During the Year if there is an error between CGST, SGST and IGST interchanged in reporting, but the gross value of the taxes matches, can the same be correctly reported in GSTR 9?

If CGST, SGST, and IGST are interchanged while reporting in GSTR-1, the same cannot be corrected while filing GSTR-9. Table 9 – Details of taxes paid of GSTR-9 cannot be edited except tax payable column. However, the assessee can correctly report the actual taxes payable under respective heads while updating Table 9, though, this correct reporting does not account for automatic intra adjustment of tax under CGST, SGST, and IGST. The shortfall of tax needs to be paid off while filing GSTR-3B of the subsequent month or by filing DRC-03 and the taxes paid in excess erroneously can be claimed as a refund. Also, there is no interest liability on taxes shortly paid in such cases.

A sales figure that was originally reported as B2C sales in GSTR-1, was later corrected to B2B sales, how should the reporting be done?

Table 4 of GSTR-9 requires details of both B2B and B2C supplies. In this case, the assessee has to report sales under B2B in Table 4, as this is the correct classification even though it was wrongly reported as B2C in GSTR-1.

A GSTR-3B was filed with wrong (excess) outward supplies and tax paid on the same, but the actual/correct supplies were declared in GSTR-1 for the same period, then in that case is there any way to get a refund of excess amount paid?

If taxes are erroneously paid in excess in GSTR-3B, the same can be claimed as a refund (as per Section 54 of CGST Act) or be adjusted against tax payments of subsequent periods. But, the same cannot be claimed though GSTR-9. The refund needs to be claimed by making an application for the same on GST portal.

Reverse Charge had been paid, but wrongly reported in GSTR-3B in 3.1.a as against 3.1.d, how can this be rectified while filing GSTR-9?

An assessee should make a correct reporting under GSTR-9 by disclosing the reverse charge paid under Table 4G even though if there is incorrect reporting under GSTR-3B.

Can a refund be claimed for Credit Notes which cannot be adjusted in 2018-19 for FY 2017-18?

No, a refund of credit notes which cannot be adjusted in FY 2018-2019 (pertaining to FY 2017-2018) cannot be claimed as the incidence of tax on such supply has been passed to the recipient.

If there is a difference between GSTR-3B & GSTR-2A then how do we rectify the same in GSTR-9?

The difference between auto-populated ITC details from GSTR-2A and those declared in GSTR-3B needs to be explained in GSTR-9 under the following 2 heads: Table 8E: ITC available but not availed Table 8F: ITC available but ineligible

We have not done any reversal of ITC while filing GSTR-3B in the past, now how do we go about the same while filing GSTR-9?

If any reversal of ITC was missed in past months GSTR-3B, the same can be done in subsequent months GSTR-3B. The same should be correctly reported in Table 7 of GSTR-9 and the excess liability created because of such reversal should be paid off.

How do we differentiate the ITC into Capital goods, Input and Input Services?

Table 6B of GSTR-9 requires differentiate of ITC into Capital goods, Inputs and Input Services. Books of accounts have to be maintained in a manner such that purchases attributable to output supply of goods, output services, and capital goods can be identified and thus ITC on the same can be differentiated. However, there is no difference in treatment of ITC between goods and services. Hence, such bifurcation may be dispensed with in the first year as the assessee may not have maintained books in the required manner due to non-requirement in GSTR-3B.

Key changes under GST by Finance Bill 2025 - MKRK & Co Chartered Accountants

Key changes under GST by Finance Bill 2025

The Finance Minister, Smt. Nirmala Sitharaman presented the Union Budget 2025 in parliament today, i.e., February 01, 2025. The finance minister has also tabled the Finance Bill 205, which has proposed various amendments to the GST Law to enhance trade facilitation. Key changes to GST are presented below for your easy understanding-

AMENDMENTS IN THE CGST ACT, 2017:

DISTRIBUTION OF INPUT TAX CREDIT IN RESPECT OF INTER-STATE SUPPLIES BY ISD.

Clause 116 and Clause 120 of The Finance Bill.

Effective date: From 1st April 2025.

