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The Hon'ble Finance Minister Ms. Nirmala Sitharaman
presented the Finance Bill, 2022 ("the Finance Bill") on
February 1, 2022 in the Parliament. We are enumerating key policy
initiatives and changes under the specified Indirect and Direct Tax
1. Amendment in Goods & Services Tax
1.1 The Central Goods and Services Tax Act, 2017 (CGST
|Changes in relation to input
tax credit (ITC)
- Auto generated inward statement to be referred for availing ITC
under the CGST Act which will include details of available and
restricted ITC basis the details furnished by the supplier.
- ITC liable to be reversed wherein the supplier has not paid the
tax. Such ITC can be re-availed on payment of tax by the
- Interest@18% to be levied on ITC wrongly availed and utilized
with effect from July 1, 2017.
- Impact - This provision casts undue responsibility on
the recipient to determine the compliance status of its vendors
even to the extent of discharging tax liability correctly and
correct claim of ITC.
- Impact – More stringent proposal towards
availment of ITC leading to working capital blockage and increase
in compliance burden.
- Impact – Litigation around levy of interest on
ITC wrongly availed laid to rest. Similar changes have been
proposed in the IGST Act and the UGST Act.
|Key change in GST
- Time limit for year-end compliances pertaining to previous
financial year extended to November 30 of the following financial
year for the following:
- Availment of ITC
- Issuance of Credit notes
- Rectification in GST returns including TCS return
- Any amount of tax, interest, penalty, fee or any other amount
available in the electronic cash ledger of a registered person can
be transferred to its distinct person's electronic cash ledger
as integrated or central tax.
- Impact – More time to businesses to reconcile its
GST returns and take corrective measures.
- Impact – Free flow of blocked working capital and
give synergy in business.
|Other changes in GST
- Two-way communication process in return filing removed. GSTR-1
cannot be filed without filing GSTR-1 of previous period, however
subject to certain exceptions.
- Due date for filing of GST return by non-resident person
revised from 20th of the following month to 13th of the following
- Late fee applicable on delayed filing of Tax Collection at
Source (TCS) return.
- Impact – Relaxation in some compliances along
with measures to provide timely filing of returns leading to
compliance driven business.
|GST registration to be cancelled in the
- For Composite taxpayers – After expiry of three
months from due date of furnishing GST return / where the return
has not been furnished for a financial year beyond three months
from the due date of furnishing the said return; and
- For taxpayers other than Composite taxpayers- After the
expiry of such continuous period as may be notified later from due
date of furnishing GST return / where the return has not been
furnished for a financial year beyond such continuous period as may
be notified later.
- Impact – Measures introduced to deter
noncompliance in filing of returns by the taxpayers.
|Changes in refund
- Scope of withholding of refund and recovery of tax from refund
due extended to cover all types of GST refund application.
- Relevant date for filing of refund application by SEZ developer
or SEZ unit clarified to be the due date for furnishing the GST
- Period of claiming refund by a specialised agency of the United
Nations Organization or any Multilateral Financial Institution and
Organization notified under United Nations (Privileges and
Immunities) Act, 1947, extended from six months to two years from
the last day of the quarter in which the inward supplies were
- Impact – More powers to the tax department to
recover tax dues from refund claims.
|Sections inserted to validate Rule 86B of
the Central Goods and Service Tax Rules, 2017 and QRMP
- Restriction on use of amount available in electronic credit
ledger Quarterly return filers to have an option to either pay
self-assessed tax or an amount that may be prescribed
- Impact – To mitigate litigation around validity
of these provisions.
(The above changes will come into effect from enactment of the
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