55th GST Council Meeting Brings Relief to GST- Registered Taxpayer

Important to know for taxpayers concerning GST

It's a big thing for registered GST taxpayers who want to minimize the hassle of claiming input credit. Taxpayers under GST who filed GSTR-3B from 2017-2018 to 2020-2021 must be cautious, as authorities are issuing demands for late ITC claims. According to the GST law, they cannot claim ITC until return filing that affected many. They have missed the advantage of ITC and, thus, their output tax liability went high. Now is the new opportunity to correct the same and obtain the available ITC.

The 2024 Budget addresses taxpayer issues and simplifies the rectification of outstanding input tax credits from previous years. It was released on 8th October, 2024 in this regard. GSTN has permitted businesses to file amendments online until January 7, 2025. It mentions that Taxpayer has to complete the process before 9th April and up to 8th April to avail its benefits from it.

Understanding the Process of GST ITC Rectification

A Simple Guide to Businesses GST. It is one of the essentials involved in conducting any business in India. Input Tax Credit, as per the scheme, enables one to recover any tax that may have been levied on buying. Companies may get an ITC demand from the tax department to repay claimed ITC with penalties and interest. Well, it is again due to the process developed by the government which enables a company to rectify this mistake. Let us tell you how is GST ITC rectification and what this is to be used to correct it with reduced penal cost on businesses.

A GST ITC Demand Order: Something Went Wrong?

As a taxpayer, you monthly filed your GST returns, only to be shocked by a portal demand stating you exceeded your input tax credit limit, despite everything seeming fine on paper, necessitating further investigation. An error on the GST portal wrongly marked specific invoices. That is why a recovery demand order for excess ITC was sent.

The New Solution: GST Rectification Process

So, instead of paying the demanded amount, businesses have the option to file for rectification under the newly introduced GST ITC rectification process. This will provide the proper rectification of the errors that arise because of technical bugs without penalty and interest.

Step-by-Step Guide to Rectify an ITC Demand Order:

Here comes Step By step-by-step guide to File a rectification application on the GST portal as per the advisory of January 7, 2025

  • GST Portal Login Go to www.gst.gov.in and login through User Id and Password
  • Proceed Further Dashboard > Services > User Services > My Applications In the next,
    Select "Application for rectification of order," then click "NEW APPLICATION."
  • Fill All the Details Download Annexure A from the portal. Fill in details of your demand order and provide details of ITC wrongly claimed by you. Upload Annexure A in complete detail now.
  • Check Your Application: Check your application once and then click on "FILE".
  • Last step:  On the specified date, one application under three months will be shown for review. Cancellation of verification for old GST claims now allows outstanding ITCs to be credited to the GST ledger.

BMA Insight

This current trend of GST advisory measures in our views, at BMA, seems progressive ones aimed more towards improving issues of compliance problems and subsequently pre-ITC errors. IThis ability to correct unadjusted ITC is a relief for trade, but it highlights the need for flexible time limits to prevent future issues. Stiff rules around e-way bills and combined multi-factor authentication are strengthening security and transparency but sometimes raise a concern for compliance for small business enterprises.

We at BMA believe that if the government makes smooth implementation and support toward taxpayers sufficient, then these initiatives could bring out positive outcomes. The thrust must be towards easier compliance rather than introducing new complexities.

Gift Vouchers and GST: What the CBIC Clarified After the 55th GST Council Meeting

The latest round of scrutiny focuses on the Indian GST regime regarding the tax treatment of gift vouchers. The 55th GST Council meeting, held on June 24, 2022, provided much-awaited clarifications on the GST treatment of gift vouchers. This post aims to clarify the implications for both businesses and consumers.

Understanding Gift Vouchers Under GST

Gift vouchers or tokens have always been a unique category of transactions falling in the grey area of taxation. A gift voucher is an instrument you can redeem for goods or services. The CBIC clarified that businesses must tax vouchers under GST at the point of sale instead of at the time of redemption.

Essential Clarifications by CBIC

The CBIC has provided much-needed clarification regarding the GST treatment of gift vouchers. The key takeaways are as follows:

1. The CBIC defines a gift voucher as a financial instrument that enables the holder to purchase goods or services. Vouchers unrelated to specific products or services will be considered 'money' in the GST regime.

2. Timing of GST Liability: The Circular clarifies that GST liability on gift vouchers is to be levied on the recipient at the time of redemption, not at the time of sale. The supplier incurs GST liability only when the voucher is redeemed for goods or services, aligning with GST principles.

3. Whether Gift Voucher sale would attract GST Gift Vouchers will be less taxed if sold since selling the same may be more or less considered as a form of consideration. Therefore, businesses which already face GST on both their sales and redemptions may find this more reassuring.

4. GST Rates: The CBIC further clarified that the specific GST rates would be applicable when the recipient receives the goods or services purchased by the gift vouchers. The GST rate will correspond to the type of goods or services that the voucher redeems. If you use a coupon and your redemption falls within a specific income tax slab, you will receive payment according to that slab.

5. Exemptions: Depending upon the nature of goods or services involved in redemption, some types of gift vouchers will be exempt from GST. It would include basic requirements and educational purposes per GST law exemptions.

Impact on Business Operations

CBIC clarifications are beneficial to business houses, particularly the issuers of the gift voucher, as the above clarification of the issue when GST will be levied may help an enterprise to arrange their accounts well and improve their effectiveness in keeping tax compliance in view.

1. Cash Flow Management: The things discussed above will enable them to manage cash flow efficiently as, due to the traditional system, currently, cash flow is recorded at the time voucher is actually liquidated. The use of gift vouchers may enhance the liquidity of businesses, particularly in the retailing and hospitality sectors.

2. Increased Sales: Because GST is not charged at the point of sale, this leaves a more flexible scenario and persuades the customer to buy gift vouchers. This can boost sales, as consumers might buy vouchers without seeing tax at checkout.

3. Customer Confidence Boosts: This transparent guideline by CBIC would make customers confident of dealing commercially. They are sure that the amount of excess tax they should not pay except they wish to encash gift vouchers.

Customer Criticism for Long-overdue amendments under which CBIC

These are some long-overdue amendments under which CBIC has clarified that it treats this kind of GST.

1. More Value: The problem of gift vouchers offers value to the consumer since, when using a voucher, an immediate tax liability will not arise. This will offer better value as customers can use the full face value of the gift voucher when purchasing.

2. Informed Choices: The justification refers to the surcharges and tax implications of a gift card, which would let the consumers realize the scenario in order to make proper choices about their purchase behaviour.

Future

The CBIC's clarification is useful, but businesses still need to remain vigilant. The law of GST would keep evolving as new developments and changes might erupt.

1. Continuous Learning: Businesses monitor GST and tax rules for gift vouchers to ensure compliance.

2. Technology: Accounting technologies manage gift voucher sales and redemptions, ensuring compliance and efficiency.

3. Adaptation in Market Dynamics: Business entities need to get ready to respond