Wednesday, 07 December 2022

GST and other changes will come into effect from 1st January

GST and other changes will come into effect from 1st January

The GST regime will see several changes from 1st January 2022. Some procedural changes will impact e-commerce players and food delivery aggregators but spare to end consumers.

The government has introduced the changes to make these platforms liable for GST deposits, which will curb tax evasion.

What will be the changes in the GST?

The correction in turn round structure in footwear and textile sectors would come into effect from 1st January. All footwear, whatever prices, will attract GST at 12 percent, while all textile products, except cotton, will have 12 percent GST, including readymade garments.

While the transport services for passengers provided by auto-rickshaw drivers through offline and manual mode would continue to be out of these, such services, when delivered through an e-commerce platform, would become taxable effective 1st January 2022, at a 5 percent rate.

What are the procedural changes coming into effect from Saturday?

The procedural changes that will come into effect include Swiggy and Zomato being responsible for collecting and depositing GST with the government on restaurant services provided through them from 1st January. They also need to be required to issue invoices/bills regarding such services.

Why has this been done?

In a meeting in September this year, the GST Council identified no mandatory registration check by Swiggy/Zomato, and unregistered restaurants were provided through these apps.

As per estimates, tax loss to the exchequer due to alleged under-reporting is ₹2,000 crore over the past two years.

GST and other changes will come into effect from 1st Januaryunsplash image

Read More: Harder GST Rules to take effect from 1st January

Will there be any burden on end consumers?

No. The legislative changes that would come into effect from 1st January will make the food delivery companies liable to collect and deposit GST with the government on the restaurant services. They would also be required to issue invoices and bills regarding such services.

There would be no extra tax weight on the end consumer as restaurants currently collect and deposit GST. In line with deposit and invoice raising has now been shifted to food delivery platforms.

Other changes from 1st January

The other anti-evasion measures that would come into effect from the new year include mandatory Aadhaar authentication for claiming GST refund, blocking the facility of GSTR-1 filing when the business has not paid taxes and filed GSTR-3B in the immediate previous month.

Currently, the law restricts filing returns for outward supplies or GSTR-1 if a business fails to file GSTR-3B for the preceding two months.

Also, the GST law has been changed to allow officers to visit premises to recover pending tax dues without any prior notice in cases where taxes paid in GSTR-3B are lower based on suppressed sales volume than supply details GSTR-1.

This move would help curb the menace of fake billing whereby sellers show higher sales in GSTR-1 to enable purchasers to claim an input tax credit (ITC), but report suppressed sales in GSTR-3B to lower GST liability.

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