GST Amendments for FY 2023-24: Crucial Corrections Before October 2024

Combined Sales Tax (CST) also known as Central Sales Tax plus State Value Added Tax or State Luxury Tax combined with Service Tax for services as a single unified GST is an indirect tax on goods and services in India paradigm shift from multiple Taxes on Central and State level. There are new rules in the GST structure for the financial year 2023-24.The following requisites have drawn modifications to the GST framework: These changes are focused on rationalizing existing business processes, enhancing compliance and managing several operational concerns that impact business entities. These amendments are important to understand and effectively apply in the course of business since violation of the implementing regulations will result in penalties and/or project delays. It is due by the end of October 2024, to enable applicants who wish to make some adjustments to meet the new requirements to do so. This puts businesses in a relatively small time that is allowed to understand all the new changes that need to be effected in various systems and to make sure that the business is fully compliant with all the set regulations.

This article will be useful to quite several organizations because it seeks to provide an understanding of the major GST changes for the year of 2023-24. We are going to analyze each amendment, discuss its impact and offer the best strategies to follow in helping business organizations for successful implementation of these changes. Regardless of whether each of you is a new entrepreneur or an executive of a huge company, it is central to grasp these amendments to retain high efficiency and prevent shocking legal or fiscal repercussions.

Key Amendments in GST for FY 2023-24

1.Revised Input Tax Credit (ITC) Provisions

The changes in the Input Tax Credit (ITC) provisions are among some of the biggest changes on the GST front, for the FY 2023-24. These changes must be comprehended by businesses to ensure they secure the best of the ITC credits and to steer clear of any non-compliance.

• Eligibility Criteria: 

New limitations have been placed regarding the ability to claim ITC. Companies and corporations must verify compliance by their suppliers to GST legislation and correctness of uploaded invoices to the GST website.

• Time Limit for Claiming ITC: 

This is regarding the time threshold from the date of issue of invoice mentioning that credit has been availed has been increased up to either of the periods, the annual return has been filed through the assessee or the September return of the subsequent financial year, has been filed.

• Matching of ITC: 

There are improved reconciliations that have been established and implemented now thus ensuring that what is claimed by the ITC corresponds to the information that is given by the suppliers. Some of these penalties include the possibility of penalties in the course of the business transaction hence any inconsistencies must be reconciled immediately.

2. Changes in GST Rates

The proposition of GST has led to numerous changes across the structure which has rationalized the GST rates for various goods and services in distinct manners affecting varied sectors differently. These changes affect planning and consequently the business as a whole and thus need to be put into account to ensure they comply.

• Reduced Rates: 

Some inputs and services were earlier in the GST ambit before the  liberalization of GST rates for certain products to mitigate the financial burden.

• Increased Rates: 

Whereas essential commodities and day-to-day usage products have received a cut in their GST rates to boost  revenue, non-essential and luxury products have received an increase in their GST rates.

• Exemptions and Concessions: 

They have reduced GST or given lower rates, on certain goods and services which are targeted to special sectors such as renewable energy and healthcare, et cetera.

3. Compliance and Reporting Enhancements

Compliance and reporting are where improvements will be seen with this new system. To ensure that there is improvement in compliance and increase transparency, some reporting and other procedural changes have been made.

• E-Invoicing: 

The world of e-invoicing continues to grow with more companies adopting the use of e-invoices. The second requirement for the use of e-invoice in B2B transactions is that companies in the trading partner group must have a turnover above a certain amount.

• GSTR-3B and GSTR-1: 

The taxpayers need to file GSTR-3B and GSTR-1 in a proper manner and within the timelines to continue this has also been modified.

• Annual Return Filing: 

There was a change in the manner and specifics of filing annual returns but a special clamp down on details was applied.

4. Penalty and Prosecution Provisions

Failure to comply with the regulation is punishable by a fine of up to € 200,000 or imprisonment of up to two years; legal entities can face a fine of up to € 1,000,000, suspension of operations, or partial or complete nationalization; Severe punishment can also be applied for the falsification of documents or indicating false information, as well as for interfering with the work of the supervisory authority. Amendments in the Act led to the enhancement of punishment in tax evasion and referral to prosecution in cases of non-compliance.

• Late Fees and Penalties: 

Scale up for money owed for filing returns after the due date of GST or GST provisions not being followed.

