CGST/IGST Act 2017 amendments w.e.f October 01, 2023

Amendment

Section 137 of the FA, 2023 – Sections 10 (2)(d) and 10 (2A)(c) of the CGST Act

Composition levy extended to suppliers of goods under e- commerce model

Clause (d) of sub-section (2) and Clause (c) of sub-section (2A) in section 10 of the CGST Act has been amended so as to remove the restriction imposed on registered persons engaged in supplying goods through electronic commerce operators from opting to pay tax under the Composition Levy.

However, restriction will continue to apply for such registered persons who are engaged in supply of services through E- commerce operator.

The CBIC vide Notification No. 36/2023 – Central Tax dated August 04, 2023hasnotified special procedure to be followed by the electronic commerce operators in respect of supplies of goods through them by composition taxpayers. Namely: –

(i) the electronic commerce operator shall not allow any inter-State supply of goods through it by the said person;
(ii) the electronic commerce operator shall collect tax at source under sub-section (1) of section 52 of the said Act in respect of supply of goods made through it by the said person and pay to the Government as per provisions of subsection (3) of section 52 of the said Act; and
(iii) the electronic commerce operator shall furnish the details of supplies of goods made through it by the said person in the statement in FORM GSTR-8 electronically on the common portal.

Section 138 of the FA, 2023 – Second and third proviso to Section 16(2) of the CGST Act

Amendment concerning payment to supplier within 180 days

Second and third provisos to sub-section (2) of section 16 of the CGST Act are amended to align the said sub-section with the return filing system provided in the said Act.

It has been provided that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be paid by him along with interest payable under section 50 of the CGST Act.

Earlier it was provided to be added to his output tax liability, along with interest thereon.

Consequently, the liability of interest on such reversal shall be determined in accordance with Section 50(3) instead of 50(1) of the CGST Act, only when such wrongly availed credit is utilised by the registered person.

Section 17(3) of the CGST Act

Sale of warehoused goods before filing BOE includible in value of exempt supply for reversal of common ITC u/s 17(2) and (3) read with Rule 42 and 43

Explanation to sub-section (3) of section 17 of the CGST Act is amended so as to restrict availment of input tax credit in respect of certain transactions specified in para 8(a) of Schedule III of the said Act, i.e., “Supply of warehoused goods to any person before clearance for home consumption“, as may be prescribed, by including the value of such transactions in the value of exempt supply for the purpose of reversal of common ITC under Section 17(2) and (3) read with Rule 42 and 43 of the CGST Rules.

Section 17(5)(fa) of the CGST Act

ITC blocked on CSR activities

Sub-section (5) of said section is amended so as to provide that input tax credit shall not be available in respect of goods or services or both received by a taxable person, which are used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013.

Accordingly, input tax credit shall not be available in respect of goods or services or both received by a taxable person, which are used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013.

Section 140 of the FA, 2023 – Section 23(2) of the CGST Act

Retrospective effect of Section 23(2) on Sections 22 and 25 w.e.f. July 2017

Sub-section (1) and sub-section (2) of section 23 of the CGST Act are amended, with retrospective effect from 01st July, 2017, so as to provide that persons for compulsory registration in terms of sub section (1) of section and section 22 of the Act need not register if exempt under sub section (1) of section 23.

Accordingly, persons already exempted from compulsory registration i.e person making outward supplies which are exclusively covered under RCM, person making supplies of services through E-Commerce Operator having aggregate turnover not exceeding INR 20 Lacs in a Financial Year, person supplying handicraft goods having aggregate turnover not exceeding INR 20 Lacs in a Financial Year, person making inter-state supplies of tax- able services having aggregate turnover not exceeding INR 20 Lacs in a Financial Year, etc. need not to obtain GST registration.

Section 141 of FA, 2023 – Section 30(1) of the CGST Act

Time limit on application for Revocation of cancellation of registration

Prescribed time limit of 30 days has been increased to 90 days from the date of order of cancellation or such further period as may be allowed by Commissioner not exceeding 180 days as prescribed under Rule 23 of the CGST Rules, for moving an application for Revocation of Cancellation of GST Registration.

