CGST (2nd Amendment) Rules, 2023 notified by CBIC

CBIC has issued amendments to CGST Rules and GST Forms through Notification 38/2023 (CGST 2nd Amendment Rules, 2023) on 04/08/2023. The changes encompass crucial aspects of tax and compliance.

CBIC Central Tax Notification 38/2023 dated 04/08/2023: Central Goods and Services Tax (Second Amendment) Rules, 2023

CGST (2nd Amendment) Rules, 2023 notified by CBIC

1. Amendment in CGST Rule 9

Amendment in CGST Rule 9 to discontinue the requirement of physical verification of business premises to be conducted in the presence of the registration applicant.

2. Amendment in CGST Rule 10A

Amendment in CGST Rule 10A to introduces a new deadline for submitting bank account details, to be furnished within 30 days of grant of registration or before filing of statement of outwards supplies in FORM GSTR-1/ IFF, whichever is earlier.

3. Amendments in CGST Rule 21A

i) CGST rule 21A(2A) substituted to provide for system-based suspension of the registration of taxpayers who do not furnish valid bank account details as per timeline prescribed in CGST Rule 10A.

ii) Insertion of new/3rd proviso in CGST rule 21A(4) to provide for automatic revocation of such system-based suspension upon compliance with provisions of CGST rule 10A regarding submission of valid bank account details.

4. Amendments in CGST Rule 23

CGST Rule 23 amended to allow extended period of 90 days (in lieu of existing 30 days) to apply for revocation of cancelled registrations, effective October 1, 2023. This extension grants taxpayers more flexibility and time to rectify issues that could lead to cancellation.

5. Amendment in CGST Rule 25

Substitution of CGST Rule 25 provide for physical verification of applicant in high risk cases, even where Aadhaar has been authenticated.

6. Amendments in CGST Rule 43

Explanation 3 inserted in CGST Rule 43, effective October 1, 2023, which prescribe that value of supply of goods from Duty Free Shops (at arrival terminal in international airports to the incoming passengers) to be included in value of exempt supplies for the purpose of ITC reversal, effective October 1, 2023.

7. Amendments in CGST Rule 46

Clause (f) of CGST rule 46 amended to provide for requirement of only ‘name of the State of the recipient’, in lieu of existing requirement of ‘name and full address of the recipient’, on the tax invoice, in cases of supply of taxable services by or through an ECO or by a supplier of OIDAR services to an unregistered recipient (B2C), to ease compliance burden of the taxpayers. Rule 46 has been simplified regarding “address on record of the recipient” for B2C supplies.

8. New Clauses (e) and (f) in Rule 59(6)

Clause (e) disallows a registered taxpayer, who has been served an intimation under sub-rule (1) of rule 88D for one or more tax periods, from providing details of outward supplies in FORM GSTR-1 or via the invoice furnishing facility for upcoming tax periods. This is unless they’ve settled the excess input tax credit specified in the intimation or has given a justification for the unpaid amount of excess input tax credit, as ruled by sub-rule (2) of rule 88D.

Clause (f) restricts a registered taxpayer from providing outward supply details under section 37 in FORM GSTR-1 or through the invoice furnishing facility if they have not supplied the bank account details in compliance with rule 10A.

9. New CGST Rule 88D

The new rule 88D dictates how to handle discrepancies in input tax credit amounts as indicated in the automatically formulated GSTR-2B statement versus the self-declared GSTR-3B return. If the registered taxpayer claims more credit than available according to GSTR-2B, the person will be notified through FORM GST DRC-01C, also sent to their email.

The individual is directed to either compensate for the excess claim with the accrued interest via FORM GST DRC-03 or to discuss the discrepancy’s reason within a week. After receiving the notification, the registered person can opt to compensate for the excess credit, either in full or partially with interest through FORM GST DRC-03, detailing it in FORM GST DRC-01C or justify the remaining amount, if any, in FORM GST DRC-01C within the stipulated timeframe.

If the person fails to compensate for the excess amount within the given timeline or provides an unacceptable reason for the discrepancy, the outstanding amount can be legally demanded as per the provisions of section 73 or 74.