• Prosecution for Fraudulent Activities: 

More action for charging of the criminals subject to legal charges for fraudulent actions and stern penalties inclusive of imprisonment.

Corrections and Omissions for the Year 2023-24

1. Outward Supply/Sales/Services

The details in the Sales/Services (Outward Supply) for the next financial year from April 2023 to March 2024 can be only updated in the return for the month of October 2024. 

1. If you have claimed Cenvat credit based on details provided in the sales invoice or credit/debit note, this has to be supported by the actual returns filed.

2. Some details were incorrectly provided  Invoice no / GSTN 

3. Short payment/ non-payment of taxes,

4. There have not been taxes paid on advances obtained for services to be rendered

5. The supply is made to the registered party for B-2-B business but unreasonable code is used for B-2-C business. 

6. In Sales/Services, for the period of one year from April to March next year, the additional /amendment entries can be made latest by the return for October of the next year.

• 1st Oct, 2020 if the turnover exceeds 500 crores
• 1st Jan 2021 if the turnover exceeds 100 crores.
• 1st April 2021 if the turnover exceeds 50 Crores.
• 1st April 2022 if the turnover exceeds 20 Crores.
• 1st October 2022 if the turnover exceeds 10 Crores .
• 1st Aug 2023 if the turnover exceeds 5 Crores

2. Reverse Charge Mechanism (RCM) and availing of ITC:

If there is a need to pay tax under the Reverse Charge Mechanism especially on the important supplies of goods / services on which the recipient is liable to pay tax under RCM , but where tax has not been paid during the F. Y 2023-24 

Below is the list containing all or some of the RCM supplies. 

1.Goods Transport 

2. Subject to the Cross-border Supply, Import of Services either Paid or Unpaid. 
3. The Body corporate regarding security services. 
4. This was done through the payment of Legal Fees to advocates as listed in the table below; 
5. This area categorizes the hiring of motor vehicles for rental purposes, commonly known as rent-a-cab businesses, under numeral 
6. Other Known Commissioner for fees and expenses for service in excess of Rs. 50,000/- but in lump-sum, if the director is an individual or Journalist or Chartered Accountant and TDS is deducted u/s 194J of Income Tax Act . 

Renting of residential property You may refer to ‘N T 04/2017 of CGST (Rate) for RCM list of Goods is N T 13/2017 of CGST (Rate) for RCM list of Service is N T 10/2017 of IGST (Rate) for RCM list of Service and N T 04/2017 of IGST (Rate) for RCM list of Goods as amended from 

from time to time. The credit paid on RCM as per the above section can be claimed only up to October, 2024 and any unutilized ITC may be blocked. Please ensure that you make all the payments of the RCM and get the ITC by October 2024 at the very most.

3. Re-classification of Place of Supply

There may be cases that at the time of original supply it may have been classified as ‘inter-state supply’ and local tax has been charged at that point whereas later on it may come to be determined as ‘intra-state’ and liable to IGST or vice versa, in that case according to the provision of the act 1. Secondly, IGST is to be paid for the import of goods from one union territory to another BUT also. Also with regards to both activities there will not be any implication of Interest on the Both CGST /SGST refund wrongly claimed Here also we have to claim the of CGST / SGST which was wrongly reversals of liabilities of earlier periods on closing of accounts of the previous years such as bad debt.

4.Credit Notes [Section 34(2) of CGST Act 2017

Credit Notes that have been issued from the period 1st April 2023 to 31st March 2024 and have not been included in the returns filed, can be claimed latest in the return for October 2024. The credit note relating to the supply for FY 2023-24 can be issued  by October 2024 & reported by 30th Nov 2024.  However, in case a credit note has been issued for such supply after October 2024 the credit by way of reversal of tax liability shall not be available.

