The Central Tax Notification No. 27/2024 introduces key amendments to the CGST Act, providing much-needed relief to businesses by extending the timeline for claiming Input Tax Credit (ITC) for financial years 2017-18, 2018-19, 2019-20, and 2020-21. Under newly inserted Section 16(5), taxpayers can now claim ITC on invoices and debit notes from these years until November 30, 2021, via returns filed under Section 39.
Key Changes and Implications:
- Extended Deadline for ITC Claims: Businesses that missed the original deadlines for claiming ITC can now file retrospective claims for the specified financial years, significantly reducing compliance pressure and financial burden.
- Relief for Registration Cancellations: This amendment allows businesses whose registrations were cancelled and later reinstated to claim ITC for invoices generated during the period of cancellation, preventing loss of tax credits and improving cash flow.
- Reduced Litigation: The extension of the ITC claim window is expected to resolve many pending disputes over missed claims, alleviating the need for extensive litigation or administrative appeals.
- Administrative Simplification: These amendments reflect the government’s broader strategy to simplify the GST framework, offering a more flexible compliance regime that allows businesses to correct past mistakes and avoid penalties.
These changes stem from recommendations made during the 53rd GST Council Meeting, which focused on reducing procedural burdens and providing amnesty for businesses that faced difficulties during the initial years of GST implementation. The amendment, along with other relief measures such as interest and penalty waivers for specific fiscal years, is expected to improve taxpayer compliance and reduce the backlog of pending cases related to ITC.
The notification marks a significant step toward creating a more taxpayer-friendly environment under the GST regime. Taxpayers are encouraged to review their old invoices and take advantage of this extended deadline to resolve any outstanding ITC issues. This will help optimize their tax position and avoid potential losses from missed credits.
Here’s a detailed look at the key amendments and their implications:
1. Input Tax Credit (ITC)
- Amendment to Section 16(5): Businesses can now claim ITC for supplies received during the financial years 2017-18 to 2020-21 until November 30, 2021. This extension allows many businesses to rectify missed claims.
- Revocation of Registration: ITC can also be availed if returns are filed within 30 days post revocation of registration, providing relief to those facing registration issues.
2. Appellate Tribunal Empowerment
- The Principal Bench of the Appellate Tribunal is now empowered to hear specific cases, including anti-profiteering matters. This change ensures specialized handling of complex cases, enhancing efficiency in resolving disputes.
3. Sunset Clause for Anti-Profiteering
- A new sunset clause aligns anti-profiteering cases with the jurisdiction of the GST Appellate Tribunal, providing a clear endpoint for such measures, which is crucial for maintaining certainty in business operations.
4. Refund Restrictions
- Refunds will not be granted for taxes paid or ITC reversed that would not have been due under Section 118 where the appeals lie to the Supreme Court. This aims to clarify refund processes and reduce potential disputes.
5. Amnesty Scheme – Interest and Penalty Waivers
- Businesses can avail waivers for interest and penalties on demand notices from FYs 2017-18 to 2019-20 if the full tax amount is settled by March 31, 2025. This amnesty scheme encourages compliance and allows businesses to resolve past dues without additional financial burdens.
6. Amendment to Section 7
- The amendments exclude raw materials for liquor production, specifically undenatured extra neutral alcohol, from GST, addressing industry-specific concerns.
7. Introduction of Section 74A
- This new section standardizes time limits for demand notices and orders, applicable from FY 2024-25 onward, while earlier periods remain under the previous provisions, promoting consistency in tax administration.
8. Regularization of Tax Practices
- Section 11A aims to protect businesses from penalties for generally accepted but incorrect tax practices, fostering a more supportive environment for compliance.
9. Self-Invoicing Time Limits
- Clear time limits for self-invoicing related to Reverse Charge Mechanism (RCM) supplies have been established, ensuring timely compliance and reducing ambiguities.
10. ITC Restrictions
- Restrictions on ITC claims for tax paid under Section 74 will now only apply to demands from FY 2023-24 and earlier, allowing for greater flexibility in ITC claims moving forward.
11. Revocation of Registration Cancellations
- The Central Government is now authorized to set conditions for the revocation of GST registration cancellations, improving the process for businesses seeking to reinstate their registrations.
12. Mandatory GSTR-7 Filing
- TDS deductors are now required to file GSTR-7 monthly, even when no tax has been deducted, enhancing the reporting framework.
13. IGST Refunds
- Refunds for IGST on goods subjected to export duty, including exports to SEZs, are restricted, impacting how businesses manage their export-related tax credits.
14. Compliance with Summons
- Authorized representatives can now represent summoned individuals to comply with summons, streamlining the compliance process for businesses.
15. Reduced Pre-Deposit for Appeals
- The pre-deposit amount for filing GST appeals has been lowered, with a new 3-month time limit for appeals set from the notification date, making it easier for taxpayers to contest decisions.
16. Updated Penalty Provisions
- Penalties for e-commerce operators have been revised to adapt to the evolving digital commerce landscape, ensuring fair and relevant compliance measures.
17. Transitional Credit for Services
- Transitional credit for service invoices received before the appointed date is now allowed retroactively from July 1, 2017, providing additional benefits to service providers.
18. Inclusion of Co-Insurance Premiums
- Co-insurance premiums and re-insurance commissions are now included in the CGST Act, simplifying transactions in the insurance sector.
For further details on these amendments, refer to the official CBIC notifications and consult tax professionals for tailored advice.
Links: https://taxinformation.cbic.gov.in/view-pdf/1010163/ENG/Notifications
https://incometaxindia.gov.in/Pages/acts/finance-acts.aspx
These amendments reflect the government’s ongoing commitment to enhancing the GST framework by making it more business-friendly and reducing compliance burdens. By extending ITC claims, empowering appellate processes, and introducing amnesty schemes, these changes aim to foster a more transparent and efficient tax environment. Businesses should familiarize themselves with these amendments to take full advantage of the available benefits and ensure compliance with the updated provisions- JSPCO
Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as professional tax advice. While we strive to keep the content accurate and up-to-date, we recommend consulting a qualified tax professional or advisor for specific guidance related to your business and the recent GST amendments.
