Year in GST
Year 2022 has been the year of standing up again from the setback of Covid pandemic that has impacted businesses globally for almost 2 years. Businesses are back in action and normalcy can be seen from the GST collections 2022.
GST collections is a good indicator of economic activity. A look at GST revenue collected in 2022 shows a consistent increase. The GST collections1 for the last 9 months of 2022 have been above ₹1.4 lakh crore. It does indicate a steady recovery trend.
GST collections do reveal an absolute increase, a positive impact for Government. For the business community and industry, several measures to ease compliance and reporting and rationalize rates have been taken by the GST Council.
The GST Council met twice in 2022; in June 2022 and a few days back in Dec 2022. GST rates have been changed for certain goods and services, exemptions have been removed and clarifications have been provided. Easing compliance for small businesses and amendments to the rules and GSTR forms to bring in more clarity has also been recommended.
Let us look at the major updates in GST Rules and compliance requirements in 2022
1. Additional disclosure of ITC in GSTR 3B
One of the major changes in GST compliance in this year was ITC reporting in GSTR 3B. Taxpayers need to now disclose separately ITC reversal of permanent and temporary nature. Further in the subsequent months when the temporary reversed ITC is reclaimed, it should be clubbed in ITC available section.
| 3B | Earlier | Now | Comments |
| 4 | Eligible ITC | Eligible ITC | |
| (1) Import of Goods | (1) Import of Goods | No change | |
| (2) Import of Service | (2) Import of Service | No change | |
| (3) Inward supplies liable to reverse charge (other than 1 or 2 above) | (3) Inward supplies liable to reverse charge (other than 1 or 2 above) | No change | |
| (4)Inward supplies from ISD | (4)Inward supplies from ISD | No change | |
| (5) All other ITC | (5) All other ITC | ITC Reversed in 4B(2) related to “non-payment of consideration to supplier within 180 days” and reclaimed at a later date in 4D (1), also need to be reported here | |
| B | ITC Reversed | ITC Reversed | |
| (1) As per Rule 42 and 43 of CGST rules | (1) As per Rule 38, 42 and 43 of CGST rules and sub section (5) of section 17 | Reversal of ITC which is permanent in nature and non-reclaimable need to be reported here | |
| (2) Others | (2) Others | Reversal of ITC which is not permanent in nature and can be claimed in future to be reported here. Also ITC mistakenly taken in the previous period can be rectified here. | |
| C | Net ITC available (A-B) | Net ITC available (A-B) | Credited in electronic credit ledger |
| D | Ineligible ITC | Other Details | Credited in electronic credit ledger |
| (1) As per Section 17(5) | (1) ITC reclaimed which was revered in 4B (2) in earlier tax period | ITC reversed in 4B(2) and later reclaimed at a future date need to be reported here as well as in table 4A(5) | |
| (2) Others | (2) ITC ineligible under section 16(4) and ITC restricted due to Place of supply | ITC is ineligible as per GSTR2B due to reasons mentioned |
At the outset it appears to be disclosure change however it has far deeper impact in the way ITC is computed and claimed. It requires keeping track at a transaction level on the position taken for ITC in a particular period. The temporary reversal of ITC on account of reasons like payment not made to supplier within 180 days or the supplier has not furnished returns and discharged tax liability, need to monitored and acted upon so that ITC doesn’t go unclaimed. For businesses, having large number of invoices and vendors, this tracking and monitoring has to be granular and automated.
New disclosures in GSTR 3B if addressed at invoice level, working capital utilisation remains optimal for businesses.
2. Deep linking between GSTR 1 and GSTR 3B
| Supplies made to | Reporting in GSTR 1 | Reporting 3B Place of supply wise |
| Unregistered person | Table 7B or 5 or 9 or 10 | Table 3.2 |
| Composition | Table 4A or 4C or 9 | Table 3.2 |
| UIN | Table 4A or 4C or 9 | Table 3.2 |
3. Scope for E-invoice applicability expands to small businesses
E-invoicing was introduced in 2020 for businesses having turnover above 500 cr. This threshold has been steadily lowered since then. As of 1st Oct 2022, e-invoicing applicability is for businesses with turnover 10 cr and above.
