Important GST Changes from 1st January 2022

2021 went by in a jiffy and 2022 is waiting for us around the corner patiently! From all the changes that indirect taxation has undergone this year, it seems like the GST rules are getting tighter in 2022. We have collated all the important GST changes being applicable from 1st January 2022 that you need to be aware of! Let us look at the changes in major brackets one by one. Read below…

1. Aadhaar Authentication made mandatory

The Central Government via GST Notification No. 38/2021-CT dated 21.12.2021 has notified January 1, 2022, as the implementation date for Rule 10B of CGST Rules, 2017.

As per rule, it is mandatory for the registered person to undergo Aadhaar authentication for the below purposes:

Filing of application for revocation of cancellation of registration in FORM GST REG-21 under Rule 23 of CGST Rules, 2017
Filing of refund application in FORM RFD-01 under Rule 89 of CGST Rules, 2017
Refund of the IGST paid on goods exported out of India under Rule 96 of CGST Rules, 2017.

A taxable person, who has not yet authenticated their Aadhaar, need to go through this authentication process before filing the above two applications and enabling the GST system to validate and transmit the IGST refund data from the GST system to the ICEGATE system.

2. GST for E-commerce Operators

The CBIC via GST Notification No. 17/2021- Central Tax (Rate) dated November 18, 2021, amended Notification No. 17/2017- Central Tax (Rate) dated June 28, 2017, to bring food delivery apps like Zomato & Swiggy, and Cloud kitchens under the restaurant services. This was first proposed n the 45th GST Council Meeting stating e-commerce operators like Swingy and Zomato need to be made liable to pay tax on services provided through them. This will become effective January 1, 2022.

Also, transport services provided by e-commerce operators like Ola and Uber will also be charged 5% GST while services provided by auto-rickshaw drivers through offline/ manual mode would continue to be exempted.

Ecommerce will no longer be required to collect TCS and file GSTR-8 in respect of ‘restaurant services’ on which it pays tax under section 9(5) of the CGST Act, 2017, but will continue to collect TCS and file GSTR-8 for other services.

3. New Provisional ITC Changes

As per GST notification 39/2021-dated 21-12-2021, taxpayers can claim ITC only if the same invoice/debit note is reflected in GSTR 2A/2B. To explain even further, if you have an invoice in your purchase register and the same is not uploaded by your vendor in their GSTR 1, you cannot claim Input Tax Credit from 1st January 2022. Read – Changes in Provisional ITC for more information.

4. GSTR 1 Blocking if GSTR 3B is not filed

This rule was implemented via GST Notification No. 35/2021–Central Tax dated September 24, 2021. It states that taxpayers will have to encounter blocking of their GSTR 1 if the return GSTR 3B has not been filed for a preceding filing month. From 1st January 2022 onwards, a registered person will not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1, if the registered person has not furnished FORM GSTR-3B for the preceding month.

6. Increase in Pre-deposit for Appeal before Appellate Authority

In sec 107 (6) Appellate Authority in that a new proviso is added that no appeal shall be filed against an order under sub section (3) of sec 129, unless a sum equal to 25% of the penalty has been paid by the appellant.

There is a requirement to deposit 10% of the penalty imposed as pre-deposit in case of first appeal which is increased to 25% of the penalty amount in case of detention and seizure of conveyance and goods during transit.

7. Self-Assessed Tax

GST Notification 39/2021 states – in section 75 of the Central Goods and Services Tax Act, in sub-section (12), the following Explanation shall be inserted, namely:–– ‘Explanation.––For the purposes of this subsection, the expression “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37(GSTR 1), but not included in the return furnished under section 39 (GSTR 3B).

Due to this amendment, the department officials will be empowered to initiate recovery action directly based on the supply shown in the GSTR 1 Return provided that corresponding GSTR 3B Return not appropriately filed, i.e. tax in whole or in part not discharged. The official will not even need to issue notice.

8. HSN Change

HSN 2022, the new revised edition of HSN published by the World Customs Organisation (WCO) will come into force from 1st Jan 2022. Generally, WCO does this revision once every 5 years. The HSN system of WCO forms the basis for the Customs tariffs in India. The Fifth Schedule to the Finance Act, 2021 has incorporated the changes necessary to align Customs Tariff to revised HSN 2022, with effect from 01.01.2022.

9. Commissioner gets the power to call for information

Section 119 of the Finance Act, 2021 has now substituted the new section for section 151 namely power to call for information. The commissioner or an officer authorized by him can by an order direct any person to furnish information relating to any matter dealt with in connection with this Act. The taxpayers will need to abide by the rules and present the required documents or furnish the returns as per the law.

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