Rule 88D of CGST Rules 2017: Manner of Dealing with ITC Differences of GSTR-2B & 3B

10. New CGST Rule 138F

A new rule known as “138F” has been incorporated. This rule concerns the furnishing of information for the intra-State movement of valuable goods like gold or precious stones and the generation of e-way bills for the same. Here are the key aspects:

1) When a State or Union territory tax Commissioner orders submission of information related to intra-State movement of certain goods, and the consignment value of such goods surpasses a specific amount over rupees two lakhs.

2) Those causing said intra-State movement are required to furnish electronic information before the movement, which generates a unique number. This applies whether the movement is due to a supply, non-supply reasons, or due to an inward supply from an unregistered person.

3) E-commerce operators or courier agencies can furnish this information when goods are supplied through them.

4) The e-way bill will be generated electronically, the information provided in Part A of FORM GST EWB-01 will not require PART B specifics for the goods’ movement.

5) If the e-way bill is generated but goods are not transported, or the details differ from those in the e-way bill, it can be cancelled electronically within twenty-four hours, unless it has been verified in transit.

6) The e-way bill isn’t necessary for goods moving from customs ports or stations to inland container depots or container freight stations for customs clearance, or transported under customs bond or supervision.

7) This new rule also incorporates the provisions of previous rules.

8) The consignment value includes central tax, State tax or Union territory tax charged, but excludes the value of exempt supply of goods in a mixed invoice.

Rule 138F of CGST Rules 2017: Intra-State movement of Gold, Precious Stones, etc.

11. New CGST Rule 142B

The insertion of rule 142B addresses the recovery of certain amounts under section 79 of the Act. If any tax or interest amount is due under section 79 and remains unpaid, the proper officer must notify the defaulting person electronically through FORM GST DRC-01D. This notification demands payment of the amount plus any applicable interest within seven days, being recorded in the Electronic Liability Register in FORM GST PMT-01, Part-II. The intimation is treated as a recovery notice. If the tax or interest remains unpaid after the specified period, the officer shall undertake recovery procedures per rules 143 through 160.

Rule 142B of CGST Rules 2017: Intimation of Amounts Recoverable u/s 79 (DRC-01D)

12. Amendments in CGST Rule 162

Starting October 1, 2023, rule 162 will be modified. The phrase “has cooperated in the proceedings before him and” will be removed from sub-rule (3). A new sub-rule (3A) will be included, dictating how the Commissioner will set the compounding amount according to a table delineating offences and their corresponding punishments. Offences punishable under clauses (i) and (ii) of section 132 sub-section (1) will entail compounding amounts relative to the gravity of the offence. Calculations for certain offences will be based on tax evasion totals, wrongful availing or utilizing of tax credits, or incorrect refunds, ranging from 25% to 75%. If an offence falls into multiple categories, the highest applicable compounding amount will be enforced.

13. New CGST Rule 163

Starting October 1, 2023, a new rule 163 will be introduced named ‘Consent based sharing of information’. This rule pertains to registered individuals choosing to share information from specific GST forms (GST REG-01, GSTR-3B, GSTR-1) with a system mentioned in section 158A(1), referred to as the “requesting system”.

The requesting system must gain the consent of the registering individual for information sharing and also communicate these details, including tax periods if applicable, to a common portal. Consent for sharing information in clause (c) of sub-rule (1) can only be given by the registrant if all receipt-holders, to whom they have issued invoices, receive satisfactory consent for the information sharing with the requesting system. Assuming consent has been given, such recipients can reasonably be considered to have given their consent.

Upon receipt of the registered individual’s consent and the tax period details, or recipients, depending on the situation, the common portal will share the information from sub-rule (1) with the requesting system.

Rule 163 of CGST Rules 2017: Consent-based Sharing of Taxpayer’s Information

14. Other Changes in CGST Rules

Various other CGST Rules have also been amended. For details please refer the attachment.

15. Changes in GST Forms

Various GST Forms and GSTR Forms have also been amended/introduced. New forms such as GST DRC-01C and DRC-01D have been introduced, while existing forms like GSTR-3A, GSTR-5A, GSTR-8, GSTR-9, GSTR-9C, and GST RFD-01 have undergone significant changes.

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