5. ITC on Inward Supply [Proviso to Section 38(5) of CGST Act,2017]

It is also a benchmark that the supplier has paid taxes thereon, and if it is not so, then it may lead not only to the additional demand for tax but for the interest and the penalty at the time of its assessment as well. As per recent amendment 01-01-2022 Technically the MBA can be obtained through part time study, distance learning or through the flexible mode of studying. As indicated above, the excess credit availed on inward supplies can be claimed only under Section 16(2) of the Act from the GSTR 2B; Recently that CBIC has issued an advisory of claiming the ITC from GSTR 2B. Hence there lies the need to compare one’s GSTR-3B with GSTR-2B for the relevant period to identify the suppliers who have not entered the GST invoices in their/ his return. Or Supplier not mentioned in the Return under section 31 of CGST Act/ SGST Act, as the case may be reported in the Transaction in GSTR 2B but the corresponding invoice was not booked for the year. Credit notes issued have led to a decline in ITC and are not directly connected to our company or are not included in our books. The Input Tax Credit of Purchase/ Expenses / Capital Goods which was availed for the F. Y. 2023-24 is to be claimed in the return on or before the due date of filing the return up to the area of F. Y. 2024-25 or in the return for the month of October, 2024. Correction of mistakes made in the return already filed or claiming the balance ITC if the ITC has not been claimed at all or excess ITC has been claimed is possible only for a final time now.

6. Obtaining the E-Invoice copies for inward Supply

It is also useful to verify whether e-invoice has been properly acquired if at all the vendors are required to produce the same. If any vendor having state and central prescribed limit of turnover above 500/100 crores /50 crores /20 crores/ 10 crores /5 crores and has not issued e-invoice in the year 2023-24, then overall ITC cannot be claimed on non e-invoice.

7. ITC Reversal

Input tax credit has to be reversed in the following cases:

A. ITC Reversal as per Rule 42 and Rule 43 of CGST Rules, 2017

If goods have been purchased to sell as an exempt supply (sale), the credit will be availed and for  compliance of rule 3 of the aforesaid rule, the credit will be reversed by an amount calculated concerning to the total sales made by the dealer, both the taxable and exempt, to give an effective credit only as per the percentage of the exempt sales over the total sales made by the dealer .Total sales for which credit is allowed for input tax credit shall be 40  40% of total sales is exempt. In this case, the 40 percent of the common ITC would be implemented in reverse. Under section 84 of the CGST Act, the indemnity bond is not required to be stamped even if it has been stamped earlier. The stamp duty has been made nominal. This has to be done on a month on month basis and if the ITC as availed has to be reversed then the same 

can be done in the regular GSTR 3B. On an annual basis the same is needed to recomputed based on of annual ratios, and In case of additional reversal of ITC is required based on  annual ratios, same has to be done by the 20 Oct 2024 Further on annual basis same is need to recomputed on the basis of the annual ratios. If the ITC has been reversed during the year His 3A, it can be re-credited up to 20 Oct 2024.

B. ITC Reversal as per Rule 37 due to non-payment within 180 days to creditors

If payment to supplier/ creditors has not been made within 180 days from the issuance of the tax invoice, then the credit or ITC on the unpaid continues to be reversed and interest of 18% has to be given. To achieve these, the creditors have to be properly screened and this has to be implemented and reported not later than October , 2024 return. It is also worth noting that even though the ITC credit note is recorded in this reversed form because no payment is made within 180 days, ITC credit note can always be claimed at any point of time in future as and when the payment is made to the supplier. As far as such action is concerned, it does not have any specified time limit for the period it has to be carried.

C. Nonpayment of Tax by Supplier on the invoices issued by supplier Rule 37(A)

Invoices resulting from the supplier and the GSTR reported  such invoices according to GSTR 1, where the invoices are reflected in the GSTR 2B, while the tax on the same has not been paid up to 30 Sep 2024. Interest and Return Type tax (ITC) is required to be reversed along with interest 18% by 30.11.2024. It is also helpful to understand that each of the tax points can be adjusted wherever tax has been initially paid by the supplier, Claim ITC back where a previously reversed ITC can be re-credited to the account of the supplier.

D. ITC reversal on account of Excess claim of Input tax credit

The same has to be applied while reversing the ITC in case of Excess Input Tax credit has been availed.  ITC of one purchase bill has been taken twice owing to a clerical mistake committed. This excess ITC has to be reversed along with interest 18%. 

