from Nos. 81 to 88) and Circular No. 143, all dated 10.11.2020. Notification Nos. 81 to 84 relate to implement the scheme of quarterly return filing alongwith monthly payment of taxes (QRMP scheme). A clarificatory circular has been issued to clarify the issues of eligibility, options, furnishing of details of outward supplies u/s 37 of CGST Act, 2017, monthly payment of tax, quarterly filing of Form GSTR-3B,applicability of interest and late fees. Further, time limit for filing of form GST ITC-04 has been extended to 30.11.2020. E-invoicing has been made mandatory from 01.01.2021 for every taxpayer whose aggregate turnover in any financial year from 2017-18 exceed ₹ 100 crores.

It is learnt that GST department is rejecting refund claims of subsidiaries of multinational companies and Indian companies providing services to foreign clients or entities considering them as intermediaries (and not exporters), more so in information technology sector.

E-way bills generated in October, 2020 have hit an all time high at 6.41 crores. Also generation of e-invoices hit 495 lakh in October, i.e. in first month itself.

Effective date of amendments in section 39 of CGST Act, 2017

The Central Government has appointed the 10th day of November, 2020, as the date from which amendments in the provisions of section 39 (1, 2 and 7) made by Finance Act, 2019 of Act shall come into force. These amendments relate to furnishing of returns under QRMP Scheme.

(Source: Notification No. 81/2020-Central Tax dated 10.11.2020)

Amendment in CGST Rules, 2017

Following amendments have been made in CGST Rules, 2017 in relation to returns (Rule 59, 60, 61, 61A and 62)

GSTR-1 related

• Quarterly return filers can file their *first and second month B2B invoices* in Invoice Furnishing Facility (IFF) on or before 13th of 1st month in next quarter
• Total value for such B2B invoices is capped to 50 lakhs per month
• No need to report invoices again in GSTR-1 if already reported in IFF
• Due date of GSTR-1 for quarterly filers is 13th of 1st month in next qtr
• HSN/SAC codes shall be mentioned mandatorily in GSTR-1* ( <5Cr- 4 digit, >5Cr- 6 digit)

GSTR-2 related

• The invoices reported in IFF shall be made available to recipient in their GSTR-2A/2B

Details of invoices furnished by	FORM	Part of FORM GSTR 2A
Non-resident taxable person	GSTR-5	Part A
Input Service Distributor	GSTR-6	Part B
Tax deducted at source	GSTR-7	Part C
Tax collected at source	GSTR-8	Part C
Integrated tax paid on the import of goods or goods brought in domestic Tariff Area from Special Economic Zone unit or a Special Economic Zone developer on a bill of entry		Part D

GSTR-3B related

• Rule 61(6) was inserted to provide due date for filing GSTR-3B for the months of October, 2020 to March, 2021 as 20^th  of next month if TO > 5 Crores
• Quarterly return filers shall deposit tax in electronic cash ledger on or before 25^th of next month for first and second months

(Source: Notification No. 82/2020-Central Tax dated 10.11.2020)

Extension of due dates for GSTR-1

New due dates for filing form GSTR-1 have been notified w.e.f. 01^st January, 2021

Monthly / Quarterly	Due Date
Monthly	11th of the succeeding month.
Quarterly	13th of the succeeding month.

(Source: Notification No. 83/2020-Central Tax dated 10.11.2020)

Class of persons for QRMP Scheme

• A registered person whose aggregate turnover crosses five crore rupees during a quarter in a financial year shall not be eligible for furnishing of return on quarterly basis from the first month of the succeeding quarter.
• Taxpayers who have furnished the return for the tax period October 2020 on or before 30th November 2020, it shall be deemed that they have opted under sub-rule (1) of rule 61A of the said rules for the monthly or quarterly, as follows:

• Turnover upto 1.5 cr and GSTR-1 on Quarterly basis in CFY- Quarterly
• Turnover upto 1.5 cr and GSTR-1 on Monthly basis in CFY- Monthly
• Turnover more than 1.5 crore rupees and up to 5 crore rupees in the preceding financial year- Monthly

The registered person may change the default option electronically, on the common portal, during the period from the 5^th day of December, 2020 to the 31^st day of January, 2021.

This is effective from 01.01.2021.

(Source: Notification No. 84/2020-Central Tax dated 10.11.2020)

Special procedure for making payment under QRMP Scheme

• Taxpayer who have opted to furnish a return for every quarter, shall deposit 35% of the tax liability paid by debiting the electronic cash ledger in the return for the preceding quarter where the return is furnished quarterly, or the tax liability paid by debiting the electronic cash ledger in the return for the last month of the immediately preceding quarter where the return is furnished monthly.
• However, no such amount may be required to be deposited-

(a) for the first month of the quarter, where the balance in the electronic cash ledger or electronic credit ledger is adequate for the tax liability for the said month or where there is nil tax liability;

(b) for the second month of the quarter, where the balance in the electronic cash ledger or electronic credit ledger is adequate for the cumulative tax liability for the first and the second month of the quarter or where there is nil tax liability:

• Registered person shall not be eligible for the said special procedure unless he has furnished the return for a complete tax period preceding such month.
• This is a effective from 01.01.2021.

(Source: Notification No. 85/2020-Central Tax dated 10.11.2020)

Rescission of Notification No. 76/2020 –CT dated 15.10.2020

Notification No. 76/2020- Central Tax dated 15.10.2020 relating to GSTR-3B for October, 2020 to March, 2021 has been rescinded w.e.f. 10.11.2020.

(Source: Notification No. 86/2020-Central Tax dated 10.11.2020)

Extension of due date for Form ITC-04

The time limit for furnishing the declaration in FORM GST ITC-04, in respect of goods dispatched to a job worker or received from a job worker, during the period from July, 2020 to September, 2020 has been extended till the 30^th day of November, 2020.

The Notification No. 87/2020-Central Tax shall be deemed to have come into force with effect from the 25^th day of October, 2020.

(Source: Notification No. 87/2020-Central Tax dated 10.11.2020)

Amendment in requirement of e-invoicing

Amendment has been made in Notification No. 13/2020-Central Tax dated 21.03.2020 relating to GST e-invoicing vide which the requirement of GST e-invoicing has been extended to tax payers having aggregate turnover exceeding ₹ 100 Crore in any of the last three financial years, viz FY 2017-18, 2018-19 or 2019-20.

This will be applicable with effect from 1^st January, 2021.

(Source: Notification No. 88/2020-Central Tax dated 10.11.2020)

Clarifications on quarterly return monthly payment scheme

The GST Council in its 42nd meeting held on 05.10.2020, had recommended that registered person having aggregate turnover up to five (5) crore rupees may be allowed to furnish return on quarterly basis along with monthly payment of tax, with effect from 01.01.2021. Government has issued various notifications on 10.11.2020 to implement the Scheme of quarterly return filing along with monthly payment of taxes (QRMP Scheme/ Scheme) and  issues related to notifications issued to implement the QRMP Scheme have been examined in the circular and clarification issued on :

• Eligibility of QRMP Scheme
• Exercising of QRMP Scheme
• Furnishing of details of outward supplies u/s 37 of the CGST Act
• Monthly payment of tax
• Quarterly filing of Form GSTR-3B
• Applicability of interest
• Applicability of late fee

(Source: Circular No. 143/13/2020 - GST dated 10.11.2020)