GST-registered businesses are around 1.39 cr, of which about 5 lakhs are currently generating e-invoices.
While the mandate is determined by turnover, certain industries such as banking, insurance etc. are exempt from e-invoices. According to Rule 48(4), exempt businesses from the e-invoicing mandate need to have a declaration on the invoices issued by them.
E-invoicing being a mandate, meeting the GST compliance requirement is necessary however there is more than just a compliance angle to it. Businesses as well as Government stand to benefit from transactional data (i.e., invoices) available in standard and structured format. With private Invoice Registration Portals being announced by Government, all GST-registered businesses would sooner or later get covered under the mandate.
4. Streamlining the GST Returns filing process
Most of the businesses file GSTR 1 and GSTR 3B, either on monthly or quarterly basis. When GST was introduced in 2017, GSTR 1 and GSTR 3B were independent returns. However, with dual objective of making filing easier for businesses and plugging GST revenue gaps, the returns are linked. Sales and tax liabilities as reported in GSTR 1 gets auto populated in GSTR 3B.
In addition to data, the filing of returns itself is linked. GSTR 3B for a month can be filed only if GSTR 1 for the month has been filed. GSTR 1 for any month can be filed only if GSTR 1 of its previous month has been filed.
5. Stricter actions for non-compliance
On one side the GSTR1 and GSTR3B filing was made orderly and sequential, on other rules for suspension and cancellation were made stringent.
CGST rules were amended to specify non-filing of returns for 3 months in case of monthly filer and 2 tax periods in case of quarterly filers will result in suspension of the GSTIN.
Government has been continuously monitoring the returns filed and also connecting dots with other information sources. Systems to identify Incorrect ITC claims, mismatch in tax liability vs settled etc. are set. System-triggered suspension notices were sent to taxpayers.
Provision for automatic revocation of suspension of registration in cases where suspension of registration was done by the system under Rule 21A(2A) of CGST Rules, for non-compliance in terms of clause (b) or clause (c) of sub-section (2) of section 29[continuous non-filing of a specified number of returns], once all the pending returns are filed on the portal by the taxpayer. (Amendmentinrule21A)
6. Mandatory HSN reporting in GSTR 1
Reporting of HSN on invoices as per invoicing rules and in GSTR 1 in Table 12 has been linked to the turnover of company. In GSTR 1, taxpayers could report either HSN or description. To make reporting and downstream analytics consistent, reporting of HSN in GSTR 1 has been made mandatory.
While the notification was issued in Oct 2020, the implementation has been done in phases, starting with large taxpayers then moving to small businesses. From 1st Nov 2022, taxpayers with up to Rs 5 crore turnover would be required to report 4-digit HSN codes in their GSTR-1.
7. Reporting supplies through e-commerce operators
Pandemic, remote workplaces and hyper-localisation have given a boost to e-commerce platforms. While large businesses have been part of e-commerce network, even small and micro businesses are using e-commerce platforms.
Under GST, supplies through e-commerce operators have certain specific rules. The e-commerce operator needs to be obtain separate registration and file GSTR 8. Businesses supplying via e-com operator need to be registered and disclose the transactions under e-com separately. New section in GSTR 1 and GSTR 3B have been introduced this year for reporting the same.
In the 48th GST Council meeting, it was decided to open up e-commerce supplies to unregistered businesses and composition taxpayers subject to certain conditions.
In addition to above highlighted, due dates for returns filing were extended for specific returns for a specific period, interest and late fee waiver was provided and an extension to claim ITC and issue credit notes before filing of Annual Return GSTR 9 was also notified.