Sections 142-145 of the FA, 2023 – Sections 37(5), 39(11), 44(1) & (2) and 52(15) of the CGST Act

Limitation of 3 years on filing of returns

The registered person shall not be allowed to furnish the return in GSTR-1, GSTR-3B, GSTR-9, GSTR-9C and GSTR-8 after a period of 3 years from the due date of furnishing the relevant return.

A new sub-section (5) in section 37 of the CGST Act is inserted so as to provide a time limit upto which the details of outward supplies under sub-section (1) of the said section for a tax period can be furnished by a registered person. Further, it also seeks to provide an enabling provision for extension of the said time limit, subject to certain conditions and restrictions, for a registered person or a class of registered persons.

A new sub-section (11) in section 39 of the CGST Act is inserted so as to provide a time limit upto which the return for a tax period can be furnished by a registered person. Further, it also seeks to provide an enabling provision for extension of the said time limit, subject to certain conditions and restrictions, for a registered person or a class of registered persons.

A new sub-section (2) in section 44 of the CGST Act is inserted so as to provide a time limit upto which the annual return under sub-section (1) of the said section for a financial year can be furnished by a registered person. Further, it also seeks to provide an enabling provision for extension of the said time limit, subject to certain conditions and restrictions, for a registered person or a class of registered persons.

A new sub-section (15) in section 52 of the CGST Act is inserted so as to provide a time limit upto which the statement under sub-section (4) of the said section for a month can be furnished by an electronic commerce operator. Further, it seeks to provide an enabling provision for extension of the said time limit, subject to certain conditions and restrictions, for an electronic commerce operator or a class of electronic commerce operators.

Section 146 of the FA, 2023 – Section 54(6) of the CGST Act

Refunds

Section 54(6) allows a refund on a provisional basis, ninety per cent. of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in per case of zero-rated supply of goods or services or both.

Sub-section (6) of section 54 of the CGST Act is amended so as to remove the reference to the provisionally accepted input tax credit to align the same with the present scheme of availment of self assessed input tax credit as per sub-section (1) of section 41 of the said Act.

This amendment will remove the reference to the provisionally accepted ITC to align the same with the scheme of availment of self-assessed ITC as per Section 41(1) of the CGST Act.

Section 147 of the FA, 2023 – Section 56 of the CGST Act

Interest on delayed refunds

Section 56 of the CGST Act is amended so as to provide for an enabling provision to prescribeanner of computation of period of delay for calculation of interest on delayed refunds.

Interest on delayed refunds will be granted for the period of delay beyond sixty days from the date of receipt of such application till the date of refund of such tax, to be computed in such manner and subject to such conditions and restrictions as may be prescribed.

Section 148 of FA, 2023 – Section 62(2) of the CGST Act

Assessment of non-filers of returns

The time period to furnish a valid return i.e. Form GSTR 3B or Form GSTR 10 (Final Return) has been increased from 30 days to 60 days under Best Judgment Assessment.
It has been provided that where the registered person fails to furnish a valid return within sixty days of the service of the assessment order, he may furnish the same within a further period of sixty days on payment of an additional late fee of one hundred rupees for each day of delay beyond sixty days of the service of the said assessment order and in case he furnishes valid return within such extended period, the said assessment order shall be deemed to have been withdrawn, but the liability to pay interest under sub-section (1) of section 50 or to pay late fee under section 47 shall continue.

Section 155 of the FA, 2023 – Section 122(1B) of the CGST Act

Penalty for certain offences

A new sub-section (1B) in section 122 of the CGST Act has been inserted so as to provide for penal provisions applicable to Electronic Commerce Operators in case of contravention of provisions relating to supplies of goods made through them by unregistered persons or composition taxpayers.

