GST: 10 new changes applicable from 1st Jan 2022

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New Year has arrived with new changes. So while celebrating it we should be ready to tackle the changes that it’s gonna bring with it, to enjoy the year completely. Let us understand these in details.

10 new changes applicable from 1st Jan 2022

1. 5% ITC is removed; the amount reflected in GSTR 2b will be only available.

Earlier, Registered person used to get 5% ITC. But after as per the new rules, Input Tax Credit shall be available only if the details of invoices are uploaded by the suppliers in their Form GSTR-1 or IFF and those are then communicated to the recipient via GSTR 2B. Even in the case of ITC on debit note the rules are same discussed above. Moreover the Margin of 5% will be no longer be available, hence extra ITC of 5% is removed from 1st Jan.

Read More: GST : 5% ITC provisions removed, ITC reflected in GSTR 2B only available

2. Recovery proceedings in case of short payment.

As per the Section 75(12) amendment, the definition of self-assessed tax includes the tax payable in respect of outward supplies furnished in Form GSTR-1, but not included in Form GSTR-3B. Therefore, from 1st Jan, if an Registered person has declared the tax under GSTR-1 but has not included in GSTR-3B, then this difference will be considered as “Self Assessed Tax”. Not just this, a direct recovery of such tax via recovery proceedings under section 79 of the CGST Act may be initiated by the proper officer without issuance of show cause notice.

3. E-way bill: 200% penalty to release goods

Currently the provisions related penalty in case of E-way Bills are:

  • full tax and 100% penalty is required to paid to release the goods which are seized for violation of E-way Bill related provisions and non-carrying of other documents under Section 129. But from 01.01.2022, the proceedings will be initiated u/s 129 & 130 for violations shall be independent proceedings and closure of parallel proceedings u/s 73 or 74. Amendment in the provision of section 129 & 130 as under:

If any deficiency has been found in E way bill then penal clause as under:

ScenarioNature of GoodsAmendment made by the Finance Act 2021
If the owner comes forwardTaxable GoodsPenalty equal  to  200% of tax payable on such goods
If the owner comes forwardExempted GoodsPenalty 2% of the value of goods or Rs25000, whichever is lower
If the owner doesn’t come forwardTaxable GoodsPenalty equal to 50% of the value of such goods or 200% of tax payable on such goods whichever is higher
If the owner doesn’t come forwardExempted GoodsPenalty 5% of the value of goods or   Rs.25000, whichever is lower

The option provided under clause (c) in terms of allowing furnishing of security equivalent to the aforementioned liabilities remains unchanged.Presently Sec. 129(2) provides for applying the provisions related to seizureand release of the goods given u/s 67(6) in the context of detention and seizure u/s 129. Hence the same often results in officers seeking another payment of tax/penalty in addition to the amounts provided u/s 129(1). The said anomaly has been corrected by way of omitting the said sub-section (2) w.e.f. 01.01.2022.Consequential amendments have been made u/s 129(3) and 129(4) to grantpower to the officer to pass the order imposing the penalty mentioned in theabove table and also grant a hearing to the concerned person before passing the order.

Read Also: GSTR 9 & GSTR 9C due date extended : CBIC

4. Provisional attachment scope widened.

Provisional attachment powers are expanded mere intimation. Now is made applicable in all cases of proceedings of Assessment, Inspection, Search, Seizure and Arrest or Demands and recovery. Attachment includes property, like bank accounts, can be done not only in the case of Show Cause Notices and investigation but also for other proceedings like Scrutiny of Returns and tax collected but not paid. Assets of the beneficiaries of bogus can be also attached though provisionally with suppliers and recipients assets.

5. Changes in GST rate

  • From January 2022, the GST rate on footwears will be taxable @12 percent for all value.
  • E-commerce operators (ECOs) in the food delivery business, such as Zomato and Swiggy, would be required to pay GST @5% on supplies from both registered and unregistered eateries. 
  • Composite supply of works contract to Govt. Entity or Govt. Authority will be taxable @18 percent
  • Job Work by way of Dyeing and Printing of Textile and Textile Products will be taxable @12 percent

Read Also: Zomato, Swiggy to pay GST for supply from both registered & unregistered restaurants

6. 25% pre-deposit for e-way bill appeals

Now pre-deposit of amount equal to 25% of penalty is to be paid, when filing appeals, before first appellate authority against order for violation of E-way bill and other provisions.

7. Department can now call for the information by the GST officer:

Commissioner can issue an order and ask any person to furnish information relating to any matter connected with GST within such time, in form and in manner, as may be specified therein u/s 151.

8. Changes in HSN codes as per HS-2022 w.e.f 01.01.2022:

The WCO has announced the New (Seventh) edition of HSN – HS-2022 due to which changes were made in the Finance Act, 2021. Around 351 amendments at 6 Digit level but India follow 8 digit classifications. So for aligning HS2021 and HS2022 at 8-digit level, Customs have provided a correlation document(at 8 digit level).

Read Also: Highlights of 46th GST Council meeting; 5% GST remains on textile

9. GST on membership fee of clubs

New clause got inserted in definition of ‘supply’ include activities or transactions by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred Payment and other valuable consideration, will effect retrospectively from July1,2017. Hence GST will be charged on membership fee.

10. Exemption removed, hence taxable

These will be taxable-

  1. Pure services and composite supply of goods and services where goods constitute not more than 25 percent value, provided to a Govt. Entity or Govt. Authority
  2. Non-AC contract Carriage or State Carriage or metered Cabs or Auto/e-rickshaws if supplied through e-commerce operators.


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