Amendments in GST as Proposed in Budget 2020

Amendments in GST as Proposed in Budget 2020

The Article below summarizes the changes proposed in the CGST Act, 2017 and IGST Act, 2017 vide the Finance Bill, 2020 (‘Budget’). Post enactment of The Finance Act, 2020, these changes shall be applicable only when a notification is issued regarding their applicability.

Composition Scheme for Service Providers:

  • Service Providers having turnover up to 50 lakhs are allowed to avail composition scheme from 1st January 2020 onwards.
  • As per Budget 2020, following service providers will not be able to avail the benefit of composition scheme irrespective of the turnover :

Service Providers engaged in:

    • Supply of services not liable to GST;
    • Inter-state supply of services; and
    • Supply of services through E-commerce operator.
  • These restrictions are in line with the current provisions that impose limitations to in respect of eligibility of composition scheme for a supplier of goods.

Availability of ITC of Debit Note:

  • Deadline for availment of ITC in respect of a Debit Note will be as follows:
Earlier of the following dates
Due date of filing GSTR-3B of September following the end of financial year in which such debit note is issued. OR The date of filing relevant annual return for the financial year in which such debit note is issued.


  • At Present, deadline for availment of ITC of a debit note is determined based on the date of issue of original Invoice to which the debit note relates.This implies that if the financial year of issue of invoice and issue of debit note are different, the year in which debit note is issued is considered for determining the due date of availment of ITC.

Cancellation of Voluntary Registration (Section 29 and Section 30):

  • The Budget proposes an amendment to enable a person who had applied registration voluntarily to apply for cancellation of registration if he is no longer liable to obtain registration.
  • Presently, a GST officer is empowered to cancel the registration on an application made by the supplier or on his own volition only under the following circumstances:
    • Discontinuance, Amalgamation, demerger, death of a proprietor, etc;
    • Change in constitution of business; or
    • Taxable person is no longer liable to obtain registration except who has obtained registration voluntarily.

Due Date of filing Application for Revocation of Cancellation of Registration :

  • As per current provisions, when a GST registration has been cancelled by GST Officer, the registered person can apply for revocation of cancellation within a period of 30 days from the date on which notice regarding such cancellation is served to the tax payer.

The Budget proposes to extend the current time limit in genuine cases, as follows:

  • By Additional / Joint Commissioner up to 30 days; or
  • By Commissioner up to 60 days.

Penalty and Prosecution (Section 122 and Section 132):

  • The Budget proposes to enhance the scope of penal provisions under Section 122 to penalize the person who retains the benefit of the following transactions or at whose instance the following transactions are conducted:
    • Supply of goods or services or both without the issue of invoice or issue of an incorrect or false invoice in relation to such supply;
    • Issue of an invoice without the supply of goods or services;
    • Availment or utilization of ITC without the actual receipt of goods or services either fully or partially;
    • Availment or distribution of ITC by an input service distributor.
  • In many cases it was observed that the person who committed the fraud was only a pawn and the mastermind behind such fraud was not directly involved in the fraud. Hence, only the taxable person who committed such offences could be penalized under the Act.
  • Hence, the mastermind behind the fraud who is the actual beneficiary of fraud escapes. The Budget seeks to bring an amendment to also penalize the actual mastermind behind such fraudulent transactions.
  • In line with the amendment to penalty provisions, the Budget also seeks to amend the prosecution provisions to extend their scope to the mastermind behind the aforementioned transactions.
  • Another amendment is proposed to be made to the prosecution provisions to make the availment of ITC without an invoice or bill a cognizable and non-bailable offence.

Relaxation in Issuance of TDS Certificate:

  • To reduce the compliance burden on tax deductors who are Government establishments, the Budget seeks to remove the requirement for issue of TDS certificate and the hence strike out the penal provisions for delay in issue of TDS certificate.

Other Changes with Retrospective effect:

Post enactment of the Finance Act, 2020 the following amendments shall have retrospective effect:

  • No refund of accumulated compensation cess on tobacco products arising out of inverted duty structure. Such refund is disallowed w.e.f. 1 July 2017 instead of the present date of 01.10.2019.
  • No tax in respect of supply of fishmeal (HS 2301) for the period 01.07.2017 to 30.09.2017.
  • GST @ 12% in respect of supply of pulley, wheels and other parts (falling under heading 8433) and used as parts of agricultural machinery (falling under headings 8432, 8433 and 8436), during the period 01.07.2017 to 31.12.2018.
  • No refund of all such tax which has been collected, but which would not have been so collected, had amendment was in force at all material times.

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