Any electronic commerce operator who-

(i) allows a supply of goods or services or both through it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply;
(ii) allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or
(iii) fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act,
shall be liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.

Section 156 of the FA, 2023 – Section 132(1) of the CGST Act

Punishment of certain offences (Section 132): Decriminalization of certain offences

Sub-section (1) of section 132 of the CGST Act has been amended so as to decriminalize offences specified in clause (g), (j) and (k) of the said sub-section and to increase the monetary threshold for launching prosecution for the offences under the said Act from one hundred lakh rupees to two hundred lakh rupees, except for the offences related to issuance of invoices without supply of goods or services or both.

Section 157 of the FA, 2023 – Section 138(1) of the CGST Act

Compounding of offences

First proviso to sub-section (1) of section 138 of the CGST Act has been amended so as to simplify the language of clause (a), to omit clause (b) and to substitute the clause (c) of said proviso so as to exclude the persons involved in offences relating to issuance of invoices without supply of goods or services or both from the option of compounding of the offences under the said Act.

No Compounding of offences – Fake/bogus invoice cases excluded from the option of compounding of offences.

Reduction in Compounding fees: Sub-section (2) of section 138 of the CGST Act has been amended so as to rationalize the amount for compounding of various offences by reducing the minimum as well as maximum amount for compounding.

The amount for compounding of offences under this section shall be such as may be prescribed, subject to the minimum amount not being less than twenty-five per cent. of the tax involved and the maximum amount not being more than one hundred per cent. of the tax involved.

Section 158 of the FA, 2023 – Section 158A of the CGST Act

Consent based sharing of information furnished by taxable person

A new section 158A in the CGST Act is being inserted so as to provide for prescribing manner and conditions for sharing of the information furnished by the registered person in his return or in his application of registration or in his statement of outward supplies, or the details uploaded by him for generation of electronic invoice or Eway bill or any other details, as may be prescribed, on the common portal with such other systems, as may be notified.

Section 159 of the FA, 2023 – Para 7, 8(a) and 8(b) in Schedule III of the CGST Act

Retrospective applicability of Para 7, 8(a) and 8(c) of Schedule III

Schedule III of the CGST Act has been amended to give retrospective applicability to Para 7, 8 (a) and 8 (b) of the said Schedule, with effect from 01st July, 2017, so as to treat the activities/ transactions mentioned below as neither supply of goods nor supply of services.

1. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India.
2. Supply of warehoused goods to any person before clearance for home consumption.
3. Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption

It is also being clarified that where the tax has already been paid in respect of such transactions/ activities during the period from 01st July, 2017 to 31st January, 2019, no refund of such tax paid shall be available.

Section 2(a) of CGST (Amendment) Act, 2023 – Section 2(80A) & 2(80B) of CGST Act 2017

Definition of "online gaming" and "online money gaming"

"online gaming" means offering of a game on the internet or an electronic network and includes online money gaming;

"online money gaming" means online gaming in which players pay or deposit money or money’s worth, including virtual digital assets, in the expectation of winning money or money’s worth, including virtual digital assets, in any event including game, scheme, competition or any other activity or process, whether or not its outcome or performance is based on skill, chance or both and whether the same is permissible or otherwise under any other law for the time being in force;’;

Section 2(b) of CGST (Amendment) Act, 2023 – Section 2(102A) of CGST Act 2017

Definition of "specified actionable claim"

‘(102A) "specified actionable claim" means the actionable claim involved in or by way of-
(i) betting;
(ii) casinos;
(iii) gambling;
(iv) horse racing;
(v) lottery; or
(vi) online money gaming;’;

Section 2(c) of CGST (Amendment) Act, 2023 – Section 2(105) of CGST Act 2017

Inclusion of provision

"Provided that a person who organises or arranges, directly or indirectly, supply of specified actionable claims, including a person who owns, operates or manages digital or electronic platform for such supply, shall be deemed to be a supplier of such actionable claims, whether such actionable claims are supplied by him or through him and whether consideration in money or money’s worth, including virtual digital assets, for supply of such actionable claims is paid or conveyed to him or through him or placed at his disposal in any manner, and all the provisions of this Act shall apply to such supplier of specified actionable claims, as if he is the supplier liable to pay the tax in relation to the supply of such actionable claims;"

