CBIC’s 2023 GST Milestones: AI-Powered Enhanced Compliance, Record-Breaking Collections, and Streamlined Procedures

CBIC's 2023 GST Milestones:

CBIC’s 2023 GST Milestones: The Department of Revenue, Ministry of Finance’s Central Board of Indirect Taxes and Customs (CBIC) has made notable progress toward improving the integrity and effectiveness of the Goods and Services Tax (GST) system. In addition to successfully completing six years of implementation, the Goods and Services Tax (GST) broke all previous records for revenue collection, achieving the highest tax revenue collection ever in April 2023 at Rs 1.87 lakh crore.

The CBIC has enhanced the registration process by utilizing artificial intelligence and data analytics to establish a risk rating system for applicants. This system guarantees comprehensive verification, thereby preventing fraudulent entries. Furthermore, CBIC’s dedication to reducing malpractices is demonstrated by the geotagging of company locations, system-based suspension of registrations for non-filers, and risk-based processing of refund applications.

In order to expedite the filing process, it is required to file GSTR-1 and GSTR-3B in order of preference. This will encourage timely returns and seamless input tax credit availability. The CBIC is committed to compliance, as evidenced by its special campaigns against fraudulent registrations, system-based procedures for reporting mismatches, and a new feature that allows unregistered individuals to apply for temporary registration.

Furthermore, the CBIC’s initiatives to assist companies and enhance cash flows are demonstrated by policies like the transfer of balances in electronic cash ledgers, exemptions for small taxpayers, and the facilitation of intrastate supply through e-commerce operators. The extension of GST exemptions for satellite launch services and the streamlining of late fee structures are noteworthy.

Read also: GST Return due date extended for GSTR-1, GSTR-3B & GSTR-7 in Manipur

Following are some of the major achievements of the Department of Revenue, Ministry of Finance, in 2023:


RISK RATING OF REGISTRATION APPLICATIONS: The registration process has been strengthened by the use of data analytics and artificial intelligence to identify risky applicants so that their detailed verification, including physical verification, can be conducted by the field officers before making a decision on their application for registration. This ensures that fraudulent elements are prevented from entering the GST system.

THE FACILITY OF GEO TAGGING information about the applicant’s place of business and the addresses of currently registered users has been made available on the portal.

SYSTEM BASED SUSPENSION OF REGISTRATION is carried out when returns are not filed for a continuous six-month period.

RISK RATING OF REFUND APPLICATIONS: Based on data analytics and risk parameters, a risk rating is assigned to GST refund applications. This allows tax officers to thoroughly verify the applications while processing them, ensuring that fraudulent taxpayers are not given undue or ineligible refunds.

SEQUENTIAL FILING OF GSTR-1 AND GSTR-3B: Effective January 10, 2022, the filing of GSTR-l is now required prior to the filing of GSTR-3B for the tax period. Also, as of 01.10.2022, the GSTR-1 must be filed consecutively. As a result, GSTR-l and GSTR-3B have been completely sequential in terms of tax period. This would guarantee timely return filing and expedite the recipient’s access to the input tax credit.

A SPECIAL ALL INDIA DRIVE LAUNCHED AGAINST FAKE REGISTRATIONS between May 16, 2023, and July 15, 2023, in close collaboration with State and Federal tax authorities. Comprehensive guidelines released for the said drive’s implementation Dated April 5, 2023, Instruction No. 01/2023-GST.

Read also: CBIC issues 33,000 notices for GST return Discrepancies in FY18, FY19

SYSTEM BASED MECHANISM OF INTIMATION OF MISMATCHES To allow the taxpayer to choose between paying the differential liability or providing an explanation, there has been a provision for liability between GSTR-1 and GSTR-3B above a specific threshold (currently Rs 25 Lakh and 20%). Without the involvement of tax officers, this will assist taxpayers in their own self-regulation and reconciliation. For excess ITC availed in FORM GSTR-3B as opposed to that made available in FORM GSTR-2B above a specific threshold (Rs 25 Lakh and 20% at present), a similar system-based mechanism has been provided.

A NEW FUNCTIONALITY HAS BEEN MADE AVAILABLE on the shared portal, which enables individuals who are not registered to apply for a refund and take up a temporary registration. Additionally, the process and guidelines for unregistered individuals to follow when submitting refund applications have been established in Circular 188/20/2022-GST, issued on December 27, 2022.

