GST is a dynamic law. It has gone through several changes, alterations, and additions ever since its inception. It is a transformational change in the area of indirect taxation which has an overarching impact on the economy and all the businesses, irrespective of their size, turnover and operations. We as taxpayers, business owners, and tax consultants must be up-to-date with all the latest GST rule changes in order to make wise decisions for ourselves and our businesses.
Here is a list of GST rule changes that will be applicable from 1st April 2021
1. E-invoicing Mandate for 50 Cr.+ Turnover Companies
As per GST Notification 05/2021, e-invoicing is mandatory from 1st April 2021 for entities whose aggregate turnover exceeds Rs. 50 crore in any of the preceding financial years from 2017-18. Earlier, the e-invoicing mandate was made applicable to Rs. 500 crore+ turnover companies in October 2020 and later it was also made mandatory for Rs. 100 crore+ turnover companies from January 1, 2021. Now, the government is also trying to bring in the smaller companies under the mandate considering the benefits of e-invoicing for MSMEs. With the integration of the E-invoicing system with the other existing regulatory systems viz. the GSTN and E-way Bill, overall the businesses will stand to benefit and the compliances should become an end-result of streamlined business processes.
2. HSN Code Mandatory
Earlier, the 8 digit HSN code was mandatory to be included in GST Invoice only for taxpayers with turnover above RS. 5 crore. However, as per the above-mentioned notification, the 8 digit HSN code is mandatory for all tax invoices (specified products) irrespective of the turnover. Notification 90/2020 amends Notification 12/2017 and correspondingly Notification 78/2020. This is one of the most important GST rule changes.
3. HSN Code in GSTR 1
The government has notified that from 1st April onwards, it will become mandatory to report minimum of 4 digit or 6 digits of HSN (Harmonized System of Nomenclature) Code in Table-12 of GSTR-1 and in Tax Invoice. Also currently the taxpayers need to provide HSN-wise the invoice value, taxable value and tax amounts in Table-12 of GSTR-1.
From 1st April, 2021 the taxpayers need to provide HSN plus rate-wise taxable value and tax amounts in Table-12 of GSTR-1. All the tax invoices should consist of proper HSN Digits, detailed explanation of the products and correct tax rates for better transparency and to escape future litigations. Under section 125 of GST there is a fine for any mistakes related to GSTR-1. The no. of HSN Code to be reported will be on the basis of Aggregate Turnover on PAN in the preceding fiscal year. For companies with turnover Rs. 5 crore and above 6 digit HSN is mandatory while those below 5 cr need to have 4 digit HSN code.
4. Penalty for Non-compliance with QR Code on B2C transactions
Along with E-Invoicing for B2B and Exports, a self-generated dynamic QR Code for B2C transactions was scheduled to be applicable for taxpayers having turnover above Rs. 500 crores. But then it got postponed and a waiver was announced in GST Notification 89/2020. According to this notification, taxpayers are required to print self-generated QR Code on B2C transactions from 1st April, 2021, failure to do so will give rise to a penalty on invoices generated from 1st December 2020. This QR Code should enable the customers to make digital payments. Recently GST circular No 146/2021 is also issued on this which states that if payment is made prior to generation of invoice then instead of dynamic QR Code the cross-reference of payment will also do.
5. GSTR 9 filing last date on 31st March for FY 2019-20
The due date for filing GSTR 9 for the financial year 2019-20 was extended by the Central Board of Indirect Taxes and Customs via GST Notification 04/2021. CBIC has extended the due date of GSTR 9 & 9C for FY 2019-20 to 31st March 2021. Know the 8 FAQs around GST Annual Return here.
6. Anti-profiteering Measures
As per GST Notification 91/2020, the due date for compliances and actions by any authority in respect of anti-profiteering measures u/s 171 due from 20th March 2020 to 30th March 2021 is extended to 31 March 2021.
CBIC extended the due date by amending notification 35/2020 and correspondingly notification 65/2020, for compliances and actions by any authority in respect of anti-profiteering measures u/s 171 due from 20.03.2020 to 30.03.2021 till 31.03.2021.
7. Reset Invoice Series
Rule 46 (b) of the CGST Rules 2017 suggests that any tax invoice should have a 16 character alpha-numeric invoice number unique for a financial year. This draws attention, now that we are entering a new Financial Year – 2021-2022. This rule implies that with the start of the new financial year 2021-22 (w.e.f. 01/04/2021), a new invoice series, unique for the financial year, is to be started by the GST taxpayers.
A similar provision is there in Rule 49 of the CGST Rules 2017, in respect of the issue of Bill of Supply by registered taxpayers availing Composition Scheme or supplying exempted goods or services or both.
8. Physical Stock Checking
To get prepared for income tax and GST audit it is important that there should be no difference in physical stock with you and the entry of the same in the books. You should also have a look at ITC reversals while checking the physical stock. If any difference is found in both then do check if any sales are missed while in books.
9. Reversal of Blocked Credit
If you write-off any inventory at the end of the year. Then as per Section 17(5) of the CGST Act 2017, it is important to reverse the ITC of the same.
10. Letter Of Undertaking
You should apply for LUT for the coming financial year 2021-22 before 01st April 2021 this will ensure smooth movement of zero-rated sales.
11. Refund for FY 2018-19
Taxpayers must note that 31st March 2021 is the last date to apply for the GST refund process related to the financial year 2018-19.
Read: Steps to track your GST Refund
12. GSTR 3B/GSTR 1 entry VS Accounting entries and Sales in Financial Statements VS E-Way Bills
There are five places where our sales are captured; one is GSTR-1, second is GSTR-3B, third accounting entries, fourth Financial Statements, and fifth E-Way bills. It is important that the details of all five places should be the same. Variance in the value at any place may lead to the payment of interest or penalty or negative marking in audits.
Additional GST Rule Changes:
- From 1 April 2021, it would be mandatory to file Form GSTR-1 before Form GSTR-3B to ensure appropriate auto-population of ITC information and GST liability on Form GSTR-3B.
To know more about the auto-population, you can read: Auto-population of GSTR 3B from GSTR 1 and GSTR 2B
- From 1 April 2021, GST refunds will be paid only through a validated bank account linked to the permanent account number (PAN) and Aadhaar number of the applicant.
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