Section 2(d) of CGST (Amendment) Act, 2023 – Section 2(117A) of CGST Act 2017

Definition of "virtual digital asset"

"virtual digital asset" shall have the same meaning as assigned to it in clause (47A) of section 2 of the Income-tax Act, 1961;’

Section 3 of CGST (Amendment) Act, 2023 – Section 24 of CGST Act 2017

Compulsory registration – Insertion of clause

"(xia) every person supplying online money gaming from a place outside India to a person in India; and".
Section 24 has been amended to provide for the mandatory registration of the persons supplying online money gaming from outside India to persons in India must also register under the Act.  

Section 3 of CGST (Amendment) Act, 2023 – Schedule III

The words "lottery, betting and gambling" to be substituted as the words "specified actionable claims".

Section 160(a) of the FA, 2023 – Section 2(16) of the IGST Act

Definition of “non-taxable online recipient”

Clause (16) of section 2 of the IGST Act has been amended so as to revise the definition of “non-taxable online recipient” by removing the condition of receipt of online information and database access or retrieval services (OIDAR) for purposes other than commerce, industry or any other business or profession so as to provide for taxability of OIDAR service provided by any person located in nontaxable territory to an unregistered person receiving the said services and located in the taxable territory.
Further, it also seeks to clarify that the persons registered solely in terms of clause (vi) of Section 24 of CGST Act shall be treated as unregistered person for the purpose of the said clause.

Previously, “non-taxable online recipient” means any Government, local authority, governmental authority, an individual or any other person not registered and receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory.

Section 160(b) of the FA, 2023 – Section 2(17) of the IGST Act

Definition of “online information and database access or retrieval services”

Clause (17) of the said section has been amended to revise the definition of “online information and database access or retrieval services” to remove the condition of rendering of the said supply being essentially automated and involving minimal human intervention.

Section 161 of the FA, 2023 – Section 12(8) of the IGST Act

Place of Supply in relation of Transportation of Goods

Proviso to sub-section (8) of section 12 of the IGST Act has been omitted so as to specify the place of supply, irrespective of destination of the goods, in cases where the supplier of services and recipient of services are located in India.

The Place of Supply shall be the location of recipient of service if the recipient is a registered person. Consequently, half of the tax shall accrue to the State where recipient is registered as against the erstwhile accrual of full tax to the Union in case of goods destined outside India.

Section 162 of the FA, 2023 – Section 13(9) of IGST

Place of Supply in relation of Transportation of Goods

Section 13(9) of the IGST Act, 2017 read as “The place of supply of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of such goods.” has been omitted to provide that place of supply of services in case of transportation of goods, other than by way of mail or courier would be covered under default provision of Section 13(2) of IGST Act and would be the location of the recipient of services, in cases where either the supplier of services or recipient of services is located outside India.

As a result, Services to recipient outside India would qualify as export, and Services from supplier outside India would qualify as import of service irrespective of the destination of goods.

Section 123 of the FA Act, 2021 – Section 16(1)(b) of the IGST Act

Zero-rated supplies to SEZ for authorised operations:

The words “for authorised operations” have been added to clause (b) of Section 16(1) to remove the ambiguity that only the supplies made for authorised operations to SEZ unit or developer shall qualify as zero-rated supplies.

Presently, in respect of supplies to a Special Economic Zone unit or a Special Economic Zone developer, the application for refund shall be filed by the –

(a) supplier of goods after such goods have been admitted in full in the Special Economic Zone for authorised operations, as endorsed by the specified officer of the Zone;
(b) supplier of services along with such evidence regarding receipt of services for authorised operations as endorsed by the specified officer of the Zone:
For the period prior to 01.10.2023, one may argue that even if endorsement of authorised operations is unavailable, still the supply to SEZ qualifies as zero-rated supply qua Section 16 of the IGST Act.

