Crucial Changes in GST Rules
In the year 2021, the tax department has come up with various changes in Goods and Service Tax (GST) Rules which will impact businesses registered under the GST regime and the businessmen who are planning to get themselves registered under GST. Here are the points you should know to run a smooth business.
New GST Registration
Biometric verification, i.e. Aadhaar authentication and taking photographs or taking biometric information, photograph and verification of such other KYC documents for the applications will be carried out for new registration
In the case of those opting not to use Aadhaar, GST registration would be given only after physical verification of the business premise, which could take up to 21 days and in case a notice is issued, even more time.
Input Tax Credit (ITC) Revised
The ITC claim was earlier restricted to 10% between 1 January 2020 and 31 December 2020 whereas it was 20% for the period from 9 October 2019 till 31 December 2019.
Now, a taxpayer filing GSTR-3B can claim ITC only to the extent of 5% of the eligible credit available in GSTR-2A.
Suspension or cancellation of GST Registration
The amendment has inserted the additional situation wherein the registration of a person can be suspended ifOne avails input tax credit in violation of the provisions of section 16 of the Act or the rules; or One furnishes the details of outward supplies in FORM GSTR-1 for one or more tax periods which is in excess of the outward supplies declared by him in GSTR 3B for the said tax periods, or violates the provision of rule 86B.
The Board inserted Rule 86B wherein all the registered persons have to pay 1% cash liability so as to curb tax evasion by way of fake invoicing.
It is applicable only to those registered persons whose value of taxable supply in a month exceeds Rs 50 lakh that means those whose annual turnover is more than 6 crore.
Not allowed to file GSTR 1 if not furnished the return of last 2 months in FORM GSTR-3B
A taxpayer is not permitted to file GSTR 1 if the taxpayer –
>Has not furnished return in FORM GSTR-3B for the preceding two months.
>Has not furnished the return in FORM GSTR-3B for preceding tax period (for a taxpayer filing quarterly returns) and he is required to discharge the tax liability of at least 1% by cash (see the discussion on Rule 86B).
>Has not furnished the return in FORM GSTR-3B for preceding tax period instead of two months.
Bonus: We have made a detailed video on Invoice Discounting: Benefits and Risks. Click here to watch the video.