Disclosure in GSTR 3B was an important update; more can be expected in coming year. A concept paper on new GSTR 3B was put up for industry feedback. Hence more updates to GSTR 3B can be anticipated
Taxpayers who have set their compliance processes, have insights and view of their compliance activities readily available, have better control over their data returns. However, keeping eye on vendor compliance becomes necessary. At the same time, having data in place and being audit ready will be far useful to better manage GST litigation.
GST rules got updated, scope of compliance expanded, so has our GST compliance solution. We added new features, enhanced existing functionalities, and launched new offerings to assist our clients stay compliant. Take a quick tour of how the Year 2022 has been for you IRIS GST.
Year in GST 2021 saw a sea of changes and updates that required taxpayers to alter their ways of filing taxes or furnish forms and pay dues.
While the year 2020 was full of despair and fear of the pandemic, 2021 brought hope and positivity. COVID vaccination drive was implemented swiftly throughout the country which helped avoid more lockdowns.
Markets opened and the economy boosted. Rise in the GST collections lately is an indicator of the same.
The year in GST 2021 was no less. The first offline GST Council Meeting – 45th GST Council Meeting, after the pandemic was held on 17th September 2021. This was after a gap of 18 months, the last offline meeting was held in March 2020 after which the pandemic struck and all the council meetings since then have been conducted via video-conferencing.
The year started with the e-invoicing mandate going live for Rs. 100 CR+ turnover companies in January 2021 and QRMP introduction and has ended with GSTR 9 self-certification. There have been multiple updates in between. We have collated for you the biggest GST updates and GST law changes that impacted the taxpayers in the year 2021
1. E-invoicing Mandate for 100 Cr. and 50 Cr. Companies
This year, the government decided to further extend the radar and take in medium-sized companies under the e-invoicing mandate. E-invoicing was mandatory for taxpayers having aggregate turnover above Rs. 100 Cr. from 01st Jan 2021 via GST Notification 88/2020. And later, it was made mandatory for taxpayers having aggregate turnover above Rs. 50 Cr. from 1st April 2021 via GST Notification 05/2021. With this change, all the B2B transactions barring a few exceptions, require IRN obligatorily. There is a high possibility of the mandate being made applicable to all businesses in the near future.
2. GSTR 1 Auto-population and blocking of GSTR 1 in case of GSTR 3B non-compliance
Auto-population of details from e-invoices into GSTR-1 is a facility for the taxpayers which has eased out the filing process. However, the auto-populated numbers are not final numbers from the legal point of view. After viewing the auto-populated data, the taxpayers need to verify the propriety and accuracy of the amounts and other data in each field, especially from the perspective of GSTR-1 and file the same, in the light of relevant legal provisions. Sometimes, the data does not directly get auto-populated. To know everything about this, read the auto-population of e-invoice details into GSTR 1.
As per GST Notification, 01/2021 released on 1st Jan 2021 – GSTR 1 or Invoice furnishing facility to be blocked if GSTR 3B is not filed on time. The CGST Rules, 2017 duly amended to insert Rule 59(6). According to which a registered person:
a. shall not be allowed to file GSTR-1, if he has failed to file GSTR-3B for preceding two months;
b. shall not be allowed to file GSTR 1 or furnish details through invoice furnishing facility, if he has failed to file GSTR-3B for the preceding tax period.
c. Along with this, there are a few more conditions due to which your GSTR 1 can be blocked. You can refer to the GST notification for more details.
3. QRMP Scheme and Introduction of IFF
Quarterly Return Monthly Payment or QRMP scheme under GST was introduced to simplify compliance for taxpayers having turnover up to Rs. 5 crores. Option to file GSTR 3B on a quarterly basis can be availed any time during the year from the 1st day of the second month of the preceding quarter till the last day of the first month of the quarter for which the option is being exercised.
Invoice Furnishing Facility (IFF) is an optional facility made available as per Rule-59(2) of the CGST Rules, 2017 and if the taxpayer does not opt for it, then they can directly upload their invoices in GSTR 1. To ease the compliance burden, the system has assigned quarterly frequency to small taxpayers automatically. Payment can be made in the first two months by a simple challan in FORM GST PMT-06.