E. Latest list of Ineligible Input Tax Credit in case of certain Purchases/ Expenses u/s 17(5)

The use of motor vehicles and other conveyance except where not included under S 17 (5) for making supplies of goods and/or services such as 

•  Food and beverages
•  Outdoor catering 
•  Beauty treatment
•  Healthcare
• Beauty or plastic surgery

Health and Fitness Centre and has been a member of the latter for the following reasons such as rent-a-cab, Expense on Car/Jeep/Any other duly authorized passenger vehicle having Seating Capacity less than 13 Persons & all expenses related to the said vehicle like Insurance, Repairs & maintenance etc. Lump sum payment for personal accident insurance, sickness / medical aid benefit except where it is notified by Government  travel concession to employees on leave or home travel , Works contract services, where the aggregate value of such services supplied for construction of an immovable property other than plant and machinery is not in excess of ten percent of the value of the construction and is not intended for further supply of works contract services, If a taxable person has himself received goods or services for the construction of an immovable property, other than plant and machinery for use in the course or furtherance of business, for his own account then it is not required to be included in the value of commission ,Tax paid goods or services or both pertains to the composition xiv in terms of which tax is paid. The fixed establishment of a non-resident taxable person, any goods or service or both has been received which is not about  goods, Consumable or for household or both, good and 

service, Consumable stock, stock in trade materials, scrap, damaged, obsolete, provided free or sold for nominal consideration.

F. Re-claim of ITC reversed in 2017-18, 2018-19, 2019-20, 2020-21,2021-22 or 2022-23:

The details of this would be stated below The ITC to the amount Reversal of ITC is allowed if any ITC has been reversed in 2017-18, 2018-19, 2019-20, 2020-21, 2021-22, or 2022-23 for payment not made to the vendor within 180 days, If the above amount is paid during the year 2023 If some payment has been made to vendors but Re-claim is not paid back in returns during 2023-24, then Re-claim can be paid till October 2024.

G. Export related compliances.

1. Export of Goods with payment of Tax 

If the goods are exported out of India under payment of Tax option and refund of the same has been received directly then whether export proceeds have been realized within the prescribed time limit prescribed under FEMA must be verified. It is needed to return back the refund received within 30 days from the date of expiry of time limit of FEMA along with the interest 18% from the date of receipt of refund in case proceeds are not realized. It can also be filed after the export proceeds are realized later at least for those exporters who got their refund application rejected initially.

2. Export of Goods or services 

If the goods are export goods exported to a country outside India under LUT and the claim for refund of accumulated ITC is claimed, it has to ensure that it satisfies the export control requirement that the export proceeds are realized within the time period prescribed under FEMA. If proceeds are not realized, refund received is required to be remitted back within a period of 30 days from the date of expiry of the time limit of FEMA, together with interest on 18% from the date of receipt of refund. Refund application in this case also can be made once more once the export proceeds are realized at a later date.

3. Supply to SEZ 

According to the latest update on the IGST Act, the ZERO Rated supply will be applicable for the goods to be supplied to SEZ, only if the goods/ services are used for the authorized operation of the units in SEZ or to the SEZ Developer. In this regard, if there is a possibility of supplying goods / services to the concerned unit/ SEZ Developer from outside the SEZ during the F Y 2023-24, then it will be mandatory to submit the Auth. letter/endorsement copy.

Critical Corrections Needed Before October 2024

1. Reconciliation of ITC

To achieve this, all companies have to reconcile their Input Tax Credit (ITC) before they can obtain any credits since they will need to prove that the claimed credits are real and not fake by providing valid invoices. 

This involves:

• Matching ITC with GSTR-2A and GSTR-2B: 

Ensuring that ITC claimed in GSTR-3B matches the ITC available as per GSTR-2A and GSTR-2B.

• Rectifying Discrepancies: 

The next course of action is to immediately address any disparities between the ITC claimed and the ITC captured in the supplier’s returns, in order to eliminate future problems.

2. Updating Accounting Systems

To comply with the new GST amendments, businesses must update their accounting systems and software to handle the revised provisions, including To comply with the new GST amendments, businesses must update their accounting systems and software to handle the revised provisions, including:

• Invoicing Software: 

Some of the specifications include: Confirming that the software is able to create e-invoices wherever it’s possible and along with it ensuring that all necessary details are captured correctly.

• GST Compliance Tools: 

To enhance GST compliance and minimize operational risk, leveraging better GST tools to monitor the changes in GST rates, better handling of ITC and accurate filing of returns.

