List of Key Changes in the GST Regime from January 1, 2022 (2022)

We list key GST changes in India for 2022, which impact the scope of supplies and enforcement mechanisms, withdraws concessions, introduces input credit restrictions, etc. besides extending the scope of e-invoicing rules.

Starting January 1, 2022, several key amendments in the goods and services tax (GST) regime will be implemented. While some of these amendments were introduced in the Central Goods and Services Tax (CGST) Act, 2017 via the Finance Act, 2021, other changes have been made based on the recommendation of the GST Council in its 45th meeting.

The scope of these amendments cover several areas, including shifting the tax burden to e-commerce websites, input credit restriction, enforcement provisions, mandatory Aadhaar authentication for GST revocation and refund application, blocking of GSTR-1 for non-filing of GSTR 3B, empowering the GST Commissioner, etc.

To prevent confusion regarding key GST compliances and reporting, businesses are welcome to reach out to our tax advisors at india@dezshira.com.

Below is a list of all the key amendments made in the GST regime:

GST changes that impact e-commerce operators

The notification dated November 18, 2021 has amended a previous notification dated June 28, 2017 wherein:

  • A proviso in entry 15 to item (b) and (c) has been added whereby passenger transportation services mediated by an e-commerce platform in a non-air conditioned contract carriage or a stage carriage has been brought under the GST net.
  • Proviso to entry 17 has been added whereby facilitating passenger transportation services by an e-commerce platform through auto rickshaws have also been made taxable (auto-rickshaw services were hitherto completely exempt).

This implies that the food aggregators / e-commerce platforms using transportation service like Zomato, Swiggy etc. are liable to pay tax on restaurant services effective January 1, 2022. The liability to pay taxes on the non-restaurant services as per this directive still lies with the restaurants themselves.

Restaurant service means supply a) by way of or as part of any service; b) of goods, being food or any other article for human consumption or any drink, provided by a restaurant, eating joint – including mess, canteen – whether for consumption on or away from the premises where such food or any other article for human consumption or drink is supplied.

As per the latest notification, Zomato, Swiggy, etc. shall be responsible for charging, collecting, and paying GST at the rate of five percent on supply of “restaurant services” made by such restaurant through the e-commerce platform.

GST Categories

Tax Charged by Restaurants (%)

Old Tax Treatment

New Tax Treatment (w.e.f. January 1, 2022)

(Video) Changes in GST effective from Jan 1, 2022

Registered under GST

E-commerce operator collects and pays GST

Restaurant pays the GST

E-commerce operator collects and pays GST

Restaurant pays the GST

Restaurant

5%

1%

4%

5%

Non-restaurant

5% / 12% / 18% / 28%

1%

Balance amount

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1% TCS

Hybrid

5% / 12% / 18% / 28%

1 %

Balance amount

5% on restaurant services

Nil

1% TCS on non-restaurant services

Balance amount

Unregistered
(not registered under GST regime)

Restaurant

No tax

No tax

Non-Restaurant

(Video) 8 Important GST Amendments From Finance Act 2022

No tax

No tax

Hybrid

No tax

No tax

Recovery of self-assessment tax without opportunity of difference between GSTR-1 and GSTR-3B

Earlier, self-assessed tax was to be determined on the basis of liabilities declared in Section 39. The new amendment aims to curb the practice of fake billing whereby sellers show higher sales in GSTR-1 to enable a purchaser to claim an input tax credit (ITC) but report suppressed sales in GSTR-3B to lower GST liability.

The amended section 75 (12) of the CGST Act states: “Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.”

Businesses worried that this amendment would lead to hostile recovery actions from the tax department even for relatively frivolous/minor cases of mismatch for otherwise compliant players. Therefore, on January 7, 2022, the Central Board of Indirect Taxes and Customs (CBIC) issued guidelines on recovery proceedings and clarified that taxmen would give a “reasonable time” to businesses to explain the reasons for such mismatch.

Expansion of the GST Commissioners’ powers

This amendment has been made to empower officers to provisionally attach property of taxable person or any other person who is the beneficiary of the transaction, after initiation of the proceedings.

This amendment has been introduced vide Section 115 of the Finance Act, 2021, which seeks to amend section 83 (1) of the CGST Act, which shall be substituted as follows:

  • Where, after the initiation of any proceeding under Chapter XII, Chapter XIV, or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed.

Various stakeholders have expressed concern regarding the potential for abuse of this draconian power to coerce taxpayers into depositing tax demands without following the due process of law. It is expected that this amendment will be challenged in court on grounds of constitutional validity.

Amendments in sections 129 and 130 of CGST Act, 2017

These amendments further empower tax authorities relating to detention of goods during movement and confiscation.

An amendment to section 129 to delink it with section 130 (confiscation) makes it a complete code in itself. The amount of penalty payable has also been increased to 200 percent and the option of getting the detained goods provisionally released has been deleted. Furthermore, time limits have been prescribed for issuance of notice and the order adjudicating the said notice.

Additionally, changes have been made in section 130 as well, along with changes to rationalize the penalties that can be imposed in case of confiscation of goods.

(Video) New GST rates form April 2022 with Change in composition scheme and registration limits #gstrates

The amended section 129 reads as follows:

  • Section 129(1): 200 percent penalty is required to be paid to release the goods that are seized for violation of E-Way Bill provisions.
  • Section 129(2) has been deleted.
  • Section 129(3): Specified period of issuance of notice (seven days) and passing of order(seven days) under Section 129(3) of the CGST Act, 2017.
  • Section 129(6): Specified time limit for selling/ disposing seized goods or conveyance.
  • Section 129(4): No penalty shall be determined without giving opportunity of hearing.

