V S Singh & Co.

Govt tightens control of GST Deptt by notifying several changes
GST Regn cancellation when ITC exceeds permissible limit under Section 16 .
Now the officer can proceed for cancellation of GSTIN where a taxpayer avails Input Tax Credit (ITC) exceeding than that permissible in Section 16. Clause (e) has been inserted in Rule 21 of CGST Rules 2017.
Now where the liability declared in GSTR 3B is less than GSTR1 the registration can be cancelled.
Now, no opportunity of being heard shall be given to a taxpayer for suspension of GSTIN, where the proper officer (PO) has reasons to believe that the registration of person is liable to be cancelled. The words “opportunity of being heard has been omitted from clause (2) of Rule 21A.
Where there are significant deviation/anomalies between details of outward supply between GSTR 3B and GSTR1 or inward supplies (ITC) between GSTR 3B and GSTR 2B which indicate contravention of Act, department shall now serve a notice in FORM GST REG 31 to call explanation as to why GSTIN should not be cancelled. Taxpayer shall be required to submit his reply within 30 days of such notice being served to him.
Where a GSTIN is suspended no refund u/s 54 of CGST Act 2017 can be availed by the taxpayer. This means that first GSTIN Suspension proceedings have to be closed before applying refund.
*Restriction on claim of ITC as per Rule 36(4)*
The claim of ITC in respect of invoices not furnished by the corresponding vendors has now been restricted to 5% of the credit available in GSTR 2B. This limit earlier was 10% of ITC available. This would be mean that a taxpayer’s ITC claim shall now be restricted to 105% of the Credit reflected in his GSTR 2B. Any claim exceeding the specified limit shall result in violation of CGST Act read with rules which may result into suspension of GSTIN as described above. The provision shall come into effect from 1st January 2021.
*GSTR 1 to be blocked in case of non-filing of GSTR 3B*
Where a taxpayer fails to file GSTR 3B for two subsequent months, his GSTR 1 shall now be blocked. Earlier non filing of GSTR 3B used to result in blocking of E-way Bill facility but from now on it shall also result in blocking of GSTR 1 of the taxpayer. Similarly, for quarterly return filers, the taxpayer failing to file GSTR 3B for the preceding quarter shall not be permitted to file GSTR 1 of subsequent quarter.
A taxpayer who is restricted to avail ITC as per rule 86B shall also not be permitted to file GSTR 1 where he has not filed GSTR 3b for the preceding tax period.
*Restriction on Utilization of Input Tax Credit – Rule 86B*
New Rule 86B shall be affected from 1st January 2021 wherein restriction has been placed on paying over and above 99% of tax liability from Input tax credit where the value of taxable supplies other than exempt supply and zero rated supply exceeds Rs. 50 lakhs in a month. Though few exceptions have been provided to this rule which are as follows:
(i) Where the taxpayer has paid Income Tax exceeding Rs. 1 lakh in two preceding financial year.
(ii) Where taxpayer has received refund exceeding Rs. 1 lakhs u/s 54 of CGST Act 2017.
(iii) Where taxpayer has used electronic cash ledger to pay of liability on outward supplies which cumulatively makes 1% of the total liability up to the said month
validity of Eway bil
Earlier one day was permitted for distance up to 100 kms under e way bill provision. Now the same has been increased to 200 kms. This means that only one day validity shall be granted to cover a distance up to 200 kms which was earlier 100 kms.

*GST for Jewellers*

*A] HSN and SAC Codes*
The following are the HSN and SAC Codes related to jewellers as specified by CBEC:
1) Rough and un-worked diamonds, precious and semi-precious stones- 7102, 7103, 7104

2) Pearls, Gold, Silver, Articles of jewellery of gold, silver, etc- 7106, 7108, 7113, 7118

3) Job work in relation to cut and polished Diamonds, plain or studded jewellery of gold, silver, etc - 9988

4) Other professional, technical and business services (residuary clause)- 9983

*B] GST Rates:*
The following are GST rates specified for CBEC
1) Sale of diamonds & stones - 0.25%
2) Sale of Jewellery - 3%
3) Job work in relation to jewellery - 5%
4) Making Charges - 5%
5) Any promotional good offered in relation to jewellery sale - 28%