In July 2021, the government made a few major changes related to QRMP Scheme for the taxpayers. The changes were related to auto-population of GSTR-3B liability from IFF and Form GSTR 1, nil filing of GSTR-1 (Quarterly) through SMS and cancellation of registration on liability to file GSTR-1.
You can read all the QRMP Scheme updates in detail here: QRMP Scheme Updates 2021
4. FasTag Made Mandatory
The Union Ministry of Road Transport and Highways notified that having a FASTag is mandatory for all four-wheel vehicles from January 1, 2021. FASTag is an easy to use and rechargeable tag that a user can stick on the windscreen of their vehicle. These tags can be detected from 25 metres away using RFID. Once detected, toll plazas can automatically deduct the toll charges from the traveller’s e-wallet, without halting the vehicle for any transaction.
FASTag was made mandatory for four-wheelers or M&N category of vehicles that were sold before 1 December 2017. For this, the Central Motor Vehicles Rules, 1989 were amended. Later, the deadline got extended to January 15, 2021.
5. COVID-19 Relief Measures
The government announced multiple relief measures citing the COVID-19 pandemic:
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- GST Rate related relief measures:
These relief measures were related to changes in GST rates for COVID medicines, injections, vaccines, ventilators, medical-grade oxygen, Covid testing kits and so on. IGST is also exempted for imports of certain COVID19 relief goods. Majorly, all the Covid relief measures were announced by the finance ministry via the 44th GST Council Meeting. We have compiled all the measures here: Covid-19 relief measures 2021. - Multiple due-date changes due to the second wave of pandemic:
The pandemic badly affected the business community and due to the lockdown, paying taxes became extremely difficult for business owners and taxpayers. So, to deal with the issue, the government pushed ahead several due dates and exempted interests and late fees applicability. All these changes were announced via the 43rd GST Council Meeting.You can learn about all the GST Due Date Changes in detail here.
- GST Rate related relief measures:
6. Compliance related relief for Taxpayers:
Multiple updates have been released throughout the year to simplify compliance for the taxpayer community. We have listed the major updates here:
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- Aadhar Authentication
All taxpayers registered as Regular Taxpayers (including Casual Taxable persons, SEZ Units/Developers), ISD, and Composition taxpayers can do their Aadhaar Authentication for GST registration or e-KYC on GST Portal. As per the 8th Amendment of the CGST Rules – 2021 via GST Notification 35/2021 – Central Tax, dated 24-09-2021, Aadhar authentication has been made mandatory in the below cases (amendment in Rule 10(B):-
- For filing of the application for revocation of cancellation of registration in FORM GST REG-21 under Rule 23
- For filing of refund application in FORM RFD-01 under rule 89
- For a refund under rule 96 of the integrated tax paid on goods exported out of India.
To know the documents required and learn the steps for undergoing Aadhar authentication or e-KYC, read: Aadhar Authentication under GST.
