These are among the many changes in the GST regime that have come into effect in this new year 2022.
Also to tackle evasion, the GST law has been amended to state that the input tax credit will now be available only once the credit is appearing in GSTR 2B (purchase return) of the tax payer. Five per cent provisional credit, earlier allowed in GST rules, will not be permitted post January 1, 2022.
EY India Tax Partner Bipin Sapra said “this change will have an immediate impact on working capital of tax payers who are currently availing credit of 105% of matched credit. The change will also mandate industry to validate that the procurements are made from genuine and compliant vendors.”
The other anti-evasion measures which would come into effect from the new year include mandatory Aadhaar authentication for claiming GST refund, blocking of the facility of GSTR-1 filing in cases where the business has not paid taxes and filed GSTR-3B in the immediate previous month.
Currently, the law restricts filing of return for outward supplies or GSTR-1 in case a business fails to file GSTR-3B of the preceding two months.
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While businesses file GSTR-1 of a particular month by the 11th day of the subsequent month, GSTR-3B, through which businesses pay taxes, is filed in a staggered manner between 20th-24th day of the succeeding month.
Also, the GST law has been amended to allow GST officers to visit premises to recover tax dues without any prior show-cause notice, in cases where taxes paid in GSTR-3B is lower based on suppressed sales volume, as compared to supply details given in GSTR-1.
Sapra said while the amendment is likely to curb the malpractice of passing of input tax credit through declaring in GSTR-1 without paying taxes in GSTR 3B, genuine differences in GSTR-1 and GSTR 3B like carry forward of unadjusted credit notes are likely to face unnecessary scrutiny.
The move is intended to curb the menace of fake billing whereby sellers would show higher sales in GSTR-1 to enable purchasers to claim input tax credit (ITC), but report suppressed sales in GSTR-3B to lower GST liability.
Nexdigm Executive Director (Indirect Tax) Saket Patawari said e-commerce operators are now liable to pay GST in place of the restaurants and the tax base of Government may increase due to the above as these operator will be liable to GST even for unregistered restaurants
“E-com operators may be asked to obtain registration in each State where restaurants are located even if they don’t have presence and undertake all the regular GST compliances even if they don’t have any infrastructure in the State. It may become a challenge to handle audits and investigations in all the states esp. for start ups and new E-com operators,” Patawari added.
Sapra further said that this amendment will also widen the tax base as food vendors who are currently outside the GST threshold will become liable to GST when provided through these online platforms. Thus, making procurement from these platforms more costlier.
“Given that restaurants sometimes supply goods along with restaurant services, an invoice may have multiple payments by multiple people and hence would involve complexity of operations. This practice of laying burden on E-Commerce operators for supplies made through them is putting additional burden on a platform which is just facilitating the supply,” Sapra added.
