Amendment has been made in the CGST Rules, 2017 vide notification no. 94/2020-Central Tax Dated 22-12-2020 (CGST (Fourteenth Amendment) Rules, 2020. The amendment covers various Chapters of CGST Rules including registration, input tax credit , filing of GST returns, e-way bills, refund of tax etc.
Highlights of the amendment in CGST Rules:
For ready reference of our readers the highlights of the main amendments in CGST Rules, 2017 is given below:
1. Cancellation of GST registration for excess availing of ITC
The Notification has empowered the officer to proceed with the cancellation of GST registration where a taxpayer avails Input Tax Credit (ITC) exceeding that permissible in Section 16. In this regard Clause (e) has been inserted in Rule 21 of CGST Rules 2017 w.e.f 22-12-2020.
2. Increase in time limit for grant of GST Registration
The CBIC has w.e.f. 22-12-2020 notified the increase in the Time limit for GST Registration from 3 days to 7 days, which means that now the department shall be required to review and grant registration within 7 days from the date of filing of the registration application. It is further notified that if the applicant does not do aadhaar authentication or where the department feels fit to carry out physical verification the time limit for grant of registration shall be 30 days instead of 7 days.
3. ITC restriction under Rule 36(4) amended
In order to nudge taxpayers to timely file their statement of outward supplies (GSTR-1), restrictions on availing of input tax credit by the recipients was imposed by inserting sub-rule (4) to Rule 36 of the CGST Rules vide Notification No. 49/2019 Central Tax, dated 09-10-2019 and later amended vide Notification No. 75/2019 – Central Tax 26-12-2019.
The notification has further amended Rule 36(4) of the CGST Rules, 2017 in respect of restriction on claim of ITC wherein it has revised the limit to 5% instead of earlier 10%. This change will be applicable from 01-01-2021.
4. Mandatory payment of 1% from cash ledger
The notification has inserted new Rule 86B regarding restriction on use of Input Tax Credit for discharging the output liability. The main highlight of the new Rule 86B is laying down limit of 99% of output tax liability for using the ITC. For detailed discussion in this regard please CLICK HERE.
5. Restriction in filing of GSTR-1 if GSTR-3B not filed
The notification has inserted Rule 59(5) w.e.f 22-12-2020, which says that a registered person shall not be allowed to furnish the details of outward supplies of goods or services or both under section 37 in FORM GSTR-1 if he has not furnished the return in FORM GSTR-3B for preceding two months. This provision will cause issued to tax payers.
6. Cancellation of GST Registration if liability in GSTR-3B is less than GSTR-1
As per newly inserted clause (f) to Rule 21 in case a registered person furnishes the details of outward supplies in FORM GSTR-1 under section 37 for one or more tax periods which is in excess of the outward supplies declared by him in his valid return under section 39 (GSTR-3B) for the said tax periods, GST registration can be cancelled. This provision is applicable from 22-12-2020.
7. Suspension of GST registration in case of differences in GST returns
The notification has inserted new sub-rule (2A) in Rule 21A of the CGST Rules, 2017 regarding suspension of GST registration in cases of significant deviation between GSTR-1 & GSTR-3B or GSTR-3B & GSTR-2B. For detailed discussion in this regard please CLICK HERE.
8. GST registration can be cancelled with giving opportunity of being heard
The words “opportunity of being heard” has been omitted from clause (2) of Rule 21A, which means now the taxpayer’s registration can be cancelled without the opportunity of being heard, where the proper officer (PO) has reasons to believe that the registration of the person is liable to be cancelled. This change is effective from 22-12-2020.
Also Read : CBIC issues clarification regarding cancellation of GST registration
9. No refund when GST registration is suspended:
As per newly inserted sub-rule (3A) to Rule 21A, a person whose registration has been suspended shall not be granted any refund under section 54, during the period of suspension of his registration. In other words GSTIN Suspension proceedings have to be closed before applying for a refund. This newly inserted sub-rule is effective from 22-12-2020.
10. Change in distance for validity of E-way Bill
With effect from 01-01-2021, one day validity shall be granted to cover a distance up to 200 kms which was earlier 100 km, under e-way bill provisions viz. Rule 138 of the CGST Rules, 2017.
Also Read: All about nine amendments in CGST Act applicable from 1 Jan, 2021
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
