• The CBIC Provisional credit (i.e.10%) reduced to 5% under Rule 36(4) w.e.f. 1 January 2021: According to rule 36 (4), claim of ITC is now reduced to 5% of the eligible credit available in GSTR-2A in respect of invoices or debit notes, the details of which have been furnished by the suppliers. This claim of CBIC Provisional credit was earlier restricted to 10% on 1st January 2020 from erstwhile 20% during the period from 9 October 2019 till 31 December 2019.
  • Narrowing the validity of E-Way bill (w.e.f. 1stJanuary, 2021): According to Rule 138(10), the validity of e-way bill is halved, which would now be one day for a distance of 200 kms which was earlier restricted to 100 km and an additional day will be provided for every 200 km or part thereof thereafter against the current limit of every 100 km.
  • Utilisation of electronic credit ledger for payment of output tax cannot exceed 99% of output tax liability in a month (New Rule 86B w.e.f. 1st January, 2021): This restriction of making payment of 1% of cash liability is a way to curb tax evasion by way of fake invoicing. The compulsion of making payment of 1% amount in cash will not be applicable to the following class of persons:
  1. Income tax of more than Rs. 1 lakh has been paid by:
    • the Person or Proprietor
    • Karta
    • Managing Director
    • Any of 2 partners or Whole Time Directors or Members of Managing Committee of Associations or Board of Trustees

In each of last two financial years for which the time limit to file income tax return under Section 139(1) has expired,

  1.  Registered person who has received refund of unutilised input tax credit of more than INR 1 lakh in preceding financial year under proviso to Section 54(3) on account of Zero-rated supplies and inverted Duty Structure made without payment of tax.
  2. Registered person who has discharged output tax liability through e-cash ledger exceeding 1% of Total Output Tax Liability (applied cumulatively) up to said month in current financial year.
  3. Specific person like Government Department / PSU / Local Authority / Statutory Body.
  4.  Commissioner or an officer authorized by him which has the power to remove the above restriction or compulsion.
  • Restriction on filing of GSTR-1 (amended Rule 59 w.e.f. 22.12.2020): If the taxpayer has not filed GSTR-3B for two preceding months, then his GSTR 1 shall now be blocked.
    Similarly, in case of quarterly return filers, non-filing of GSTR 3B for the preceding quarter i.e. tax period, shall not be allowed to file GSTR 1 of the subsequent quarter.
  • Amendment in new registration process vide Rule 8 and 9 (From a date to be notified): –Aadhar authentication is now compulsory for GST registration along with verification of original documents uploaded with FORM REG-1 at facilitation centers.
    However, the taxpayer has the choice of not using Aadhaar, and in such case GST registration would be granted only after physical verification of the business premise, which will take maximum 21 days and in case a notice is issued or even more time.
  • Rule 21 has been amended to insert new scenarios for suspension or cancellation of GST Registration (w.e.f. 22.12.2020):
    The department has power to suspend the registration of taxpayer if:
    1. A taxpayer has availed ITC by contravening provisions of section 16 of the Act/Rules;
    2. A taxpayer furnishes the details of outward supplies in FORM GSTR-1 for one or more tax periods which exceeds his outward supplies declared in GSTR 3B for the said tax periods, or acts in violation of rule 86B.
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