Charting the Course: Analyzing GST Changes of 2023 and Envisioning 2024
The GST landscape is ever-changing, and the significant GST changes in 2023 will have a lasting impact on the fiscal environment beyond the coming years. Businesses and individuals must comprehend these GST changes and adjust to the modified tax setting.
These GST changes will help to improve the GST system of India. It will help digitalize the entire system as expected and forecasted by the tax department. Let’s explore the pivotal elements of the GST changes in 2023 and what to expect with respect to GST changes in 2024.
What GST changes were made in GST in 2023?
There were many GST changes made throughout the year. We shall understand it month-wise.
January:
On January 12, 2023 the GST portal offers an automated feature allowing the reinstatement of cancelled GSTINs when taxpayers submit pending GST returns.
On January 4, 2023, CGST Notification 01/2023 was released, granting increased authority from Superintendents of central tax to Additional Assistant Directors in DGGI, DGGST, and DG Audit.
February:
The key highlights of Budget 2023 include the removal of criminal penalties for certain offences and the expansion of the composition scheme to encompass e-commerce retailers.
March:
CGST notifications 02/2023 to 08/2023, issued on March 31, 2023, implement the GST Council’s recommendations in the following ways:
· Amnesty schemes, valid until June 30, 2023, are introduced for late filers of GSTR-4, GSTR-9, and GSTR-10, individuals falling under Section 62 of the CGST Act (subject to Best Judgment assessment), and for those seeking revocation of cancelled GST registration under REG-21.
· CGST notification 05/2023 implements risk-based biometric Aadhaar authentication for Gujarat from December 26, 2022.
· The extension of the limitation period under Section 168A to issue orders under Section 79 (recovery proceedings) is prolonged for previous years:
o For FY 2017-18: extended until December 31, 2023
o For FY 2018-19: extended until March 31, 2024
o For FY 2019-20: extended until June 30, 2024
April:
According to the advisories from the GST Network dated April 12 and April 13, 2023, businesses having an annual turnover of Rs. 100 crore or higher are required to submit tax invoices and credit-debit notes to the Invoice Registration Portal (IRP) within seven days from the invoice date starting May 1, 2023.
May:
CBIC has released a new directive regarding online scrutiny, extending the previously issued standard operating procedure (SOP) for FY 2017-18 and 18-19 to cover FY 2019-20 onwards.
On May 16, 2023, the government portal activated the GSTR-9 and GSTR-9C filing feature for FY 2022-23. In a significant move on May 11, 2023, the department introduced an automated return scrutiny module, effective from FY 2019-20 onwards. This initiative aims to streamline communication between GST officers and taxpayers, reducing time and effort for both parties.
Additionally, on May 10, 2023, CBIC announced the commencement of the 6th phase of e-invoicing. Consequently, businesses with a turnover exceeding ₹5 crore in any fiscal year since 2017-18 are mandated to issue e-invoices starting August 1, 2023.
The GST department has extended the deadline for reporting old e-invoices on the e-invoice IRP portals by three months. Additionally, the department has not yet specified the new date for the implementation of this requirement.
June:
From July 15, 2023, the NIC has mandated that taxpayers with turnovers exceeding Rs. 100 Crore utilise Two-factor Authentication when logging into the e-invoicing and e-way bill systems.
July:
The 50th GST Council meeting convened on July 11, 2023. During the meeting, it was decided that notifications would be sent through DRC-01C to prompt a response from taxpayers who have claimed excess ITC in GSTR-3B compared to GSTR-2B beyond a specific threshold. Additionally, the GST rate for online gaming was set at 28% based on the full face value.
August:
On Wednesday, August 2, 2023, the 51st GST Council meeting was conducted via video conferencing. During the meeting, the Council deliberated and endorsed the regulations for applying a 28% GST on casinos, racecourses, and online gaming.
October:
The 52nd GST Council meeting highlights and implementations are as under:
A GST Amnesty Scheme has been introduced, extending the appeal filing deadline until January 31, 2024, for orders passed until March 2023. This scheme requires a 12.5% pre-deposit of tax, with 2.5% paid in cash.
CGST Section 159 will be amended to restore provisionally attached property automatically after one year. It has been clarified that no GST will be applicable on personal guarantees offered by directors to banks against sanctioned company credit/loans.
The taxable value for corporate guarantees between related entities (e.g., a holding company to its subsidiary) is defined as 1% of the guarantee amount or the actual consideration, whichever is higher.
The GST Council has granted states the authority to tax Neutral Alcohol (ENA) used in human consumption in liquor production. Rules for the Composition of GSTAT have been established, specifying age limits for the President (50-70 years) and members (maximum 67 years) and criteria for appointing judicial members.
Clarifications have been provided on various issues, such as the eligibility of the District Mineral Foundation Trust for GST exemptions, the GST rate (5%) for job work services processing barley into malt, and the states’ adoption of 28% GST on gaming companies.
GST Changes in rates for goods include 0% GST on millet flour (HS1901) when sold loose, reduced GST (from 28% to 5%) on molasses, and a separate 18% GST on ENA for industrial use.
Regarding services, exemptions have been granted on water supply and public health services supplied to government authorities, conditional IGST exemptions for foreign vessels converting to coastal runs, exemptions for services to government bodies for Panchayat/Municipality functions, and exclusion of bus operator companies from specific CGST sections for GST payment and ITC claims. Additionally, Indian Railways services will be subject to forward charges, allowing ITC to discharge liabilities.
GST Changes in 2024:
The GST changes in 2023 in the GST landscape pave the way for future transformations and GST changes in 2024 in India’s tax framework. The amendments in Section 137 of the Finance Act, 2023, expanding the composition scheme to E-commerce operators (ECOs) for registered goods suppliers, hint at a more inclusive tax environment.
Read In-Depth – 11 Major GST Changes
The emphasis on timely payments to suppliers within 180 days as clarified under the new provisions, demonstrates a commitment to strengthen the financial integrity and fair transactions within the GST ambit. This alteration streamlines payment procedures and ensures equitable treatment for suppliers across various sectors.
Additionally, the constraints on Input Tax Credit (ITC) for goods and services involved in Corporate Social Responsibility (CSR) activities, introduced through Section 139 of the FA, 2023, may indicate future shifts in how tax planning strategies evolve for businesses engaged in socially responsible initiatives.
The government has made GST changes in the tax rules that help smaller businesses since July 1, 2017. These GST changes in the rules make it easier for some specific businesses not to have to register for GST. This shows that the government wants to reduce the rules for smaller businesses, helping them grow without too much tax hassle. Also, if a business had its GST registration cancelled, now it has more time to ask to get it back. This might make it easier for businesses that need their GST registration again.
Moreover, the introduction of limitations on filing belated returns (Sections 142-145) underscores the importance of timely compliance and sets the tone for a more punctual tax regime in the years ahead. GST Changes related to refunds, penalties, decriminalisation of offences, consent-based information sharing, and retrospective applicability (Sections 146-159) indicate a direction toward a more transparent, compliant, and adaptable tax ecosystem.
In the Integrated Goods and Services Tax (IGST) Act, modifications like the widened scope of OIDAR services, GST changes in the place of supply, and clarity on zero-rated supplies to Special Economic Zones (SEZ) hint at continued efforts to align tax policies with evolving business practices and international trade dynamics.
Conclusion:
The GST changes in 2023 reflect a proactive approach by the government toward fostering a more responsive, streamlined, and adaptable GST framework. These GST changes address current challenges and lay the groundwork for a more resilient and future-ready taxation system in India.
