ANALYSIS OF RECENT NOTIFICATIONS DATED 08-10-2024

Notification No.

Summary

Notification No. 21/2024-Central Tax

This Notification specifies deadlines by which tax payments must be made in order to avail of the waiver of interest, penalty, or both u/s 128A.

As recommended in the 53rd Council Meeting and insertion of New Section 128A of the CGST Act vide Finance Act, 2024, for waiving of interest penalties on demand notices issued under Section 73 of the GST Act for fiscal years 2017-18, 2018-19, and 2019-20.

This section (128A) deals with the powers of the government to exempt certain taxpayers from penalties or late fees in specified circumstances. The notification establishes the effective date from which specific provisions under this section will be applicable, allowing for more flexible penalty provisions under GST compliance.

Vide this Notification CBIC notifies dates up to which tax should be paid for waiver of interest/penalties under Section 128A of CGST Act 2017.

• Registered persons who have received notices or statements or orders referred to in clause (a), (b), or (c) of Section 128A of the CGST Act – Last date is 31.03.2025.

• Registered persons who have received a notice u/s 74 in respect of the period mentioned in Section 128A(1) (For some specific cases) – 6 months from the date of redetermination order. 

The Notification shall be effective from 01.11.2024. 

Notification No. 22/2024-Central Tax

Notification No. 22/2024-Central Tax, issued on October 8, 2024, introduces a special procedure for rectifying demand orders related to incorrect Input Tax Credit (ITC) claims, particularly for violations of Section 16(4) of the CGST Act.

It allows for the rectification of demand orders where ITC was claimed incorrectly under Section 16(4). This is now permissible under the newly inserted sub-sections (5) and (6) of Section 16.

Registered taxpayers who have received orders under Sections 73, 74, 107, or 108 of the CGST Act for improper ITC claims are eligible to apply for rectification.

Taxpayers must submit an electronic application through the GST portal within six months from the notification date. Along with the application, relevant details must be provided as per the annexure attached to the notification.

The concerned officer must issue a rectified order within three months of receiving the rectification request.

If the rectification process adversely affects the registered person, the principles of natural justice must be followed, ensuring that the person is provided a fair opportunity to be heard before any adverse decision is made.

Notification No. 23/2024-Central Tax

Vide this Notification, CBIC provides for the waiver of late fees under Section 47 of the CGST Act for registered persons required to deduct TDS for delays in filing FORM GSTR-7 returns, for the month of June 2021 onwards if they exceed twenty-five rupees for every day of delay. The total late fee payable under Section 47 for failure to file FORM GSTR-7 by the due date is capped at one thousand rupees.

In cases where no TDS is deducted, the late fee is completely waived. This notification offers significant relief to taxpayers by reducing penalties for filing delays, particularly in cases of nil returns.

This notification is aimed at reducing the financial burden on businesses, especially those that have experienced penalties for delays in filing GSTR-7 returns. It is particularly beneficial for public sector units and government departments that are often required to deduct TDS.

Notification No.

Summary

Notification No. 05/2024-Central Tax (Rate)

Change in rate of tax on Goods

This notification issued to notify change in rate of tax which are as follows-

1. Cancer drugs such as Trastuzumab Deruxtecan, Osimertinib, and Durvalumab providing relief to patients – 5% (2.5% CGST + 5% SGST) (Earlier rate 12%)

2. Extruded or expanded savoury snacks, classified under HS 1905 90 30 – 12% (6% CGST + 6% SGST) (Earlier rate 18%)

3.   Car and Motorcycle Seats: The GST rate for car seats, classified under HS 9401 – 28% (14% CGST + 14% SGST) (Earlier rate 18%).

The Notification shall be effective from 10.10.2024.

Notification No. 06/2024-Central Tax (Rate)

The 54th GST Council meeting held on 09.09.2024, has proposed reverse charge mechanism will be applied to the supply of metal scrap from unregistered to registered persons.

Suppliers must register once they surpass the threshold limit, while recipients will be responsible for paying tax under RCM. Additionally, a TDS of 2% will be imposed on the supply of metal scrap in B2B transactions.

Vide this Notification, CBIC amended the earlier notification No. 4/2017-Central Tax (Rate) from June 28, 2017 by adding a new entry No.8 to the table in the original notification, after S. No. 7. This brings the metal scraps of the Chapters 72, 73, 74, 75, 76, 77, 78, 79, 80 or 81 under its ambit. 

CBIC has notified effective date to be 10.10.2024.

Notification No. 07/2024-Central Tax (Rate)

Transport of passengers by helicopters

Vide this Notification CBIC notified GST rate for transportation of passengers by helicopters services on sharing basis to be 5% (2.5% CGST + 2.5% SGST) 

Provided input tax charged on goods used in supplying the service has not been taken.

The Notification shall be effective from 10.10.2024. 

Notification No. 08/2024-Central Tax (Rate)

Exemption on certain service

Through this notification exemption have been provided for certain services related to electricity and educational affiliations.

• Services related to electricity - Supply of services such as application fees for providing electricity connection, rental charges against electricity meter, testing fees for meters/ transformers/capacitors, labour charges from customers for shifting of meters/service lines, charges for duplicate bills etc. which are incidental, ancillary or integral to the supply of transmission and distribution of electricity by transmission and distribution utilities to their consumers, when provided as a composite supply will be exempt from GST.

• Educational affiliations - R&D grant to three categories of research institution, college or university will be exempted from GST. These include recognition under State laws, Central Laws or one which has got exemption under Income Tax. The exemption will be available to both government as well as private institutions and there will be no threshold. Now, “past demands to be regularized on ‘as is where is’ basis.

The Notification shall be effective from 10.10.2024. 

Notification No. 09/2024-Central Tax (Rate)

Service related to renting of any property other than residential dwelling (i.e. commercial property)

GST council in its recent meeting held on 09/09/2024 recommended to bring renting of Commercial property by unregistered person to a registered person under Reverse Charge Mechanism (RCM) to prevent revenue leakage.

And this recommendation is notified through issuance of Notification no. 09/2024 (central tax rate).

In a significant move to tighten GST compliance and prevent revenue leakage, the Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 09/2024-Central Tax (Rate), dated October 8, 2024. This notification mandates that the service of renting Commercial properties by unregistered persons to registered persons will now fall under the Reverse Charge Mechanism (RCM). The new provisions will come into effect from October 10, 2024.

Under the RCM, the liability to pay Goods and Services Tax (GST) shifts from the supplier to the recipient of the goods or services. This amendment to Notification No. 13/2017-Central Tax (Rate) aims to address the issue of tax evasion in cases where unregistered persons were previously renting Commercial properties, resulting in potential revenue losses.