Latest GST Amendments enacted through the Finance Act 2023

Table of Contents

1. Option to pay tax under the composition scheme for registered persons supplying goods through E-Commerce Operator

2. Penalty provisions for E-Commerce Operator

3. Input Tax Credit for expenditure related to Corporate Social Responsibility (“CSR”)

4. Maximum Period defined for filing returns under GST

5. Decriminalization of certain offences

6. Facilitating the information shared on the GST portal with other systems as may be prescribed by the government

7. Place of Supply in certain cases

8. Revision in the definition of the Non-Taxable Online Recipient

9. Sale of Goods From Custom Bonded Warehouse Before Clearance Shall Attract Reversal of ITC Under Rules 42 & 43

10. Removal of confusion regarding the availability of exemption from GST registration under Section 23

11. Clarification on Retrospective Applicability of Exemption to Certain Activities Covered Under Schedule III

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1. Option to pay tax under the composition scheme for registered persons supplying goods through E-Commerce Operator

Earlier Registered persons engaged in intra state supply of goods through Electronic Commerce Operators could not opt to pay tax under the composition scheme. Now, section 10 has been proposed to be amended to allow the registered person supplying goods within the state through E commerce operator to opt for the composition scheme provided the aggregate turnover in the preceding financial year does not exceeds ` 50 lakhs.

2. Penalty provisions for E-Commerce Operator

A new sub-section (1B) has been incorporated in section 122 of the CGST Act, 2017 so as to provide for penal provisions applicable to Electronic Commerce Operators in case of contravention of certain conditions relating to supply of goods made through them by unregistered persons or composition taxpayers.

An electronic commerce operator (‘ECO’) has been made liable to a penalty of ` 10,000 or an amount equivalent to the tax involved, whichever is higher, if –

• ECO allows an unregistered person (other than one who has been exempted by the Govt. to obtain registration) to supply goods/services through him
• ECO allows those persons to carry out inter-state supplies through it who are ineligible to make such inter-state supply [e.g., composition dealer]
• ECO fails to provide information on supplies made through it by persons exempted from obtaining GST registration

In the case of a composition dealer, the tax for the purpose of penalty will be equal to the regular tax amount.

3. Input Tax Credit for expenditure related to Corporate Social Responsibility (“CSR”)

Section 17(5) of CGST Act is proposed to be amended to provide that the Input Tax Credit (“ITC”) shall not be available in respect of goods or services or both received by a taxable person, which are used or intended to be used for activities relating to obligations under CSR as per Section 135 of the Companies Act, 2013.

4. Maximum Period defined for filing returns under GST

Budget 2023 seeks to restrict the filing of returns/statements under Section 37 (GSTR 1), section 39 (GSTR 3B), Section 44 (GSTR 9 Annual Return) and Section 52 (GSTR 8 TCS Return) to a maximum period of three years from the due date of Filing the relevant return. Also, the amendment seeks to provide an enabling provision for extension of the said time limit subject to certain conditions and restrictions for an electronic commerce operator or a class of Electronic Commerce operators.

5. Decriminalization of certain offences

Section 132 of CGST Act, 2017 are being amended inter alia to-

• Raise the minimum threshold of tax amount for launching prosecution under GST from one crores to two crores except for the offence of issuance of invoices without supply of goods or services or both.
• Reduce the compounding amount from the present range of (50% to 150% of tax amount) to the range of (25% to 100% of tax amount).
• Decriminalize certain offences specified under clauses (g), (j) and (k) of sub-section (1) of section 132 of the CGST Act, 2017 i.e. Obstruction or preventing any officer in discharge of his duties, Deliberate tempering of material evidence and failure to supply the information.

6. Facilitating the information shared on the GST portal with other systems as may be prescribed by the government

A new section 158A in CGST Act, 2017 is being inserted to enable sharing of the information furnished by the registered person in his return or application of registration or statement of outward supplies, or the details uploaded by him for generation of electronic invoice or E-way bill or any other details on the common portal, with other systems in a manner to be prescribed.

7. Place of Supply in certain cases

Proviso to sub-section (8) of section 12 of the IGST Act is being omitted so as to clarify that the place of supply for-

• the transportation services of goods being transported to outside India, and
• where the supplier of services and recipient of services are located in India,

shall be the location of recipient of services (if recipient is registered) and shall be the location at which such goods are handed over for their transportation (if recipient is unregistered).

8. Revision in the definition of the Non-Taxable Online Recipient

The scope of Non-Taxable Online Recipient has been increased to include unregistered persons (including governmental agencies registered for deducting tax) availing OIDAR services for any purposes including commerce, industry, business or profession.

Further it also seeks to clarify that the persons registered solely in terms of clause (vi) of Section 24 of CGST Act, 2017 shall be treated as unregistered person for the purpose of the said clause.

9. Sale of Goods From Custom Bonded Warehouse Before Clearance Shall Attract Reversal of ITC Under Rules 42 & 43

‘Supply of custom bonded warehoused goods before clearance for home consumption’ to be included for the purposes of computing the value of exempt supplies for the purpose of reversal of ITC under Rules 42 & 43 of the CGST Rules, 2017. ITC will have to be reversed on goods and/or services exclusively or commonly used or intended to be used for the supply of goods while they are still in custom bonded warehouse.

10. Removal of confusion regarding the availability of exemption from GST registration under Section 23

Section 23 has been amended in a way that now it starts with

“Notwithstanding anything to the contrary contained in sub-section (1) of section 22 or section 24”.

Earlier, a person who was exclusively engaged in making exempt supplies was still required to obtain GST registration due to mandatory registration under section 24 (e.g., in the case of RCM). As per the proposed change, if registration is not required under Section 23, there is no need to obtain registration irrespective of any mandatory requirement in terms of other provisions.

11. Clarification on Retrospective Applicability of Exemption to Certain Activities Covered Under Schedule III

It is proposed to be clarified that, even though the following activities were inserted in Schedule III on 01-02-2019, these activities shall be deemed to have been kept outside the GST purview with effect from 01st July, 2017.

• supply of goods between two non-taxable territories without the same entering into India
• supply of custom bonded warehoused goods before clearance for home consumption
• high-sea sales

However, no refund shall be allowed for taxes already paid on account of the above.