*C] GST rate for different transactions:*

1) Customer buys a Gold ornament worth Rs. 5,00,000- The entire value will be taxable @ 3%

2) Customer buys a Gold ornament worth Rs. 5,00,000 and the Jeweller charges separately for Gold and making charges - Gold @ 3% and making charges @ 5%

3) Customer gives old jewellery and in return buys a Gold ornament worth Rs. 5,00,000- As per notification no. 10/2017 (CT and UT Act), dated 28 June 2017, local purchase of second hand goods by a registered dealer (Jeweller in this case) is exempt from tax provided the dealer pays tax at the time of resale on the value determined as per Valuation rules. GST on Gold @3% and on making charges @5% as in above cases.

4)Customer sells old jewellery to the Jeweller and does not buy anything in exchange - There will not be any tax implications.

*D] Input Tax Credit:*
A jeweller is also eligible to claim ITC of all inputs, capital goods, packing material etc. except those barred by Sec. 17(5). In case of imitation jewellery which are also taxable @ 3% whereas the inputs & raw material like Copper etc. are taxable at 5%, the manufacturer is eligible to claim Refund of accumulated credit as it amounts to Refund of inverted tax structure u/s 54 of CGST Act.

*Change in Form 26AS Information*

CBDT has issued an Order under section 119 read with Rule 114-I of the Income Tax Rules, 1962 to authorize the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) to *upload information relating to GST return,* which is in his possession, in the Annual Information Statement in Form 26AS, within three months from the end of the month in which the information is received by him.The New Annual Information Statement (AIS) was made effective from *01.06.2020.*

A] The new Form 26AS will also contain information about below high-value transactions:

1) Cash deposits and withdrawals from savings accounts
2) Purchase and sale of immovable property
3) Time deposit or fixed deposits
4) Payments for credit cards
5) Purchase of shares, debentures and other transactions in securities
6) Foreign currency remittances
7) Buy-back of shares
8) Cash payment for goods and services

B] The Form will also display transaction-specific information for each high-value transactions reported:

1) Name of the organisation filing the information
2) Date and the type of transaction
3) Parties to a transaction, whether singly or jointly undertaken
4) Amount of the transaction and remarks if any

With this Income Tax Department will get all the information of taxpayer which results into speedy Tax Assessments.

Notification No 82,83,84,85 and 86/2020:

*Below updates are effective from 01.01.2021:*

*GSTR-1 related:*

- Quarterly return filers can file their *first and second month B2B invoices* in Invoice Furnishing Facility (IFF) on or before 13th of 1st month in next qtr

- Total value for such B2B invoices is capped to 50 lakhs per month

- No need to report invoices again in GSTR-1 if already reported in IFF

- Due date of GSTR-1 for quarterly filers is 13th of 1st month in next qtr

- *HSN/SAC codes shall be mentioned mandatorily in GSTR-1* ( 5Cr- 6 digit)

*GSTR-2 related:*

- The invoices reported in IFF shall be made available to recipient in their GSTR-2A/2B

- Notified FORM GSTR-2B

*GSTR-3B related:*

- Rule 61(6) was inserted to provide due date for filing GSTR-3B for the months of Oct 2020 to Mar 2021 as 20th of next month if TO > 5 Crores

- Quarterly return filers shall deposit tax in electronic cash ledger on or before 25th of next month for first and second months

*87/2020:*

- Due date for filing ITC-04 (Job worker return) for the period July 2020 to September 2020 is extended to 30th November 2020

*88/2020:*

*E-invoicing* is mandatory from 01.01.2021 for every taxpayer (other than SEZ unit) whose aggregate TO in any of the FY from 17-18 exceeds *100 Crores*

Happy Dussehra to everyone....

*Summary of Revised due dates*

Income tax return for FY 2019-20 (no tax audit) -
*31 December 2020*

Income tax return for FY 2019-20 (TP, tax audit and partners of tax audit firms) -
*31 January 2020*

Various audit reports (including tax audit, transfer pricing) -
*31 December 2020*

Income tax return for FY 2018-19 -
*30 November 2020*

GSTR9/9C for FY FY 2018-19 -
*31 December 2020*