CGST Rules Amended To Give Effect To The Recommendations Of The 53rd GST Council Meeting Held On June 22, 2024

Notification No. 12/2024¹ dated July 10, 2024 – Central Tax (CGST Amendment Rules²)

The following amendments are introduced to the CGST Rules:

1. Rule 39 of CGST Rules is amended with effect from the date to be notified, whereby the mechanism for distribution of ITC through ISD is prescribed. It may be noted that this mechanism is similar to the mechanism earlier prescribed under Section 20 of the CGST Act (which was omitted vide Finance Act, 2024). The following conditions and procedure have been prescribed:
   1. ITC available for distribution in a particular month should be distributed in the same month;
   2. the amount of ITC distributed should not exceed the amount of ITC available for distribution;
   3. an ISD is required to distribute ITC attributable to relevant recipient in the ratio of its respective turnover (including taxable and non-taxable) pertaining to the preceding financial year;
   4. ITC of IGST to be distributed as ITC of IGST;
   5. ITC of CGST³ and SGST⁴ to be distributed:
      1. If recipient located in same State as that of ISD, be distributed as ITC of CGST and SGST respectively; and
      2. If the recipient is located in a State other than that of ISD, be distributed as IGST;
   6. ISD will issue an ISD invoice for the above distribution.

Sections 2(61) and 20 of the CGST Act were amended vide the Finance Act, 2024 (No. 8 of 2024) dated February 15, 2024 ("Finance Act") whereby ISD mechanism was made mandatory. The said date has been notified to be April 01, 2025, by the CBIC⁵ vide Notification No. 16/2024-Central Tax dated August 6, 2024.

1. Rule 28(2) of the CGST Rules is amended (effective October 26, 2023) to clarify that the value of supply of services to a related person by way of corporate guarantee on behalf of the recipient, which is deemed to be 1% of the amount of such guarantee or actual consideration, whichever higher, is to be computed per annum. The provision is further amended to state that the invoice value of the aforesaid supply will be deemed to be accepted, if the recipient is entitled to full ITC. Various issues pertaining to taxability and valuation of supply of such services have been clarified vide Circular No. 225/19/2024-GST dated July 11, 2024;
2. an optional facility in Form GSTR-1A is prescribed (by amending Rule 59(1) of the CGST Rules) whereby, a taxpayer can amend or furnish additional details of supplies in Form GSTR–1A. The said form can be filed any time between the date of filing Form GSTR–1 and the date of filing Form GSTR–3B, for the relevant tax period;
3. Rule 88B of the CGST Rules is amended to exclude the amount of GST debited from the electronic cash ledger (as available on the due date) while filing the return in Form GSTR–3B, for computation of interest under Section 50 of the CGST Act;
4. Rule 89(1B) of the CGST Rules is inserted to allow exporters to claim a refund of additional IGST paid due to upward revision in price pursuant to export of goods. The said rule also provides for the time limit and mechanism of filing such a claim vide Circular No. 226/20/2024-GST dated July 11, 2024;
5. Rule 95B of the CGST Rules is inserted to allow refund of tax paid on inward supplies of goods received by Canteen Stores Department;
6. Rule 96A(1)(b) of the CGST Rules is amended to include the time period allowed under FEMA⁶ (including any extension of such period as permitted by the RBI⁷) while computing the timelines for receipt of export proceeds in case of export of goods or services without payment of tax under bond or letter of undertaking; and
7. Rule 142B of the CGST Rules is inserted to provide the manner of recovery of tax and/or interest which is recoverable under the provision of GST Law and the same has remained unpaid by the registered person.

Footnotes

1. The amendments are effective July 10, 2024, unless otherwise specified

2. The Central Goods and Services Tax (Amendment) Rules, 2024

3. Central Goods and Services Tax

4. State Goods and Services Tax

5. Central Board of Indirect Taxes and Customs

6. Foreign Exchange Management Act, 1999

7. Reserve Bank of India

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.