Goods and Services Tax (GST) which is such an important component of the indirect tax regime barely finds mention in the Budget 2022-23 speech of the Minister of Finance. This is a reflection of the changed landscape post-2017. There were no proposals obviously on the GST rates.

But there were changes proposed in the GST statutes — seventeen in the CGST Act and one each in IGST and UTGST. All these are on the basis of recommendations made by the GST council over the period of the last twelve months. Given the fact that these recommendations were in the public domain, it is surprising that the proposals appear to have left very many nonplussed.

The proposals are a mix of measures to, enhance taxpayer facilitation (ETF)

and curb tax evasion (CTE). The more important changes proposed are:

Clause 99 of the Finance Bill (FB) seeks to impose a condition on availment of input tax credit (amending section 16 of Central Goods & Services Tax Act) only if the credit has not been restricted under Sec 38 of the Act which deals with furnishing details of outward supplies. This was much needed given the rampant misuse. (CTE)

The clause also has a proposal to extend the time limit for availment of input tax credit till the 30^th November of the following financial year (ETF)

Clause 100 (FB) proposes to amend section 29 ibid so as to initiate action to cancel the very registration of a person who having opted for the composition scheme, has not furnished returns for a for a period of three months beyond the due date. (CTE)

The proposal at Clause 101 seeks to ease a pain point. This proposes to extending time of issuance of credit notes up to 30^th November (from 30^th September) of the following financial year (ETF)

Clause 102 seeks to amend section 37 ibid relating to furnishing details of outward supplies. The requirement of the details of outward supplies having to within a time period either be accepted or rejected is being done away with. The clause also seeks to extend timelines to the 30^th November of the following financial year for rectification of errors (ETF)

Clause 103 seeks to substitute the existing section 38. This is a corollary of the proposal in clause 102. This proposal seeks to put in place an auto-generated statement of inward supplies/input tax credit. Obviously, CBIC is confident of the robustness of GSTN to generate such statements for the taxpayers. (ETF and CTE)

Clause 105 seeks to substitute Section 41 of the Act and do away with the concept of “claim” of eligible input tax credit. Instead, the proposal is to permit the taxpayer to avail the self-assessed input tax credit. (ETF)

Clause 106 seeks to do away with Sections 42, 43 and 43A Act -in effect doing away with the two-way communication process in return filing. These were provisions that had been put in the statute after an extended debate. They were intended to check fraudulent claims of input tax credit. The technology provider had also assured that systems would be put in place to operationalise the provision. Obviously, this has not happened. The proposal to auto-generate a statement of inward supplies would hopefully take care of any possible attempted mischief. (ETF)

Clause 109 seeks to amend the provisions relating to the utilisation of credit (Sec 49). Restrictions are being proposed for utilising the amount available in the electronic credit ledger. Further, the maximum amount of output tax credit that can be discharged through the ledger is also sought to be prescribed. This proposal has generated debate-but what this proposal in effect seeks to do is only put in the statute what was introduced in the rules through a notification (notification 94/2020 which introduced Rule 86B) and was in force from 1.1.2021. (CTE)

Clause 110 seeks to substitute Sub-section (3) of section 50 retrospectively, with effect from the 1st July 2017. Instead of the present rate of 24 percent, a rate of 18 percent is being proposed. (ETF)

These amendments would come into force from a date to be notified. It must be kept in mind that all the States will have to carry corresponding changes in their respective SGST Acts.

Certain retrospective amendment proposals have also been proposed-all are beneficial to the taxpayer. There is also an administrative retrospective amendment proposed recognising GSTN portal as the common goods and services tax electronic portal-making de jure what is de facto.

Another Budget related development though not directly related to the GST proposal is the proposal to tax at 30 percent under the IT Act virtual digital assets. While the cryptocurrency market is grappling with this development, CBIC would do well to look closely at these transactions from the GST angle.

Thus, it may be seen that ETF proposals far outnumber the CTE proposals. As the Minister of Finance mentioned in her speech ‘The right balance between facilitation and enforcement has engendered significantly better compliance’. This is reflected handsomely in the record GST collection for the month of January 2022.