ACTION TO IMPROVE CASH FLOW: A mechanism has been put in place to allow the balance of a registered person’s electronic cash ledger to be transferred to the electronic cash ledger of a different person. With the help of this provision, taxpayers would not have to file a refund claim with tax officers in order to transfer the unused balance in the cash ledger between registered individuals who share the same PAN. This would give them a better case for conducting business and increase their cash flow and liquidity.

DURING ITS 47TH MEETING, THE GST COUNCIL made a recommendation to permit unregistered suppliers and composition taxpayers to use E-Commerce Operators (ECOS) to supply goods within the state, subject to specific requirements. With the passage of the Finance Act of 2023, the GST Act has undergone the necessary modifications. In accordance with the GST Council’s recommendation, Notification No. 34/2023-CT was issued on July 31, 2023. The elimination of the need for mandatory registration would benefit thousands of small taxpayers. They would be able to sell their goods without having to register, up to a threshold turnover of registration, thanks to the opening of the massive e-commerce market. The government’s commitment is demonstrated by the extension of the benefit of allowing intrastate supply of goods through an E-commerce Operator (ECO) to the composition taxpayers support small businesses.

VIDE NOTIFICATION NO. 18/2022—CENTRAL TAX: dated 28.09.2022, effective 01.10.2022, amendments have been made to the CGST Act to extend the deadlines for credit note issuance, rectification, and amendment up to the 30th day of November that follows the conclusion of the financial year to which the details in question apply. Previously, it was permitted through the September return furnishing deadline. This gives the taxpayers more time to amend or correct their returns. credit note issuance and input tax credit utilization.

The late filing fees for Form GSTR-9 and GSTR-9C: elays by registered individuals with annual revenue up to Rs. 20 crore have been rationalized by tying the fees to the taxpayers’ total revenue for the relevant fiscal year.

THE E-INVOICING SYSTEM WAS INTRODUCED IN INDIA: for exports and B2B transactions, beginning on O1.10.2020, for taxpayers with an annual aggregate turnover of Rs. 500 crore and above. This cap was gradually lowered over time, and as of October 1, 2022, it is now only Rs 10 crores. By virtue of notification no. 10/2023-Central Tax dated 10.05.2023, this threshold limit has been further lowered to Rs 5 crore as of August 1, 2023.

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ASSISTANCE FOR TAXPAYERS RELATING TO HIGH LATE FEES: By virtue of Notification No. 07/23-CT dated 31.03.2023, the late fee for filing Form GSTR-9 / GSTR-9C for FY 2017–18 to FY 2021–22 after the deadline was extended until 31.08.2023 via Notification No. 25/2023-CT dated 17.07.2023. The maximum late fee was set at Rs. 20,000/- (Rs. 10,000/- + Rs. 10,000/-) if filed between 01.04.23 and 30.06.23. Furthermore, the late fee for filing a delayed final return in FORM GSTR-10 was capped at Rs. 1,000 (Rs. 500 + Rs. 500) if the return was filed between April 23 and June 30, 2023, and it was further extended until August 31, 2023, July 17, 2023, by Notification No. 26/2023-CT.

VIDE Notice No. 06/2023-CT: dated March 31, 2023, announced a conditional amnesty program for the deemed withdrawal of best judgment assessment orders issued under Section 62. This program applies to situations in which a valid return was not provided within 30 days of the assessment order’s date of service, which must have occurred on or before February 28, 2023, if the pending return was filed on or before June 30, 2023. Notification No. 24/2023-CT dated 17.07.2023 further extended the deadline for filing a pending return to August 31, 2023.

VIDE NOTICE NO. 03/2023-CT: dated 31.03.2023: for those registrations that were canceled due to failure to file returns by the deadline of 31.12.2022 and for which the deadline for filing an application for revocation or cancellation of registration was extended until 30.06.2023 in case the application was not filed, the appeal was denied, or the appeal was pending within the allotted time. Furthermore, the deadline for submitting an application to revoke such a cancellation of registration was extended until August 31, 2023, by Notification No. 23/2023-CT dated July 17, 2023.

VIDE NOTIFICATION NO. 32/2023-CT: dated July 31, 2023, the registered person has been exempted from filing an annual return for the financial year 2022–2023 if their total turnover was less than two crore rupees.

VIDE NOTIFICATION NO. 33/2023-CT: on July 31, 2023, ‘Account Aggregator’ has been notified as the systems that the common portal may share information with, subject to the registered person’s or taxpayer’s consent. By doing this, MSMES will be able to obtain business loans or credit based on their GST registration.

To simplify and decriminalize: amendments have been made to certain provisions of the CGST Act, 2017, in response to the GST Council’s recommendation.

