Last updated: March 2nd, 2023 6:19 PM

Highlights of GST Proposals in Union Budget 2023

The present article briefly covers the highlights of Goods and Services Tax (GST) proposals as proposed in the Union Budget 2023.

Composition scheme vis-à-vis supply through e-commerce operator –

Composition scheme covered under section 10 of the Central Goods and Services Tax states that the registered person engaged in the supply of goods or services through an e-commerce operator is not eligible to opt under the Composition Scheme. However, as per the budget proposal, the said restriction is amended. Accordingly, the registered person engaged in the supply of goods through an e-commerce operator will now be qualified to opt under the Composition Scheme. Importantly, the restriction continues in respect of the supply of service. The position of the composition scheme vis-à-vis supply through the e-commerce operator, after implementation of the budget proposal, are summarized hereunder –

• Composition scheme benefit will be available to the person who is engaged in the supply of goods via an e-commerce operator;
• Composition scheme benefit is not available to the person who is engaged in the supply of services via an e-commerce operator.

Input tax credit vis-à-vis Corporate Social Responsibility (CSR) –

Sub-clause (fa) is inserted to section 17(5) of the Central Goods and Services Tax Act, 2017. According to the new sub-clause (fa), the input tax credit (ITC) will not be available on the goods or services or both received by the taxable person, which is used/ intended to be used for fulfilling obligations under CSR.

Persons not liable for GST registration –

Provisions of section 23 of the Central Goods and Services Tax Act, 2017 covers the provisions relating to persons not liable for obtaining GST registration. The said provisions are substituted retrospectively with effect from 1^st July 2017. The provisions are substituted so as to give overriding effect to section 23 of the Central Goods and Services Tax Act, 2017 over section 22(1) and section 24 of the Central Goods and Services Tax Act, 2017. Accordingly, the person not liable to obtain GST registration as per section 23, are not liable to obtain GST registration even if –

• They are liable to pay tax (GST) under RCM (Reverse Charge Mechanism); and
• They fall under compulsory registration i.e. as per section 24.

GST return filing in Form GSTR-1 –

Sub-section (5) is inserted to section 37, accordingly, the registered person can furnish the belated return in Form GSTR-1 only till 3 years from the due date of said return. Filing of belated return will not be allowed after expiry of the period of 3 years.

GST return filing in Form GSTR-3B –

Sub-section (11) is inserted to section 39, accordingly, the registered person can furnish the belated return in Form GSTR-3B only till 3 years from the due date of said return. Filing of belated return will not be allowed after expiry of the period of 3 years.

GST return filing in Form GSTR-9 –

Sub-section (2) is inserted to section 44, accordingly, the registered person can furnish a belated annual return in Form GSTR-9 only till 3 years from the due date of said return. Belated annual return filing will not be allowed after expiry of the period of 3 years.

GST return filing in Form GSTR-8 –

Sub-section (15) is inserted to section 52, accordingly, the e-commerce operator can furnish the belated return in Form GSTR-8 only till 3 years from the due date of said return. Belated return filing will not be allowed after expiry of the period of 3 years.

Penalty provisions for e-commerce operator –

Sub-section (1B) is inserted to section 122 of the Central Goods and Services Tax Act, 2017 which proposes the imposition of penalty on e-commerce operator for specified offences. E-commerce operator will be penalized if –

1. They allow the supply of goods or services through it by an unregistered person.
2. They allow the supply of goods or services through it by the person who is not eligible to make such an inter-State supply.
3. They fail to furnish correct details via return filing in Form GSTR-8.

In case of any of the above offence, the provision prescribes the penalty of higher of the following amounts –

• An amount equal to the tax amount involved has such supply been made by the registered person other than the person paying tax u/s. 10; or
• INR 10,000.

Decriminalization of offences –

Provisions of section 132(1) of the Central Goods and Services Tax Act, 2017 are amended so as to decriminalize the following three offences –

1. Obstructing/ preventing the officer from discharging duties under Central Goods and Services Tax Act, 2017.
2. Tempering with or destroying any material evidence/ documents.
3. Failing in supplying the requisite information or supplying false information.

Increase in monetary threshold limit for launching prosecution for the offences –

It is proposed to increase the monetary threshold limit from INR 100 Lakhs to INR 200 Lakhs for launching prosecution for the offences. However, the enhanced threshold limit will not be applicable in case of offences relating to the issuance of invoices without the actual supply of goods or services or both.

Compounding of offences –

Option of compounding of offences will not be available to the persons who are involved in the offences relating to the issuance of invoices without actual supply of goods or services or both. The minimum amount for compounding of offences is reduced from a higher of INR 10,000 or 50% of the tax involved to 25% of the tax involved. The maximum amount for compounding of offences is reduced from higher of not being less than INR 30,000 or 150% of the tax involved to 100% of the tax involved.

Schedule III to the Central Goods and Services Tax Act, 2017 –

Activities/ transactions covered under Schedule III are neither treated as a supply of goods nor treated as a supply of service. Accordingly, para 7 and para 8, as made effective from 1^st February 2019 cover –

• Supply of goods from a place situated in a non-taxable territory to another place situated in the non-taxable territory without the goods entering into India.
• Supply of warehoused goods to any person before clearance for the home consumption.
• Supply of goods by a consignee to any other person after the goods have been dispatched from the port of origin which is located outside India but such supply should be before clearance for home consumption.

According to the budget amendment, both para 7 and para 8 will be effective retrospectively from 1^st July 2017. Meaning thereby that GST will not be leviable on the same. However, it is clarified that GST will be already collected on such supplies will not be refunded back.

Miscellaneous amendments –

• As per the amendment to the second and third proviso to section 16(2) of the Central Goods and Services Tax Act, 2017 –
  • If the buyer fails to pay the value of the supply within a period of 180 days to the supplier. In such case, the buyer is liable/ required to pay an amount equal to the input tax credit (ITC) along with applicable interest u/s 50.
  • On payment of the value of supply to the supplier, the recipient will be entitled to avail input tax credit.
• Provisions of newly inserted section 158A of the Central Goods and Services Tax Act, 2017 permits the GST portal to share information with such other systems as and when prescribed by the Government.