Key GST updates of 2023
1. Introduction of ITC Reversal and Reclaim Statement:
Disclosure of ITC reversal and reclaim while filing GSTR 3B came into effect in 2022. This year a new statement summarising ITC reversal and reclaim reporting done by businesses was introduced. A provision to report the opening balance of reversal by 31st January 2024 with the option to make amendments if any, by 29th February 2024 has been added. This statement not only serves the government’s validation of data in GSTR 3B but also empowers businesses to verify and ensure accurate ITC reporting, preventing the lapse of reclaimable ITC.
2. ITC Blocked due to non-compliant vendors:
Compliance of vendors is key to businesses to claim ITC. Vendors need to file GSTR 1 so that the invoice gets populated in GSTR 2A/2B and they need to file GSTR 3B on time so that the claimed Input Tax Credit (ITC) does not have to be reversed. For FY 2022-23, the time limit to nudge vendors to file and claim ITC was 30th Nov. To facilitate businesses, the Government had sent out email communication highlighting ITC subject to reversal due to late filing vendors.
3. Removal of mandatory GST Registration for e-commerce suppliers:
Aligned with the recommendations of the GST council, the mandatory obligation to obtain GST registration for suppliers using e-commerce platforms was removed, subject to certain conditions. To serve the dual purpose of getting unique verifiable identity and easing GST compliance for these suppliers, a mechanism for obtaining an enrollment ID was effectively implemented.
4. Rule 88C and 88D for common reasons for receiving GST Notices:
The government has in place a mechanism for automated scrutiny of GST returns and the same has been getting enhanced over the period. The scrutiny has resulted in businesses getting notices. Discrepancy in tax liability as per GSTR 1 and 3B and difference in ITC claimed as per 2B and 3B are the most common reasons for notices. Rules 88C and 88D covering these common reasons were notified this year and online compliance to affect the same was introduced on the GST portal. Government intimation is sent via Part A of GST DRC –01 B or DRC 01 C. Businesses need to respond to these intimations online in Part B and make payment of taxes if needed.
5. Controlling frauds and fake GST registrations:
Tackling GST evasion and fraudulent activities has been a top priority for the government. In a concerted effort, a special drive took place from May to June this year, leveraging artificial intelligence, advanced data analytics, and multiple data sources to uncover frauds and fake GST registrations. The government, using these technologies, identified and took strict actions against culprits. During the Winter Session in Parliament, Finance Minister Nirmala Sitharaman revealed that the drive led to the detection of about 21 thousand fake GST registrations identities and exposed tax evasion amounting to Rs 24 thousand crore.
Simultaneously, to maintain control over GST registrations, various measures have been introduced. These include geo-tagging the principal place of business and implementing biometric authentication. These measures prevent the misuse of stolen identities for getting GST registration.
6. 2 Factor Authentication to ensure data privacy:
GST is a rich data source and hence sought by all stakeholders. GST framework has a clear consent process built in and through GST Suvidha Providers (GSP), data can be fetched. However, there was a surge of malpractices to get data from the GST portal through web-scraping. To keep a check on this, 2-factor authentication has been recently launched in Dec for some select states and will be soon extended pan-India. A welcome move to ensure only legitimate ways of obtaining data prevail. 2FA is also implemented on Governments E-way Bill and E-invoice Systems i.e., NIC portals.
7. E-invoicing further brought down to cover Rs. 5 CR AATO:
E-invoicing has been live in India since 2020 and has been rolled out in phased manner. On 1st Aug 2023, the threshold of e-invoice applicability was lowered to Rs 5 cr. A facility to declare exemption from e-invoicing is now available. This is useful for businesses who are above the threshold however are under the exemption list.
- Introduction of Private IRPs:
Extending e-invoicing to all businesses and other transaction types such as B2C is in Government’s roadmap, to handle the voluminous flow of transaction requests, private Invoice Registration Portals (IRP) were selected.
- Importance of data interoperability:
Important to note, with multiple IRPs coming into the picture interoperability of data amongst IRPs becomes necessary. GST system, being the central authority for all IRPs and custodian of all e-invoices, has made e-invoice fetch available not only for suppliers but also for recipients. Many new possibilities are now open.
- Ensuring cleaner data from the source:
E-invoicing is transactional and real-time data. From a better data quality and supervision perspective, some rules were introduced. Generation of e-invoice within 30 days of date of invoice and reporting of 6-digit HSN or more. These validations will ensure no misreporting and tax evasion. Also, Government can have a better sense of economic activity on a real time basis
- Bringing B2C transactions under the net:
E-invoicing keeps tax evasion under check however the current scope covers B2B and export transactions. Reporting and hence evasion on B2C transactions is a concern to be addressed. While the Government is contemplating including B2C under e-invoicing, another measure of getting citizens who are the end consumers to participate has been rolled out as beta.
Mera Bill Mera Aadhikaar is an incentive scheme wherein consumers can upload their invoices and stand a chance to win exciting prizes. The idea is that consumers will insist on getting an invoice and once uploaded to the Government, tax liability of businesses become visible. As of now the scheme has been rolled out in a few states.
Important Links to read more
ITC Reversal on Account of Rule 37(A)
Comprehensive Guide 6 IRPs for E-Invoice Reporting
ADVISORY: MERA BILL MERA ADHIKAAR SCHEME
Introducing Electronic Credit Reversal and Reclaimed statement
Advisory: Time limit for Reporting Invoices on the IRP Portal
Two-factor Authentication for Taxpayers