GST Council Recommends 5 Important changes in the CGST Rules

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The GST Council, in its 39th meeting held on 14.03.2020, has made the five important following recommendations in the CGST Rules :

  • Procedure for reversal of input tax credit in respect of capital goods partly used for effecting taxable supplies and partly for exempt supplies under CGST rules 43 (1) (c);
  • ceiling to be fixed for the value of the export supply for the purpose of calculation of refund on zero-rated supplies;
  • to allow for the refund to be sanctioned in both cash and credit in case of excess payment of tax;
  • to provide for recovery of refund on the export of goods where export proceeds are not realized within the time prescribed under FEMA; and
  • to operationalize Aadhaar authentication for new taxpayers.

Other Important Changes

  • Interest for delay in payment of GST to be charged on the net cash tax liability w.e.f. 01.07.2017 (Law to be amended retrospectively).
  • Where registrations have been cancelled till 14.03.2020, application for revocation of cancellation of registration can be filled up to 30.06.2020 (extension of the period of application as a one-time measure to facilitate those who want to conduct business).
  • A new facility called ‘Know Your Supplier’ to be introduced so as to enable every registered person to have some basic information about the suppliers with whom they conduct or propose to conduct business.
  • The requirement of furnishing FORM GSTR-1 for 2019-20 to be waived for taxpayers who could not opt for availing the option of special composition scheme under notification No. 2/2019-Central Tax (Rate) dated 07.03.2019 by filing FORM CMP-02.
  • A special procedure is being prescribed for registered persons who are corporate debtors under the provisions of the Insolvency and Bankruptcy Code, 2016 and are undergoing the corporate insolvency resolution process, so as to enable them to comply with the provisions of GST Laws during the CIRP period.
  • A special procedure for registered persons in Dadra and Nagar Haveli & Daman and Diu during the transition period, consequent to the merger of the UTs w.e.f. 26.01.2020; transition to be completed by 31.05.2020.
  • Seeking information return from Banks
  • To curb fake invoicing and fraudulent passing of ITC, restrictions to be imposed on the passing of the ITC in case of new GST registrations, before physical verification of premises and Financial KYC of the registered person.