10 new changes applicable from 1st Oct under GST, Income Tax and other: Many things changes with the time no doubt but changes in Indian laws by Indian government is constant. These changes and developments are expected to have an effect on money, finances and your wallet. The government has made the reforms in order to make life simpler for both the general public and taxpaying organisations.
Top 10 new changes from October 1, you should know
1. 28% GST on online gaming, casinos, betting
The 28 percent GST rate will apply to specific activities from 1st October 2023:
- In the case of casinos, tax will be calculated based on the face value of the chips purchased.
- For horse racing, the tax will be levied on bets placed with bookmakers or totalisators.
- Online gaming will also be subject to the 28 percent GST rate.
2. 5% GST on ocean freight imports exempted from October 1, 2023
The government has exempted payments made for goods imported through ocean freight from the 5 per cent integrated GST with effect from October 1, 2023. The Finance Minis-try has notified changes to the IGST Act about payment Ocean freight import payment exempted from 5 pc IGSTof integrated GST on ocean freight on imported goods. Cur-rently, importers are required to pay 5 per cent GST under the Reverse Charge Mechanism. The amendments are aligned with the apex court’s ruling in the case of Mohit Minerals and help explicitly mention the gov-ernment’s alignment with the position. The Court had held that since the Indian importer is liable to pay IGST on the composite sup-ply, comprising supply of goods and supply of services of transportation, insurance, etc. in a CIF contract, a separate levy on the importer for the supply of services by the shipping line would violate the GST Act, as per a report.
3. Consent based sharing of information furnished by taxable person
A new section 158A and Rule 163 in the CGST Act is being inserted to provide for prescribing manner and conditions for sharing of the information furnished by the registered person in his application for registration, GSTR 1, GSTR 3B, GSTR 9, E invoice, E waybill as may be prescribed, on the common portal with such other systems, as may be notified. W.e.f. 01.10.2023, “account aggregator”, as defined in the Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016, has been notified as the system with which the information can be shared. The sharing of information shall be done after obtaining the consent of the supplier in all cases and of the recipient in cases where his identity is involved.
4. Composition levy extended to suppliers of goods under ecommerce model
The advantage of the composition scheme which was previously unavailable to registered individuals involved in goods supply via E-commerce platforms, will now be expanded to encompass them. Nevertheless, limitations will persist for registered individuals engaged in providing services through E-commerce operators. The amendment has omitted the term ‘goods’ under Section 10 (2)(b) of CGST Act and Section 10(2A)(c). The term ‘Services’ prevails in the subsection.
5. Zero-rated supplies not permitted with payment of IGST
The default option now generally is supplying under LUT without tax payment and claiming refund of accumulated ITC or pay IGST upfront and claim cash refund. CBIC has issued a notification, specifying all goods and services eligible for export on payment of integrated tax. Suppliers of these goods and services can claim a refund of the tax paid. However, certain specified goods are exempted from this provision. The latest notification, No.01/2023-IGST, permits tax payment for all exports of goods and services, barring specific goods like cigarettes, pan-masala, and other tobacco related products.
6. ITC blocked on CSR activities under Section 17(5) (fa) of CGST Act 2017
There was a lot of misperceptions prevailing on the eligibility of ITC on Corporate Social Responsibility – CSR activities because of conflicting decisions by various authorities. Considering this difficulty, the Government had decided to introduce an amendment in Section 17(5) of the CGST Act, 2017. The amendment with insertion of new clause 17(5)(fa), states that input tax credit on goods and services received by companies to undertake CSR activities under section 135 of Companies Act, 2013 is not allowed. So in effect, ITC shall not be available on goods/services received by taxable person, which are used or intended to be used for activities relating to fulfillment of obligations under Corporate Social Responsibility (“CSR”) activities.
7. No Payment to Suppliers Within 180 Days
Section 16 of the CGST Act 2017, has been amended to the effect that where a recipient fails to pay to the supplier the amount towards the value of supply along with tax, within a period of 180 days from the date of issue of invoice, an amount equal to the ITC availed by the recipient, shall be paid by the recipient along with interest payable under Section 50 of the CGST Act 2017. The pre-amendment provision provides for payment of ITC as addition to output tax liability whereas, post-amendment it would be payment/reversal of ITC.
Consequently, the liability of interest on such reversal shall be determined in accordance with Section 50(3) instead of 50(1) of the CGST Act 2017 though in both cases the interest leviable is only 18% pa at present. This amendment will help to align the language of law with the return filing system.
8. TCS rules
The government has announced the implementation of new rule of tax collection at source (TCS) from October 1. The new rule will be applied on several financial transactions which include overseas expenses that will impact people planning abroad trips, investing in foreign stocks, mutual funds, crypto and pursuing higher international education.
In the Finance Bill 2023, the government had raised TCS from 5 percent to 20 percent for remittance under the Liberalised Remittance Scheme (LRS) and overseas tour packages. It also removed the threshold of ₹7 lakh for TCS on LRS.
9. Small savings schemes to freeze if Aadhaar, PAN not submitted
Individuals who have opted to invest in small savings schemes such as Public Provident Fund (PPF), Senior Citizens Savings Scheme (SCSS), National Savings Certificate, among others must mandatorily submit their Permanent Account Number (PAN) and Aadhaar card documents by September 30, 2023. Failure to do the same may result in the suspension of the accounts from October 1 until the documents are provided, as per government’s notification.
10. Birth certificates to become a single document for Aadhaar, government jobs
The Registration of Births and Deaths (Amendment) Act, 2023 will come into force across the country from October 1, 2023, allowing the use of a birth certificate as a single document for admission to an educational institution, issuance of a driving licence, preparation of voter list, Aadhaar number, registration of marriage or appointment to a government job.
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