Amendments under GST applicable from 1.1.2022

As we welcome the new year 2022, here are some amendments introduced by the government in GST Law, applicable with effect from 1st January 2022. Most of these changes were introduced by Budget 2021, now made applicable.

1. Transactions between a person to its members for consideration:

Supply Amendment to tax the AOPs/ Partnership firms/ JVs for services to its members so as to nullify the judgment of Calcutta Club Ltd whereby the concept of mutuality was considered & no distinct entity exists.

2. Availment of ITC as per GSTR 2A/2B – 100% ITC reflecting in GSTR-2B/2A

In order to check leakages of ITC, a new provision was inserted 16(2)(aa) whereby claiming of ITC is restricted to the extent supplier furnished the outward supplies in GSTR-1 & paid the due taxes.

3. Detention & Seizure to be separated from the Demand/ Recovery Provisions

The amendment will make the proceedings of detention, Seizure & confiscation of goods & conveyances in transit separate from Section 73 & 74

4. Direct recovery w/o SCN for liabilities furnished in GSTR-1 & not paid through GSTR-3B

In order to curb incorrect filing by showing excessive supplies to pass credits & not showing the liability in GSTR-3B or showing the bills but not paying, can be recovered w/o SCN

5. Provisional attachment upon initiation & increased coverage of beneficiaries of fake invoicing

Provisional attachment of property can be made from the initiation of any proceeding against pendency of proceeding (earlier). Even property of beneficiary/ masterminds like professional filing returns can be attached now

6. Filing of appeal against detention after payment of 25% penalty

As against 10% of the tax under dispute, 25% of the penalty levied is required to be paid for filing an appeal.

7. Payment of only penalty for relevant of goods & increased penalty for detention & seizure proceedings

As against 100%, 200% of the tax payable where the owner comes forward for a penalty payment. If the owner doesn’t come, higher of 50% of the value of goods or 200% of tax payable.

8. Mandatory Aadhar authentication for refund & revocation of cancellation of registration

Stringent rules to identify the person claiming refunds, revocation of cancellation of registration

9. GSTR-1 filing can be made after filing preceding GSTR- 3B

Now filing both the returns on a monthly/quarterly basis has been mandatory

10. Rates changes:

Footwear- Increased to 12% (from existing 5%)

Job work- Dyeing, Printing of Textiles- 12%

Tailoring services- 5%

Other processes of Job work- 5%

Other processes of Job work for unregistered Principal -18%

Please also note that there was a proposal for an increase in GST Rates of Textile from 5% to 12% with effect from 1st January 2022, to correct the anomaly of Inverted duty structure. The same was taken back in GST Council Meeting dated 31st January 2021.