Amendments in GST regime to be implemented from 1 January: All you need to know

In order to prevent fraudulent activities pertaining to billing and recovery, the Union government has made changes to the current Goods and Services Tax (GST) regime. The amendments, which are part of the Finance Act 2021, will come into effect from 1 January, 2022. The new GST rules will have a larger impact on businesses as compared to customers. The changes will focus on a range of issues such as eligibility for tax credits, taxable supply and rules for filling appeals. The modifications have been done in order to make the indirect tax regime stricter. New GST Rules -Currently, a company has to file two monthly returns which are GSTR-1 and GSTR-3B, if it has an annual turnover of more than Rs 5 crore.  While GSTR-3B is a self-declared summary, the GSTR-1 returns show sales invoices. Until now, if there was a discrepancy in the company’s filings of both the GSTRs, a government official would be sent to recover the GST for the amount of sales on which tax has not been paid. As per the new rule, government will not issue a show-notice to businesses before sending an official. This has been done to curb fake billing means and make recovery of taxes from businesses easier, according to CNBC TV18. -From 1 January, it will also be mandatory for all businesses to get an Aadhaar authentication for claiming their GST funds. -Norms related to grant of credits for taxes paid on raw materials will also change. It is mandatory for all sellers to mention the details of their invoice in their monthly sales return i.e. in their GSTR-1 form. Buyers who do not comply with this rule will not be eligible to get credit for the taxes paid on that item. This rule will help to keep a check on fake invoices too. -Another law, related to food ordering and delivery platforms such as Zomato and Swiggy, will also come into effect from 1 January. It is the responsibility of food delivery apps to collect GST from customers, instead of restaurants, and deposit it with the government. As per reports, many food delivery platforms underreport their business in order to evade taxes. This rule makes it necessary for them to issue invoices for such services and also helps curb tax evasion. -One amendment mentions that transaction by a person, other than an individual, to its members or constituents for cash, deferred payment or other valuable consideration will be treated as a taxable supply. Transactions made from a member to the entity will also be taken as taxable supply, as per a Live Mint report. -A penalty of 25 percent shall also be paid by businesses if they appeal against the order of officials in situations where goods are seized for alleged transportation or storage in violation of the rules. The mentioned GST changes aim to strengthen the recovery of taxes while tightening the eligibility of tax credit, thereby keeping a check on tax evasion.