Section 123 of the FA Act, 2021 -Section 16(3) & (4) of IGST Act

Zero rated supply

Section 16(3) has been amended as “A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed:

Further, Section 16(4) has been inserted to be read as “The Government may, on the recommendation of the Council, and subject to such conditions, safeguards and procedures, by notification, specify-

(i) a class of persons who may make zero rated supply on payment of integrated tax and claim refund of the tax so paid;
(ii) a class of goods or services which may be exported on payment of integrated tax and the supplier of such goods or services may claim the refund of tax so paid.
Notification, No. 01/2023 Integrated Tax dated 31.07.2023 has notified all goods or services as the class of goods or services which may be exported on payment of integrated tax and on which the supplier of such goods or services may claim the refund of tax so paid except specific goods like cigarettes, pan-masala, and other tobacco related products.

Please note that no notification has been issued for supply of goods or services or both for authorised operations to a Special Economic Zone developer or a Special Economic Zone unit, with payment of integrated tax. Hence, such supplies made without payment of IGST.

Section 2 of IGST (Amendment) Act, 2023 – Section 2(17) (vii) of IGST Act 2017

Definition of “online gaming”

The clause (vii) has been “online gaming” substituted as “(vii) online gaming, excluding the online money gaming as defined in clause (80B) of section 2 of the Central Goods and Services Tax Act, 2017;”

Section 3 of IGST (Amendment) Act, 2023 – Section 5 of IGST Act 2017

Levy and collection of tax

Inserted the words "other than the goods as may be notified by the Government on the recommendations of the Council"

The central Government has issued the Notification No. 03/2023 – Integrated Tax dated 29.09.2023 to notify the supply of online money gaming as the goods on import of which the proviso to sub-section (1) of section 5 of the said Act shall not apply, but on which integrated tax shall be levied and collected under sub-section (1) of section 5 of the said Act.

Section 4 of IGST (Amendment) Act, 2023 – Section 10 of IGST Act 2017

Place of supply of goods other than supply of goods imported into, or exported from India.

Where the supply of goods is made to a person other than a registered person, the place of supply shall, notwithstanding anything contrary contained in clause (a) or clause (c), be the location as per the address of the said person recorded in the invoice issued in respect of the said supply and the location of the supplier where the address of the said person is not recorded in the invoice.

Explanation.-For the purposes of this clause, recording of the name of the State of the said person in the invoice shall be deemed to be the recording of the address of the said person.

Section 5 of IGST (Amendment) Act, 2023 – Insertion of Section 14A of IGST Act 2017

Special provision for specified actionable claims supplied by a person located outside taxable territory.

(1) A supplier of online money gaming as defined in clause (80B) of section 2 of the Central Goods and Services Tax Act, 2017, not located in the taxable territory, shall in respect of the supply of online money gaming by him to a person in the taxable territory, be liable to pay integrated tax on such supply.
(2) For the purposes of complying with provisions of sub-section (1), the supplier of online money gaming shall obtain a single registration under the Simplified Registration Scheme referred to in sub-section (2) of section 14 of this Act:

Provided that any person located in the taxable territory representing such supplier for any purpose in the taxable territory shall get registered and pay the integrated tax on behalf of the supplier:

Provided further that if such supplier does not have a physical presence or does not have a representative for any purpose in the taxable territory, he shall appoint a person in the taxable territory for the purpose of paying integrated tax and such person shall be liable for payment of such tax.
(3) In case of failure to comply with provisions of sub-section (1) or sub-section (2) by the supplier of the online money gaming or a person appointed by such supplier or both, notwithstanding anything contained in section 69A of the Information Technology Act, 2000, any information generated, transmitted, received or hosted in any computer resource used for supply of online money gaming by such supplier shall be liable to be blocked for access by the public in such manner as specified in the said Act.".