Clause (61) of section 2 of the Central Goods and Services Tax Act is being amended to explicitly provide for distribution of input tax credit by the ISD in respect of inter-state supplies on which tax has to be paid on RCM, by inserting reference to sub-section (3) and sub-section (4) of section 5 of Integrated Goods and Services Tax Act.

Further, corresponding change has also been made to Section 20(1) and Section 20(2) to provide for distribution of input tax credit by the Input Service Distributor in respect of inter-state supplies, on which tax has to be paid on reverse charge basis.

LINKING OF REDUCTION OF SUPPLIERS OUTPUT TAX LIABILTY ON CREDIT NOTE WITH REVERSAL OF ITC BY THE RECIPIENT

Clause no 121 of The Finance Bill.

Proviso to sub-section (2) of section 34 is being amended to explicitly provide for requirement of reversal of corresponding input tax credit in respect of a credit-note, if availed, by the registered recipient, for the purpose of reduction of tax liability of the supplier in respect of the said credit note.

Thus, no reduction in Output tax liability to the supplier shall be permitted unless the recipient if registered reverses ITC on such credit note.

SUPPLY OF VOUCHERS- NOT SUPPLY OF GOODS NOR SUPPLY OF SERVICES

Clause no 117 and 118 of The Finance Bill.

The Finance bill seeks to omit Section 12(4) and Section 13(4) of The CGST Act relating to time of supply in respect of Vouchers.

The 55^th GST Council meeting has recommended that transactions involving vouchers should not attract GST, as vouchers do not qualify as either goods or services. Instead, vouchers function as prepaid payment instruments, meaning that GST will be applicable only on the underlying goods or services purchased using the voucher. Since GST applies to the actual supply of goods or services, the concept of time of supply for vouchers becomes irrelevant, thereby omitted the relevant time of supply provisions pertaining to vouchers.

AMENDMENT IN SECTION 17(5)(d)

Clause no 119 of The Finance Bill.

Clause (d) of sub-section (5) of section 17 is being amended to substitute the words “plant or machinery” with words “plant and machinery” with retrospective effect from 1^st July 2017.

Further, Explanation no 2 is added to include that-

“For the purposes of the clause (d), it is hereby clarified that notwithstanding anything to the contrary contained in any judgment, decree or order of any court, tribunal, or other authority, any reference to “plant or machinery” shall be construed and shall always be deemed to have been construed as a reference to “plant and machinery”.”

The Hon’ble Supreme Court, in the case of Chief Commissioner of CGST v. M/s. Safari Retreats Private Limited & Ors [Civil Appeal No. 2948 of 2023 dated October 03, 2024], has held that GST credit cannot be denied on “Plant” in Section 17(5)(d) of the CGST Act. ‘Plant’ is different from the term “plant and machinery”, which excludes land, buildings, or other civil structures. The Court held that in certain cases, a building could be considered a plant on satisfying functionality test, thereby, making it eligible for ITC under Section 17(5)(d) of the CGST Act.

However, with this retrospective amendment as recommended in the 55th GST Council meeting, the impact of the Supreme Court’s decision stands nullified.

INVOICE MANAGEMENT SYSTEM

Clause no 122 of The Finance Bill.

Section 38(1) is being amended to omit the expression “auto generated” with respect to statement of input tax credit in the said subsection

Furter, Section 38(2) is being amended by omitting the expression “auto generated” with respect to statement of input tax credit in said subsection and to insert the expression “including” after the words “by the recipient” in clause (b) of said sub-section to make the said clause more inclusive.

Furthermore, Section 38(2) is being amended by inserting a new clause (c) in the said sub-section to provide for an enabling clause to prescribe ‘other details to be made available in statement of input tax credit’.

All the above changes are made to make the Invoice Management System (IMS) now possible and obligatory, with corresponding amendments being made under the respective sub-sections of Section 38 of the CGST Act. IMS is introduced to streamline ITC reconciliation, generation of GSTR 2B based on the actions taken by the recipient. This amendment provides a legal framework for IMS as recommended by the 55th GST Council Meeting.

RESTRICTOINS FOR FURNISHING GSTR 3B

Clause no 123 of The Finance Bill.

Section 39(1) is being amended to provide for an enabling clause to prescribe conditions and restriction for filing of return under the said sub-section.

