A significant amendment in the Central Goods and Services Tax (CGST) Act has been introduced by the Central Board of Indirect Taxes and Customs (CBIC), through GST notification No. 20/2024 – Central Tax on October 8, 2024.
The same notification is related to the insertion of Section 74A into various sections of CGST rules, which would come into force from November 1, 2024. The same revision aims to facilitate the process of issuing tax demand notices and orders under the CGST framework.
Introduced Amendment
- Section 74A will now be applicable to Sections 73 and 74 in multiple CGST rules, including Rules 88B, 88D, 96B, and 142. Such revisions have the motive to standardize the process to address the tax demands whether or not they engaged in matters related to fraud, suppression, or willful misstatement.
- Rule 88B, connecting to interest on delayed payment, and Rule 88D, regarding delayed refunds, as per Section 74A will be inserted after Sections 73 and 74 to comprise the new provision in all corresponding cases.
- Rule 142, which deals with the issuance of notices and recovery proceedings, has been revised to show the inclusion of Section 74A. It ensures a uniform approach for issuing show cause notices and concluding proceedings, supported by revisions in FORM GST DRC-03 and FORM GST DRC-05.
- For pre-notice consultation, the GST DRC-01A form is been used and has also been amended to incorporate Section 74A provisions. This will permit assessees to address their obligations u/s 74A, furnishing clarity and flexibility in settlement options.
Amendment Impact
Uniformity and predictability have been drawn under the insertion of section 74A to process the issuing of tax demands and settling disputes. Earlier separate time durations and processes applied to matters that engage scams and those without. A common time duration with section 74A would be applicable in all matters easing the compliance for the assessees and authorities.
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A significant relief provided by this amendment is the increase of the deadline for taxpayers to pay their tax obligations with lowered penalties, extending it from 30 days to 60 days. This extra time provides greater flexibility and aids in maintaining compliance without imposing severe penalties.
Closure
The efforts of the government to facilitate tax processes, reduce procedural complexity, and enhance taxpayer convenience are been displayed from the revisions to the CGST act via the introduction of Section 74A effective November 1, 2024. Taxpayers can navigate the compliance landscape with ease via standardized procedures for addressing tax demands. The anticipated changes are expected to simplify the GST framework and minimize disputes, thereby encouraging a more efficient tax administration process.
It is been recommended that taxpayers analyze the revisions and prepare for the updated rules that will come into force next month.