3. Training and awareness programs 

Training and awareness programs are an integral part of any organizational development activities as they are the key strategy through which the organizational goals and objectives are communicated to the employees of the organization to ensure organizational success.It is crucial for the accounting and finance teams to continually update about the recent changes in the gst act and policies and to achieve this it is wise to engage them in training and awareness programs.

• Regular Workshops: 

Scheduling factory-focused awareness creation sessions such as training workshops and seminars in order to pass information on the new provision and their implications to the employees.

• Expert Consultation: 

Requesting advice on different complex areas for determining legal requirements in GST for compliance.

4. Extended filing of return

It is therefore essential to meet all the statutory filing of the GST returns in order to avoid incurring heavy penalties and interests. Businesses should:

• Set Reminders:

Encourage a strong system of reminders and alert which helps to ensure timely submission of all the GST returns as and when required.

• Regular Reviews: 

It showed that one needs to carry out the checks of GST filings on a regular basis to reduce the extent of errors.

GST Amendments for FY 2023-24

Conclusion 

While every business is all set to prepare for the next financial year, it becomes crucial to understand and work on the changes in GST for financial year 2023-24 to be able to stay away from penalties. Major amendments involve modification in claiming Input Tax Credit (ITC), new rates of GST, stringent compliance procedures followed by documentation, and imposing severe penalties for non-adherence to norms. Some recommendations that businesses have to incorporate include; reconciling ITC claims to supplier invoices, updating one’s accounting/invoice issuance system, constant training of employees on new GST laws, and submitting all GST returns in a timely manner. If these corrections are made before the next financial year, October 2024, several trading sectors including manufacturing, trade and services would follow GST rules and regulation diligently.

Also Watch: Amendment in GST Registration: Core and Non-Core Fields

FAQ

1. What has changed in the ITC provision modalities?

The place of supply criteria have been modified so that mobiles and laptops are liable for VAT in the state where the supplier has his business, the time limit for claiming ITC has increased and there are more frequent reconciliations to verify that ITCs match the supplier’s records.

2. What are the new GST rates for common use and luxury contractual products?

Currently, it has been observed that there is a negative GST rate on some items since they have been fixed to reduce the financial pressures of people and, on the other hand, there are high GST rates which have been levied on luxury items and non-essential goods in order to enhance the recovery of funds.

3.In implementing e-invoicing what types of requirements have been driven?

e-invoicing is no longer limited to goal 1 but has shifted to encompass more businesses where companies having a turnover exceeding the stipulated figure are expected to produce e-invoices only for business to business transactions.

4. In their process of updating accounting systems, what should businesses do?

Companies should implement the changes to their invoicing systems to meet e-invoicing standards for GST and should leverage the latest advanced GST toolset to address ITC and rate fluctuations.

5.What makes the filing of GST returns promptly so crucial?

One cannot overemphasize the importance of on or before due date filing in cases of tax returns and other books of accounts to avert the wrath of the law in terms of penalties, compounded interest charges among others. Businesses should put in place notifications and schedule for review on filings and filings should be reviewed as often as possible.

6.What are some implications related to the particular sector that companies should know?

Manufacturing sectors which need to address ITC for capital goods should also apply to the service sector specifically in implementing e-invoicing for B2B transactions, and the retail sectors if they need a new point-of-sale machine that is accurate in billing.

7 What new amendments are there in GST for FY 2023-24?

The significant amendments introduced include changes in ITC mechanism, alteration in GST rates concerning various supplies, new compliance standards, and Business-to-Consumer (B2C) reporting formats, higher penalties for non-compliance and other unlawful deeds.

8. How can the changes to the ITC provisions impact businesses? 

The ITC provisions and the changes made to them have an overall direct relationship with businesses since they are the parties affected by them.

9.What has happened to the GST rates today on the goods that are necessary and those are in the luxury range?

The implication is that while the rates for basic goods and services which most Nigerians need have been brought down so as to relieve the pressure on the people, those for luxury and non-essential items have been hiked slightly to improve government revenues. Many businesses need to use new solutions for the calculation of prices and bills corresponding to these changes.

4. What are the new changes that have been implemented in the e-invoicing procedure for the new amendments?

To sum up, the scope and the use of e-invoicing have grown, by engaging more business organizations in e-invoicing, where the companies having a turnover over a certain limit should issue only e-invoices for B2B operations. This is meant to increase clarity and at the same time minimize tax avoidance.