The Finance Minister Nirmala Sitharaman has introduced certain changes in CGST Act, 2017 & IGST Act, 2017 to curb input credit frauds and safeguard Government revenues. Also, multiple changes to the goods and services tax framework aimed at helping small and medium businesses to tide over pandemic-induced disruptions. In this article, we will discuss on Changes Proposed In GST – Union Budget 2021.
Changes Proposed In GST – Union Budget 2021
The Union Budget 2021, have proposed specific mutations in the CGST Act, 2017 & IGST Act, 2017 to curb input credit frauds and safeguard Government revenues. The amendments brought out in the Finance Bill, 2021 will come into effect from the date when the same will be notified, as far as feasible, concurrently with the corresponding amendments to the similar Acts passed by the States and Union Territories with Legislature.
Also, it includes relaxation in the obligatory audit requirement for registered businesses, determination of interest payable against outstanding tax liability and defining provisions under input tax credit can be utilised.
The lists of proposed changes from Clause 99 to Clause 114 are reviewed as under:
Obligatory Audit Requirement Relaxed
The finance minister has now declared that businesses having a turnover above Rs 5 crore won’t be obliged to get their accounts audited by a chartered accountant. Thus, the earlier need for an external certification of annual reconciliation statement has abolished. Now, enterprises can rely on self-certification for this view.
Interest Payable Only On Net Liability
The GST law obliges a registered person to deposit tax obtained by it before the deadline prescribed by the government. Businesses usually set off the unutilised input tax credit available in the electronic ledger before paying the tax to the government. In case of a delay in depositing tax, businesses require to shell out interest up to the rate of 18%. Further, the government has now moved an amendment to the CGST Act which specifies that interest will only apply on the net tax liability.
Credit Available Only If Defined Conditions Fulfilled
Budget 2021 now proposes an amendment in section 16 of the CGST Act to incorporate such constraints. Before, Section 16 never had a condition to say that input tax credit shall be only available if the supplier has reflected his invoices in GSTR. But according to Budget 2021, the only conditions were filing of the return, payment of tax, receipt of goods and possessing the tax invoice and Credit Available Only If Defined Conditions Fulfilled.
Other Significant Reforms
The government has also introduced amendments which specify that a tax appeal can be filed in certain instances only after 25% deposit of the contested amount with the department, allowing the GST commissioner to call for information from any person in association with any matter under the CGST Act.
Impact of Budget 2021
Budget 2021 assumes enormous importance and effective as it comes amid the novel coronavirus pandemic, which has led to massive economic disruption in India and around the world. Also, the Budget lays concentrate on the seven pillars for strengthening the economy – Health and Wellbeing, Physical and Financial Capital and Infrastructure, Inclusive Growth for Aspirational India, Reinvigorating Human Capital, Reform and R&D, and Minimum Government Maximum Governance.
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