Section 39(1) of the CGST Act is being amended to provide an enabling clause to prescribe certain conditions and restriction for filing of return such as-

Rule 59(6) of the CGST Rules stipulates that if a taxpayer fails to pay taxes for a preceding tax period, they will not be able to file Form GSTR-3B for the current period
A maximum time limit of 3 years for belated filing of GSTR 3B.
Additionally, Form GSTR-1 must be filed before Form GSTR-3B for the current period to be enabled, and Form GSTR-1 and Form GSTR-3B must match; otherwise, notices under Section 75(12) of the CGST Act read with Rule 88C of the CGST Rules will be issued.

MANDATORY PAYMENT 10% OF PENALTY AMOUNT FOR FILING APPEALS

Clause no 124 and 125 of The Finance Bill.

Section 107(6) is being amended to provide for 10% mandatory pre-deposit of penalty amount for appeals before Appellate Authority in cases involving only demand of penalty without any demand for tax.

Proviso to Section 107(6) is amended to reduce pre deposit requirement from 25% to 10% of Penalty amount. However, current proviso was applicable only in the cases involving violation related e waybill compliance for which penalty of 200% of tax was prescribed u/s 129(3). The stated pre-deposit was set at 25%, but now it is being reduced to 10%. At first glance, this may seem like a reduction in the pre-deposit requirement. However, the amended proviso provides for any order of penalty not involving demand of any tax. Thus, proviso has broadened the scope now including orders u/s 122, 122(1A) etc. Hence, pre deposit of 10% of disputed penalty may lead to rise in financial burden of taxpayers in such cases where no pre deposit was required to be paid currently.

Similar amendment is also made in Section 112(8) for second appeal filed before the Appellate Tribunal.

TRACK AND TRACE MECHANISM

Clause no 116, 126, 127 of The Finance Bill.

A new clause (116A) is being inserted in section 2 to provide definition of Unique Identification Marking for implementation of Track and Trace Mechanism.

Further, New section 148A is being inserted to provide for an enabling mechanism for Track and Trace Mechanism for specified commodities

New section 122B is being inserted to provide penalty for contraventions of provisions related to the Track and Trace Mechanism provided under section 148A. Section 122B of the CGST Act, where the taxpayer will be liable to pay either INR 1 Lakh or 10% of the disputed tax, whichever is higher.

Section 148A is being inserted to provide for enabling mechanism for a Track and Trace Mechanism for specified goods or persons or class of persons, who are in possession or deal with specified goods. A “Track and Trace Mechanism” allows for the monitoring and recording of a product’s movement throughout its entire supply chain, from the point of origin to the final consumer, using unique identifiers like barcodes or RFID tags. Goods that are considered prone to tax evasion, such as tobacco, pan masala, scrap, plastic, and paper are expected to be included in the list of items subject to this mechanism, with the final list being notified by the government.

Other Amendments
1. Amendment in the definition of Local Authority:

Clause no 116 of The Finance Bill

Sub-clause (c) of clause (69) of section 2 is being amended to replace “municipal or local fund” with “municipal fund or local fund” and to insert an Explanation after the said sub-clause, to provide for definitions of the terms ‘Local Fund’ and ‘Municipal Fund’ used in the definition of “local authority” under the said clause so as to clarify the scope of the said terms.

1. Amendment to Schedule III: Activities or transactions which shall be treated neither as a supply of goods nor a supply of services:

Clause no 128 and 129 of The Finance Bill.

Schedule III of CGST Act is being amended, retrospectively w.e.f. 01.07.2017 by inserting a new clause (aa) in paragraph 8 of Schedule III of the Central Goods and Services Tax Act, to provide that the supply of goods warehoused in a Special Economic Zone or in a Free Trade Warehousing Zone to any person before clearance for exports or to the Domestic Tariff Area shall be treated neither as supply of goods nor as supply of services.

Further, Clause 129 provides that No refund of tax already paid will be available for the aforesaid activities or transactions referred to in clause 128.

We hope this information provides insight into the Budget 2025 amendments and assists you in your future endeavors. Please feel free to reach out if you have any questions.

Key changes under GST by Finance Bill 2025

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