The Central Goods and Services Tax – Second Amendment Rules, 2022 were published by the Central Board of Indirect Taxes and Customs in GST Notification no. 19/2022 – Central Tax dated September 28, 2022. It should be noted that the aforementioned amended rules take effect on October 1, 2022.

Grounds for cancellation of GST registration

The Central Goods and Services Tax Rules, 2017’s Rule 21 outlines the grounds for which a person’s registration may be revoked. 7 pre-existing grounds [sub-rules (a) to (g) of rule 21] exist.

With the addition of sub-rules (h) and I to rule 21, the amendment rules have now added the following two grounds for the cancellation of a person’s GST registration:

• If the registered individual who is required to submit the GSTR-3B return on a monthly basis does not submit it for a continuous period of six months,
• The registered individual who is required to submit the GSTR-3B quarterly return fails to do so for a continuous two tax periods.

You can read: Cancellation, Revocation and Re-Registration under GST

Amendments to the rules governing the reversal of input tax credits in the event that the consideration is not paid (rule 37)

The Central Goods and Services Tax Rules, 2017, rule 37’s provisions have undergone practically total revision. The modified provisions read as follows:

If payment toward the value of a supply of goods or services is not made to the supplier within 180 days, the registered person who has claimed an input tax credit on an inward supply of goods or services must reverse the credit.

The registered person needs to:

• Reverse an amount equal to input tax credit availed on such supply of goods/ services; and 
• Pay interest as per provisions (section 50). 
• Reversal is to be done while filing Form GSTR-3B for the period immediately following the period of completion of 180 days from the date of issue of the invoice. 
• After paying the value of such, the registered person is allowed to reclaim the input tax credit. 

Amendment in the application of GST refund (rule 89) 

GST Refund application modification (rule 89)  

• Now, in accordance with the provisions of Section 49(6) of the Central Goods and Services Tax Act of 2017, the applicant must submit an application in Form GST RFD-01 to seek a refund of the balance that is present in the electronic cash ledger. 
• It should be noted that the prior version of this refund was accessible by submitting a return for the applicable tax period in Form GSTR-3, GSTR-4, or GSTR-7. 

Other Changes in the Second Amendment under GST 

• GSTR 1 of the current tax period shall not be allowed to file if the monthly/quarterly return GSTR 1 if the previous period is not furnished. 

Omissions in the Second Amendment under GST 

1. Rule 36(2), which states that an input tax credit is only available if Form GSTR-2 is filled up with the necessary information, is now omitted.
2. Amendment/ omission under rule 38 relating to claim of credit by a banking company/ a financial institution –
   • As per sub-rule (c), 50% of the remaining amount of input tax shall be ITC which is admissible to the banking company/ financial institution and the other remaining balance of 50% amount of ITC needs to be reversed in Form GSTR-3B;
   • Sub-rule (d) to rule 38 is completely omitted.
3. Rule 42(1)(g) and rule 43(1) which is reference to Form GSTR-2 has been omitted.
4. Form GSTR-1A, Form GSTR-2, and Form GSTR-3 are omitted.
5. Rules 69 to 79 have been omitted.

These were all the changes and modifications made in the Second Amendment rules under GST. If you wish to study the second amendment in detail, you can check out GST Notification no. 19/2022 – Central Tax dated September 28, 2022.

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As a registered taxpayer, reconciling your purchase invoices with the supplier-uploaded invoices on the GST system is a critical activity as it determines your ITC claim. Further, the Government issues legal notices to taxpayers for discrepancies in the ITC claimed in GSTR 3B and the amount as per supplier uploaded details. Our Smart Reconciliation comes in handy for managing reconciliation tasks in a timely, efficient and easy manner.

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