APPELLATE TRIBUNAL FOR THE CONSTITUTION OF GOODS AND SERVICES TAX: The GST Council’s recommended amendment to the CGST Act, 2017 has been implemented in order to establish the GST Appellate Tribunal. More steps are being taken to ensure the Tribunal runs smoothly.

Read also: 28% GST on online gaming, casinos, horse racing from Oct 1: CBIC

WITH A VIEW TO FURTHER ENHANCE EASE OF DOING BUSINESS : The option to pay GST through the forward charge mechanism is available to GTAS who pay duty on an RCM basis. As a measure to facilitate trade, GTAS are exempt from filing an annual declaration for the purpose of paying GST under forward charge. Unless they file a declaration stating that they wish to return to the reverse charge mechanism (RCM), they will be considered to have exercised this option for the current and future fiscal years if they have used it for one financial year.

GST EXEMPTION ON SATELLITE LAUNCH SERVICES: In an effort to support start-ups, the exemption from paying sales tax on services provided by private sector organizations has been extended to those provided by ISRO, Antrix Corporation Limited, and New Space India Limited (NSIL).

THE GST CODE ON ONLINE GAMING: The long-pending issue was finally resolved by the GST Council at its 51st meeting.

The 52nd GST COUNCIL RECOMMENDED TO EXEMPT SERVICES of solid waste management, water supply, public health, sanitation conservation, and slum improvement and upgrading provided to governmental authorities.

The MERA BILL MERA ADHIKAAR SCHEME encourages customers to demand GST invoices for their purchases by offering rewards to those who upload B2C invoices on the Mera Bill Mera Adhikaar application. This initiative promotes accountability and transparency in business transactions. It was introduced as a pilot project in a few States and UTs.

In VIDE CIRCULAR NO. 199/11/2023-GST: dated 17.07.2023, it is made clear that, under the current provisions of the GST law, the Input Services Distributor (1SD) mechanism is not required for the distribution of input tax credit of common input services acquired from third parties to the distinct persons. It also clarifies questions regarding the taxability of internally generated services provided by one distinct person to another distinct person.

RULES 9 AND 25 OF THE CGST: Rules, 2017 have been amended to remove the need for the applicant to be present in person for the physical verification of the business premises and to include physical verification in high-risk situations even in cases where Aadhaar authentication has been completed.

Read also: 10 new changes applicable from 1st Oct under GST, Income Tax and other

UPON THE GST COUNCIL’S RECOMMENDATION, To give clarity on the taxation of supplies in casinos, horse racing, and online gaming, certain amendments have been made to the CGST Act 2017 and IGST Act 2017 through the Central Goods and Services Tax (Amendment) Act, 2023 and the Integrated Goods and Services Tax (Amendment) Act, 2023. These amendments will take effect on October 1, 2023. The aforementioned amendments, among other things, offer equal opportunities to Indian providers of online gaming services in comparison to foreign providers who supply online gaming services to Indian consumers. Such foreign providers of online gambling for real money have to register, and there are provisions in place for punitive measures against them, such as website blocking, should of contravention of provisions under GST law. Further, the Council inter alia decided that a review of effect of these amendments on trade & industry and other stake holders would be undertaken by the Council after six months of the implementation, based on the status report encompassing revenue data and stakeholders’ feedback.

APPEAL COULD NOT BE FILED WITHIN THE ALLOWED TIME PERIOD AMNESTY SCHEME FOR FILING APPEALS AGAINST DEMAND ORDERS: The Council has suggested offering an amnesty program to taxable individuals who were either unable to file an appeal under section 107 of the CGST Act, 2017 against the demand order issued on or before March 31, 2023, or whose appeal against the order was denied only for failing to file it within the time frame outlined in section 107, subsection (1). In all of these situations, taxpayers may file an appeal against these orders until January 31, 2024, provided they pay a 12.5% pre-deposit of the tax under dispute, out of which at least 20% (i.e. 2.5% of the tax under dispute) should be debited from Electronic Cash Ledger. This will facilitate a large number of taxpayers, who could not file appeal in the past within the specified time period.

AFTER A YEAR, PROVISION FOR AUTOMATIC RESTORATION OF PROVISIONALLY ATTACHED PROPERTY: The order for a provisional attachment in FORM GST DRC-22 shall not be valid after the expiration of one year from the date of the said order, according to a recommendation made by the Council to amend sub-rule (2) of Rule 159 of the CGST Rules, 2017 and FORM GST DRC-22. This will make it easier to release properties that are provisionally attached after a year has passed without requiring a separate, detailed written order from the Commissioner.

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