The year 2021 has brought with it key amendments to the GST laws. These amendments will have a direct impact on businesses, which the government seeks to initiate from the 1st of January. These amendments include the introduction of E-invoicing, QRMP (Quarterly Return and Monthly Payment scheme), new return format (GSTR-2B), and auto-populated GSTR-3B. A slew of CBIC notifications were introduced in light of a large number of GST fraud cases that maliciously used forged invoices to avail ITC (Input Tax Credit).

This article looks at a number of changes to the GST laws that have come into effect from 1 January 2021. This will help businesses plan ahead and make changes to filing procedures as per the new laws.

#1 E-invoicing to Come Into Effect

For businesses with an aggregate business turnover exceeding ₹100 crores, E-invoicing will be the new mandate. This is in-line with the government’s initiative to transform the country through digitization and is applicable beginning of financial year 2017-18. This was earlier the norm with businesses with an aggregate turnover of  ₹500 crores, however, the new law includes businesses with ₹100 crores or more. Henceforth, all Tax Invoices, Credit and Debit Notes will be required to login to the official Invoice Registration Page (IRP) and mention Registration Number with QR code on each of the documents.

The implementation of E-invoicing will give way to faster reconciliation with details of E-invoicing automatically reflecting in GSTR 1, 2A, 2B, 4A, 6A. This will help taxpayers claim input tax credit easily without the hassle of manually entering their details.

#2 Quarterly Return Monthly Payment Scheme

For small businesses with a monthly turnover of ₹5 crores or less in the preceding FY, the option of filing quarterly GST returns along with monthly payment of tax is available under the QRMP scheme. Under the scheme, individuals are required to quarterly submit GSTR-1 and GSTR-3B. The payment of tax has to be done on a monthly basis through GST_PMT-06. As a result of this new amendment, individuals will be required to file only 8 returns a year, as opposed to 16. Additionally, individuals with multiple GSTINs can selectively adopt the QRMP scheme even if some of the GSTINs have a turnover of less than ₹5 crores.

#3 Input Tax Credit (ITC) Claim Amendments

Rule 36(4) is officially amended. Entitlement for invoices not furnished by suppliers has been reduced from 10% to 5% of the available credit in GSTR-2B. Additional changes include:

  • Section 16(4) – Eligibility and conditions for ITC
  • Section 17 (5) – Blocked Credit
  • Reconcile with GSTR 2A and 2B
  • Rule 36(4) – 5% Provisional ITC
  • Rule 42 & 43 – Apportionment of ITC
  • Rule 86B – 1% Output liability to be paid in case, subject to conditions
  • Rule 86A – Credit blocked by dept. In fraudulent cases

With the new GST laws, businesses will have to be extra careful while filling in their ITC computation. Businesses will not only have to make sure that they are tax compliant but also their suppliers are tax compliant so that it does not impact their ITC claim.

If you are looking for help filing GST returns or GST registration, Bajaj Finserv Markets can help you with all the updated information on the latest GST rules and amendments. If you want to know more about the GST invoice, make sure to visit our GST registration page, which provides all the details in a set-wise format.