There have been several amendments to the CGST Act, which favour the taxpayer with better compliance. There have been updates to the sections relating to the payment of taxes and interest, hence easing the filing of GST returns and reducing the burden of interest. Let's analyse some of the major amendments made and how GST-registered taxpayers will benefit from them.
The threshold limit for registration under GST for suppliers of goods has been increased to Rs 40 lakh from Rs 20 lakh. This change had already been proposed by the GST Council in its 32nd meet, and has now been passed by Parliament and amended in the CGST Act under section 22. This new amendment will greatly benefit all small and medium scale suppliers, who can utilise the benefit of a higher exemption limit and refrain from collecting taxes and filing their returns. This revised limit does not impact the other sections that require mandatory registration in case of inter-state suppliers or those selling through an e-commerce operator. Also, it is only available to a supplier of goods.
On the topic of registration under GST, a new sub-section has been introduced under section 25, relating to the procedure of registration. The government has now mandated Aadhaar authentication for all taxpayers under GST, even those who are getting registered for the first time. Without getting Aadhaar authentication done, the registration allotted to a person will be deemed invalid. For registrations allotted to persons other than individuals, the Aadhaar authentication of its authorised representative or authorised signatory needs to be done in such cases. This new procedural compliance introduced, demonstrates the focus the Government has on making Aadhaar a common proof of identification to be used across all legal departments.
The best news yet for taxpayers is that they will now be able to shift wrongly paid taxes to the correct head under the latest amendment to section 49 of the CGST Act. The inability to shift wrongly paid taxes in the past, had led to a lot of hassles and grievances among taxpayers, as these taxes, once paid, could not be utilised and would need to be paid again. With this new update, any amount in the electronic cash ledger, be it under taxes, interest, penalties or fees can now be transferred to the correct head under IGST, CGST or SGST/UTGST as applicable.
In another pivotal move, the burden of interest on delayed payment of taxes will now get significantly reduced. The interest provisions under section 50 have been amended to include the levy of interest on only that extent of tax paid by debiting the electronic cash ledger, or in other words, paid using cash. In the past, taxpayers had to pay interest on the entire portion of the tax that remained unpaid beyond the due date. This included even that portion paid using input tax credit, which many experts opined was against established practices. This amendment will see a reduced burden of interest liability for taxpayers, and a nil liability in cases of payments made utilising only input tax credit.
Under section 10 governing the Composition Scheme, a new sub-section has been introduced that will even bring Service Providers under the ambit of this scheme. All service providers having an annual turnover of up to Rs 50 lakh, as well as mixed suppliers i.e. of both goods and services, will now be able to take the benefit of the Composition Scheme. This new update makes headway for small businesses, as it will greatly ease compliance in terms of maintenance of books of accounts and the filing of returns.
As far as the filing of returns go, section 39 of the CGST Act has been amended to introduce a new option for specified taxpayers to furnish their returns on a quarterly basis, instead of monthly. The persons opting for the quarterly filing of returns, will however, still need to pay their taxes monthly. Likewise, for Composition taxpayers, they will only need to file their returns annually, while the payment of taxes needs to be done on a quarterly basis. This will drastically reduce the filing burden on small taxpayers, as well as reduce the costs involved in staying GST-compliant.
Some of the latest amendments introduced in the CGST Act, as well as the Income Tax Act, tells us that the Government is now moving towards a cashless economy. A new section namely 31A introduced in the CGST Act mandates certain specified suppliers to give their recipients the option of prescribed modes of electronic payments. One of the main reasons for the introduction of mandatory electronic payments is to curb the usage of cash and prevent tax evasion, which is a bona-fide problem our country is facing. We could hope to see an even bigger shift to near about 100 per cent cashless state in the years to come, which will be an essential requirement to eliminate all unlawful cash dealings in our country.
In order to prevent suppliers from reaping the benefits of input tax credit, and not transferring this advantage to consumers in the form of reduced prices, the National Anti-profiteering Authority - constituted under section 171 - can now impose a penalty of up to 10 per cent equivalent to that of the profiteered amount in cases where the supplier is found guilty of this malpractice. This amendment has the customer as its focal point, with a crackdown on all suppliers engaged in unethical behavior.
Overall, taxpayers have seen several welcome moves under GST, and can now hope to begin their GST 2.0 journey with a more simplified approach.
(The author is Founder & CEO at ClearTax)