CBIC Modifies GSTR-3B for Prior Negative Liability

GSTR-3B

Get ready for a significant update in your GST returns; CBIC’s Table 6.1 of GSTR-3B has been revamped with a new, game-changing update. This update, which includes ‘Adjustment for negative liability from previous tax period‘ in the case of Reverse Charges and the supply of goods under Section 9(5) GST Act, is causing ripples in the taxation industry. A fresh, new table has replaced the old one, marking a significant shift in the tax landscape.

Read more:- GST Return Filing – What is GST Return Filing, Due Dates, Penalties and Types

The Superstar: Section 9(5) GST Act

Let’s get into the details. This update focuses on Section 9(5), which relates to services provided by E-Commerce operators. The government shared this significant amendment with us but has yet to announce the date of implementation.

Table 6.1 Revised

The new Table 6 is divided into Parts ‘A” and “B”. If you are a regular taxpayer, then

  • Part ‘A” is the place to go if your primary concern is supplies and Reverse Charge Mechanisms (RCM). Here, you can enter all of your information.
  • Part “B” is for GST payers who handle supplies under Section 9. (5) of the GST laws, i.e. our e-commerce operators.

What’s New?

Previously, the GSTR-3B Table 6.1 was straightforward. It listed just the tax payable, the tax paid via ITC (if applicable), the tax paid in cash, the interest paid in cash, and the late fee in cash. There’s now a new feature, ‘Adjustment Negative Liability from Previous Tax Period’. The taxpayer can identify any negative liabilities in the previous tax period and manually adjust them on their next return. You get a second chance at getting it right.

Bid Farewell to Table 6.2

In an unexpected amendment, a recent update has said goodbye to Table 6.2, where taxpayers previously disclosed TDS/TCS credits.

The New Mechanism in Rule 39 of CGST Rules

The CGST Rules have been amended to include a mechanism that allows an Input Service Distributor (ISD) to distribute credit. This is a significant change that simplifies the credit distribution process for ISDs. A sub-rule was also added that allows the head office and ISD to transfer credit for taxes paid by reverse charge. It involves the raising of a bill as per rule 54(1A), CGST Rules.

What We Think About This

The amendment appears to combine the provisions of the former section 20 of the CGST Act 2017 and the previous rule 39 of the CGST Rules. The distribution of credit to ISD has remained the same. However, there is a slight inconsistency between the rules that needs to be further analysed.

Interest on Delayed Tax Payment

As per Notification No. 12/2024, the CGST Rules introduced a new provision to Rule 88B(1). Notification No. 12/2024—Central Tax (Clause 15) describes it. If an amount is credited to the electronic cash ledger before or on the due date for filing returns, but later deducted, it will not be factored into the interest calculations.

Why This Matters

The recent amendment, in line with the 53rd GST Council Meeting held on 22 June 2024, addresses a long-standing issue that has been the subject of numerous court disputes. This amendment ensures that taxpayers receive interest for delayed filings when payments are made via ECL, providing a sense of reassurance and clarity in the tax process.

Refunding Additional IGST – What’s new?

Notification No. Circular No. 226/20/2024-GST dated 11 July 2024 has amended rules 89 and 96 of the CGST Rules to allow refunds for additional Integrated Goods and Service Tax (IGST) paid because of upward price revisions after export. The amendment allows for the refund of additional Integrated Goods and Service Tax paid due to upward revisions in prices of goods after export.

Clarifications regarding the importance of:

This circular clarifies the process for claiming refunds of additional IGST due to price revisions that occurred after export. Exporters may claim refunds by submitting Form GST RFD-01 in the category ‘Any Other’, with a note for any additional IGST that was paid. Before processing refunds, officers will check disclosures made in Forms GSTR-1 or GSTR-3B.

Our Insights

The latest amendment allows taxpayers to claim refunds for extra IGST paid due to price increases after export, but it doesn’t cover service exports. Exporters must deposit IGST refunds in proportion to price reductions of exported goods, along with any applicable interest. Exporters may have to pay additional GST if they haven’t considered past price reductions in their refund claims.

Wrapping up…

With these updates, CBIC has made GST compliance dynamic and more taxpayer-friendly. The new Table 6.1 of GSTR-3B and its revised rules have significant implications for GST compliance, making it more efficient and transparent. The new ISD credit distribution mechanism is another step towards a more efficient GST. Be on the lookout for notifications of the latest effective dates and adjust your returns accordingly.