Important Changes in GST rules from January 1, 2021

On 22nd December 2020, GST department issued a notification no. 94/2020 and made specific changes in the GST rules which have already implemented from 1st January 2021. These rules are called the Central Goods and Services Tax (Fourteenth amendment) rules, 2020. As per this new notification, 8 GST rules have been changed, which might increase the problems of the taxpayers.

Let us understand the amendments made to the GST rules one by one –

Rule 59(4)(5)

One more sub-rule (5) shall be inserted after Rule 59 sub-rule (4) which explains that if you do not furnish the return in Form GSTR-3B for preceding 2 months, you shall not be allowed to furnish GSTR-1.

If you file GSTR-1 on a quarterly basis – If you have not furnished the return in form GSTR-3B for preceding tax period, you shall not be allowed to furnish the details of outward supplies of goods/services or both in form GSTR-1 under section 37 or with the use of invoice furnishing facility.

Rule 36(4)

This rule tells you the conditions that you need to follow in order to claim an Input tax credit (ITC). As per this condition, you shall be restricted if you are not receiving credit in 2A, you are then entitled to claim the credit you are receiving in 2A plus 5% extra. Previously, it was 10% which has now been substituted with 5%.

Rule 138 (New E-way bill rules)

The validity has been explained for the 100 KM distance in the previous table, which has now been substituted with 200KM.

Table as per new rules

Previously, you were getting one day for the distance up to 100 KM other than over-dimensional cargo or multimodal shipment, which has now been replaced with 200 KM whereas, for every extra 200 KM, or part thereof, you will get one additional day. Thus, as per the amendment, the distance has been changed from 100 KM to 200 KM, and it has already implemented from 1st January 2021.

86(B) (Restrictions on use of amount available in electronic credit ledger)

Electronic credit ledger contains the ITC that you avail through GSTR-3B. As per the restriction imposed, the registered person shall not use the amount available in electronic credit ledger to discharge his/her liability towards output tax in excess of 99% of such tax liability, which means 1% you need to pay from the cash ledger. Rule 86(B) only applicable in cases where the value of taxable supply (except supply and zero-rated supply) exceeds 50 Lakh rupees in a month. This rule may not be applicable in certain instances.

Rule 8

A new rule 4(A) isintroduced under rule 8, which will get notified at some future date. It means that if you opt for Aadhaar based authenticated registration, you will get your GST registration number in 7 days whereas if you do not opt for this, you need to apply for physical verification. As per physical verification, individual director or partner will go for documents verification along with the application form in GST REG-01 at one of the facilitation centres notified by the commissioner.

Rule 9

As per rule 9, there is a change in the time limit of receiving GST registration certificate. Previously, when you opt for Aadhaar based authenticated registration, you were getting your GST registration certificate in 3 days, which has now been extended to 7 days. In the case of physical verification, the verification will be granted after 30 days of application submission.

Rule 21 (Cancellation of registration in certain cases)

New clauses (e), (f) and (g) has been added to the cancellation of GST registration. GST registration can be cancelled in the following cases –

1. If any individual avail ITC in non-compliance/violation of the provisions of section 16 of the act.
2. Non-compliance/violation of the provision of electronic credit ledger under rule 86B.
3. If there is a mismatch in the outward supplies you have declared in the GSTR-1 and GSTR-3B for the tax periods. In case, you have declared excess outward supplies in GSTR-1 and less in GSTR-3B, it could also lead to GST cancellation.

Rule 21A (Suspension of registration)

It’s a very big and strict change implemented by the GST department. As per the change, a GST registration can be suspended by the GST officer without giving you the opportunity of being heard. A sub rule 2(A) will be added to rule 21(A), means a comparison of the return (GSTR-9) furnished by a registered person under section 39 will be made with –

1. Outward supplies furnished in form GSTR-1, or
2. The details of inward supplies derived based on the details of his suppliers outward supplies furnished in his form GSTR-1.

If any significant change appears that indicates contravention of the provisions of the act, the individual registration shall be suspended and same shall be intimated to him in form GST REG-31 on the common GST portal electronically or by sending a mail to his/her e-mail address. As per rule 3(a), any registered individual whose registration has been suspended under sub-rule (2) or sub-rule 2(A) shall not be granted any refund under section 54 during the suspension period of his registration.