Summary of the key GST changes in Union Budget 2023
1. Composition Scheme and E-commerce Operators
A composition scheme has been allowed for the taxpayers engaged in the supply of goods through an e-commerce operator (who is required to collect TDS).
Earlier If someone is supplying services through an E-commerce platform shall still not be able to opt for the composition scheme which is relaxed by the department.
2. ITC on Corporate Social Responsibility (CSR)
An input tax credit will not be available in regard to goods or services or both received by a taxpayer, which is used or aimed to be used for activities relating to obligations under corporate social responsibility (CSR) as defined in section 135 of the Companies Act of 2013.
GST paid on expenditures incurred relating to CSR will become a cost to the company.
3. Schedule III transactions to be included in the exempt supply
The proposed amendment aims to restrict availing ITC on supplies made in schedule III. The proposal is to move these supplies in exempt sales (supply) for example:
- Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of the building (a) Supply of warehoused goods to any person before clearance for home consumption
- For the purposes of paragraph 8, the expression “warehoused goods” shall have the same meaning as assigned to it in the Customs Act, 1962 (52 of 1962).
4. Persons not liable for GST registration
Notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section 24, (a) the following persons shall not be liable to registration, namely:
1. Any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act, 2017;
2. An agriculturist, to the extent of supply of produce out of cultivation of land;
The Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, specify the category of persons who may be exempted from obtaining registration under this Act.”
5. GST Return Filing
After a period of three years from the deadline for filing the return for the tax period, it is proposed to restrict the filing of outward supply details in GSTR-1 returns while allowing the government to make an exemption for (class of) registered persons.
Restrictions on changes and the filing of information about outward shipments (actual and proposed restrictions):
- When the return for the prior period has not been filed, the ability to file GSTR-1 is prohibited.
- Furnishing invoice details shall be restricted after 3 years from the due date of filing the return for the particular tax period.
- GSTR1, GSTR3B, GSTR8 (TCS), GSTR 9 cannot be filed beyond 3 years from the due date. However, Government may relax this if it deems fit.
Note: At present, there is no cut-off date for filing a GST Return. Now, it is proposed that GST-1, GSTR-3B, GSTR-9 and TCS return can be filed up to 3 Years.
6. Penal consequences to E-Commerce Operator
A new sub-section (1B) in section 122 of the CGST Act proposed to insert so as to provide for penal provisions to E-Commerce Operator (ECO) in case of contravention of provisions relating to supplies of goods or services made through them by unregistered persons or composition taxpayers.
Accordingly, in order to prevent legal repercussions, ECO should be required to collect data accurately and to be cautious while handling transactions through their platform.
Insertion of a new clause in Sec. 122:
(1B) Any electronic commerce operator who:
(i) Allows a supply of goods or services or both through it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply;
(ii) Allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or
(iii) Fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act, shall be liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.
7. Introduction of Consent-based sharing of information
The introduction of Section 158A is titled “Consent-based sharing of information furnished by a taxable person”. It is inserted by the Budget 2023 and is yet to be notified, along with the rules, manner or procedure. The agenda of the section will be consent from the supplier and recipient before sharing the specified data to another system as may be notified by the Government.
It is intended to facilitate the consent-based sharing of the information provided by the taxpayer during registration, GSTR-1/ GSTR 3B, annual returns, as well as information provided for the preparation of IRN (e-invoices) and e-way bills.
Sharing the specifics of e-invoices and e-way bills when the recipient’s identity is disclosed would also require the recipient’s consent.
8. Non-taxable online recipient & OIDAR
*Budget 2023 changed the meaning of ‘non-taxable online recipient’. Now, it means an unregistered person receiving OIDAR services located in the taxable territory. Also, the unregistered person includes the TDS deductors registered u/s 51 of the CGST Act. These changes are yet to be notified by CBIC.
9. Amendments in Schedule III
Clarification to state that GST is not applicable on Merchant Trade Transactions (Cross Country Shipments), Supply of warehoused goods before clearance and High Sea Sales from the inception of GST.
Additionally, it is made clear that no reimbursement of taxes paid that have already been paid for transactions or activities that occurred between July 1, 2017, and January 31, 2019, would be granted.
These were some of the important GST changes announced and proposed in the finance bill 2023. For a detailed update regarding important changes as per the union budget 2023 kindly connect with EaseMyGST Team.