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1. E-Invoice limit has been reduced w.e.f. 1-8-2023, and now those registered persons whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds Rs. 5 crore are required to issue E-invoice for Export invoice and B2B supplies.

2. Filing of GSTR-9 has been further exempted for Registered Persons whose aggregate turnover in FY 2022-23 is upto ₹ 2 crores through Notification No. 32/2023-CT dt 31-7-2023.

3. Rule 10A of the CGST Rules, 2017 has been amended from 4-8-2023 to curb fraudulent trade practices. Many a times, persons with a mala-fide intension used to get registered and file GSTR-1 and not upload GSTR-3B. Thus, they avoided paying any taxes, and transferred the credit of ITC to buyers. The government has amended the Rule 10A of the CGST Rules, 2017 to plug this loophole and specified that, registered person is to furnish information with respect to details of bank account on the common portal within the following time-limits -

Top 10 changes impacting small business which are made effective in July and Aug 2023
  • within a period of 30 days from the date of grant of registration, or
  • before furnishing the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 or using invoice furnishing facility,
  • whichever is earlier.

There is a mandatory requirement of furnishing bank details before furnishing of GSTR-1. It is to be noted that bank details to be updated are required to be in the name of the person to whom registration has been granted. Thus, restricting deceitful person from transferring credit.

4. Changes in Registration Procedures -

a. Biometric Aadhaar Authentication shall be done and photograph shall be clicked for new registrations which are picked up on the basis of data analysis and risk parameters. This additional procedure was introduced for the applicants in the State of Gujarat w.e.f. 26-12-2022. Now, w.e.f. 31-7-2023 the UT of Puducherry (amended through NN 31/2023-CT, dt 31-7-2023), has also been notified.

 

As per Rule 8(4A), every applicant who has opted for and completed authentication of Aadhaar number at the time of uploading registration form and is identified on the common portal, based on data analysis and risk parameters, his biometric-based Aadhaar authentication shall be done and his photograph shall be clicked, in order to consider his application.

Along with this, there shall be verification of the original copy of the documents uploaded with the application in FORM GST REG-01 at one of the Facilitation Centres notified by the Commissioner will be done.

b. In the procedure for registration laid down in R-9 of the CGST Rules, 2017, there was a specific mention that in all the situations requiring physical verification, the verification shall be conducted in the presence of the person who has applied for registration. Now w.e.f. 4-8-2023, the Rule 9 of the CGST Rules, 2017 has been amended and words "in the presence of the said person" have been omitted, thereby implying that the even in the absence of person applying for registration, verification is allowed. This is a welcome change as person applying for registration is not bound to stay in the same city/state till the completion of the process of registration.

c. Rule 21A(2A) of the CGST Rules, 2017 has also been amended and the department can w.e.f. 4-8-2023 suspend the registration for a new situation and seek reply within 30 days of communication to explain the reason as to why registration shall not be cancelled. Following situation are inserted -

  • Contravention of provisions of Rule 10A of the CGST Rules, 2017 discussed above.

d. Rule 25 of the CGST Rules, 2017, which relates to physical verification of place of business has been amended w.e.f. 4-8-2023. It now provides for 2 timelines for visiting officers -

a) If verification is done before grant of registration, then report is to be uploaded in FORM GST REG-30on the common portal within maximumperiod of 25days of grant of acknowledgment in FORM GST REG-02.

b) If verification is done after grant of registration, then report is to be uploaded in FORM GST REG-30on the common portal within a period of 15working days following the date of such verification.

5. R-138F of CGST Rules, 2017 has been inserted w.e.f. 4-8-2023. R-138F states that E-way bill is to be generated for the intra-state movementof the following goods -

a. Natural or cultured pearls and precious or semi-precious stones; precious metals and metals clad with precious metal (Chapter 71)

b. Jewellery, goldsmiths' and silversmiths' wares and other articles (Chapter 71) [excepting Imitation Jewellery(7117)]

 

Few points need to be noted in this regard

  • The powers have been delegated to Commissioner of State GST department/UT GST Department, who in consultation with Jurisdictional Principal Chief Commissioner or Chief Commissioner of Central Tax, may exercise the powers by issuing a notification in this regard.
  • The goods specified in R-138F are the same goods which are exempt from generation of E-way bill in the case of inter-state movement of goods as per serial numbers 4 and 5 in the Annexure appended to sub-rule (14) of rule 138.
  • The invoice value including GST (excluding exempt supply) is to be not below Rs. 2 lacs.
  • Only information in Part-A of FORM GST EWB-01 is to be filed and E-way bill generated.
  • No notification has been issued in Delhi State in this regard till date.

6. A new rule 88D of CGST Rules, 2017 has been inserted.It deals with manner of dealing with difference in input tax credit available in auto-generated statement containing the details of input tax credit (GSTR-2B) and that availed in return (GSTR-3B). This rule states that difference should be greater than such amount and such percentage, as may be recommended by the Council and since no notification has been issued detailing the amount and percentage, this rule is not effective.

7. Rule 59 of CGST Rules, 2017 has been amended w.e.f. 4-8-2023 to restrict a registered person to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 or using the invoice furnishing facility (IFF), if he has not furnished the details of the bank account as per the provisions of rule 10A.
Rule 59 has also placed a restriction on furnishing GSTR-1 or IFF, if registered person has received an intimation under Rule 88D. But till the time R-88D becomes fully functional and council prescribes the amount and percentage difference for which intimation will be sent, this part of amended R-59 is virtually ineffective.

8. Para 7&8 of the Schedule III of CGST Act, 2017, had been amended from 1-2-2019.
These paras talk about out-and-out sales (meaning sale from one country to another without such goods entering India), sale of goods while in custom warehouses and high-sea sales.

The department started issuing notice that since provisions are inserted from 1-2-2019, such supply is taxable from 1-7-2017 to 31-1-2019.

But actually, this amendment was clarificatory in nature and the government did not have the intention from the beginning to charge GST on it. Thus, the government has changed the effective date of this amendment to 1-7-2017. However, the government has clearly mentioned that if tax has been paid by any person that shall not be refunded.

9. Ocean Freight to a place outside India, commonly known as Export Ocean Freight, was included in the Explanation to Rule 43. In this explanation, a list of items is given which although are exempt in nature but will not be considered for the purpose of reversal u/r 42 and 43. Now with effect from 4-8-2023, export ocean freight has been omitted.

It is to be remembered that now only Interest received on loans and deposits and value of supply of Duty Credit Scrips is to be excluded for the purpose of computation of reversal u/r 42 and 43.

10. Clarification on taxability of shares held in a subsidiary company by the holding company. -

Sometimes department demands GST from Holding companies on holding of shares in subsidiary companies, solely on the basis of the fact that there is an SAC entry '997171' in the scheme of classification of services mentioning "the services provided by holding companies, i.e. holding securities of (or other equity interests in) companies and enterprises for the purpose of owning a controlling interest."

Shares come under the definition of Securities as defined under Sec 2(h) of the Securities Contracts (Regulation) Act, 1956 and securities are neither goods nor services as per Sec 2(52) and Sec 2(102) of the CGST Act.

Merely having an entry in the services code should not allow the government to charge GST which is otherwise not chargeable. This has been clarified through Circular No. 196/08/2023-GST dated 17-7-2023.

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Published by

CA Shruti Singhal
(Practicing CA)
Category GST   Report

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