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- Updates in ITC-04
Form ITC-04 went through multiple due-date changes this year. Also, As per the recent eighth amendment, Rule 45(3) has been changed to relax the filing of form ITC 04 – regarding job work. Taxpayers with an annual aggregate turnover in the preceding financial year above Rs. 5 crores now need to furnish ITC-04 six consecutive months commencing on the 1st day of April and the 1st day of October while taxpayers with an annual aggregate turnover in the preceding financial year up to Rs. 5 crores will furnish ITC-04 annually. - Relaxations under section 168A of the CGST Act
As per GST Notification 24/2021 , there has been some relaxations under section 168A of the CGST Act: Time limit for completion of various actions, by any authority or by any person, under the GST Act, which falls during the period from 15th April 2021 to 29th June 2021, to be extended up to 30th June 2021, subject to some exceptions. - Use of EVC instead of DSC:
EVC stands for Electronic Verification Code and DSC stands for Digital Signature Certificate. Facility for filing GSTR 1 or submitting details of B2B invoices via IFF was made available via EVC instead of DSC. The following are the notifications that brought about the changes:As per GST Notification 07/2021 – Companies can file GSTR 1/ IFF & 3B using EVC instead of DSC from 27th Apr to 31st May 2021. While GST Notification 32/2021 talks about form GSTR-3B, GSTR-1/IFF and CMP-08 filing through EVC facility extension. - Cumulative Availment of ITC for April, May, June
105% cap on availing ITC was made applicable on a cumulative basis for tax periods April, May, and June 2021 to be applied in the return Form GSTR 3B for the tax peridot June 2021. This was as per GST Notification 27/2021 – Rule 36(4) of claiming provisional ITC – applicable cumulatively to April, May, and June 21. The date of reporting outward supplies using IFF was also extended to 28th June 21. - Retrospective amendment of interest on delayed tax payment
As per GST Notification 16/2021, the interest on delayed payments was made chargeable on net tax liability i.e. on the amount of the tax paid in cash from 1st June 2021 onwards. This removed the ambiguity that taxpayers had regarding delayed payments.
- Aadhar Authentication
7. GST Amnesty Scheme
In the 43rd GST Council Meeting, the finance ministry brought out the GST Amnesty Scheme to provide relief to taxpayers regarding late fees for pending returns. It basically reduces the tax burden off taxpayers during the pandemic. This scheme was valid from June 1, 2021, to August 31, 2021. The relief information was out via GST Notification 19/2021. The scheme offered relaxation in late fees for return filings of GSTR 3B and GSTR 1, relaxation in late fees for filing GSTR 4, relaxation for availing Input Tax Credit under GST, and relaxation in late fees for filing of GSTR 7.
8. Blocking of E-way Bill facility Resumed
The government had temporarily suspended blocking of E-way Bill generation for taxpayers in 2020 citing the pandemic to bring in relief for taxpayers. As per the GST advisory released on 4th August 2021, the blocking of the E-way Bill (EWB) generation facility has been resumed after 15th August 2021 as per Rule 138 E (a) and (b) of the CGST Rules, 2017. Now since the blocking facility has been resumed, anyone who does not file the GSTR 3B timely, will not be able to generate E-way Bills.
Read the conditions for blocking here: Blocking Of E-way Bill Generation Facility Resumed
9. Simplified Refund Procedures
The GST Refund procedures were simplified recently as the government gave clarifications regarding impending issues via GST circular 166. In cases of GST refund of excess balance in the electronic cash ledger (ECL), the refund application can be filed anytime. Another point that was clarified – the TDS/ TCS amount which remains unutilized in ECL after discharge of tax dues and other dues payable under CGST Act and rules made thereunder, CAN be refunded to the registered person as excess balance in the electronic cash ledger. Read all the refund-related clarifications here: Summaries of the latest GST circulars 165 and 166.
10. GSTR 9 Filing Exemption and GSTR 9C Self Certification
In July 2021, the CBIC exempted the requirement of filing the annual return i.e. Form GSTR 9 for taxpayers having AATO up to Rs. 2 crores for the financial year 2020-21. This change was made via GST Notification 31/21 dated 30-07-2021.
The CBIC has also exempted the requirement furnishing Form GSTR 9C for taxpayers having turnover up to Rs. 5 Crores for the financial year 2020-21 and onwards. This change was made via GST Notification 30/21 dated 30-07-2021.
GSTR 9C is an annual audit form applicable to all registered taxpayers having a turnover above 5 crores in a particular financial year. Until FY 20-21, it included a reconciliation statement for a particular financial year to be filed by taxpayers on or before 31st December after being certified by CAs/CMA. However, from 30th July 2021, the government has notified the removal of GST audit and certification done by CA/CMA and has ordered the taxpayers to self-certify their return. Read more: GSTR 9C Self Certification.
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