Further, section 107(6) has been amended vide Section 116 of the Finance Act, 2021. This amendment states that “no appeal shall be filed against an order under sub-section (3) of section 129 of the CGST Act, unless a sum equal to 25 percent of the penalty has been paid by the appellant.”

Amendment related to input credit

Amendment has been made vide Section 109 of the Finance Act, 2021 to insert the new clause ‘(aa)’ in Section 16(2) of the CGST Act, 2017. This new clause introduces a new condition to avail input GST credit. It states that the credit of input GST on an input side invoice or debit note can be availed only when details of such invoice/debit note have been furnished by the supplier in their outward supplies (GSTR-1) and such details have been communicated to the recipient of such invoice or debit note.

This implies that the supplier’s declaration/return in GSTR-1 must match with GSTR-2A/2B at the recipient’s end in order for the recipient to avail credit of GST charged from it by the supplier.

Consequently, the five percent limit mentioned in Rule 36(4) has been rendered irrelevant as the recipient would not be able to take any ITC if the same is not reflected in the recipient’s GSTR-2A and/or 2B.

Mandatory Aadhaar authentication for GST revocation and refund application

With effect from January 1, 2022, it is now mandatory for the registered person to undergo Aadhaar authentication for the following purposes:

  • Filing of application for revocation or cancellation of registration in FORM GST REG-21 under Rule 23 of CGST Rules, 2017.
  • Filing of refund application in FORM RFD-01 under Rule 89 of CGST Rules, 2017.
  • Refund of the IGST paid on goods exported out of India under Rule 96 of CGST Rules, 2017.

Aadhaar authentication or e-KYC verification before filing of refund may be done by accessing the “Dashboard > My Profile > Aadhaar Authentication Status” on the GST portal.

Amendment to definition of ‘supply’ under GST

Section 7(1)(aa) of the CGST Act has been inserted with retrospective effect from July 1, 2017 to broaden the definition of ‘supply’ by including the supply of goods or services or both between any ‘person’ (other than an individual) to its members or constituents or vice versa for consideration.

In other words, this amendment seeks to classify the activity of a club or an association in supplying goods or services to its members as a ‘supply’ and therefore subject to GST.

Withdrawal of GST exemption/concession for specified infrastructure/EPC projects

The notification dated November 18, 2021 has amended entries 3 and 3A of the previous notification dated June 28, 2017 to omit the words “Governmental Authority or a Government Entity”.

The Entry 3 and 3A provided GST exemptions for pure services and supply of composite services provided to a ‘governmental authority’ or a ‘government entity’ where the value of goods did not exceed 25 percent. The said exemption has been withdrawn. The various statutory authorities which had qualified as a ‘governmental authority’ or a ‘government entity’ include:

  • Smart City project agencies
  • City development authorities
  • Government controlled universities
  • State-owned power utilities
  • State-owned industrial development
  • Public sector undertakings (PSUs)
  • Authorities like NHAI, etc.

Changes in GST E-Invoice Rules from April 1, 2022

The Indian government has reduced the threshold for mandatory issuance of e-invoice for businesses from INR 500 million to INR 200 million annual turnover. This step is expected to affect smaller businesses, who will now have to mandatorily issue electronic invoices. To understand the change in policy as well as the process of generating e-invoices, read our article here: Changes in GST E-Invoice Rules from April 1, 2022: What Businesses Should Note.

This article was originally published January 11, 2022. It was last updated March 4, 2022.

India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to india@dezshira.com for more support on doing business in in India.

We also maintain offices or have alliance partners assisting foreign investors in Indonesia, Singapore, Vietnam, Philippines, Malaysia, Thailand, Italy, Germany, and the United States, in addition to practices in Bangladesh and Russia.

(Video) GST Changes from 01.01.2022 | Not Ease of Doing Business | #gstupdate

FAQs

What are the changes in GST in 2022? ›

W.e.f. July 18, 2022, these items would attract GST when “pre-packaged and labelled”. Additionally, certain other items such as Curd, Lassi, puffed rice etc., when “pre-packaged and labelled” would attract GST @ 5% with effect from July 18, 2022.

What are the latest changes in GST? ›

Registered person having aggregate turnover in the financial year 2021-22 up to two crore rupees, exempted from filing annual return for the said financial year. Last date for filing Form GST CMP-08 for composition dealers for quarter ending 30th June, 2022 has been extended up to 31st day of July, 2022.

What are the 4 types of GST? ›

There are Four GST types namely Integrated Goods and Services Tax (IGST), State Goods and Services Tax (SGST), Central Goods and Services Tax (CGST), and Union Territory Goods and Services Tax (UTGST). The taxation rate under each of them is different.

Is GST applicable on milk? ›

The government today clarified that fresh milk and pasteurised milk are fully exempted from Goods and Service Tax (GST). Further, milk products like curd, lassi, butter milk and paneer are also exempted from GST if sold in forms other than those pre-packaged and labelled.

What is the GST exemption for 2022? ›

GST tax: The GST tax exemption amount, which can be applied to generation-skipping transfers (including those in trust) during 2022, is now $12.06 million, which was increased from $11.7 million. The rate remains unchanged at 40 percent.

What day is GST in January 2022? ›

You will get your annual GST/HST credit, which was calculated using information from your 2021 tax return, in four payments. We will make these payments on July 5 and October 5, 2022 and on January 5 and April 5, 2023.

Is GST increasing 2022? ›

New GST Rates come into effect from July 18- Check what is costlier, what is cheaper? New GST Rates 2022: The new GST rates came into effect from July 18, 2022. The new GST tax structure was approved during the 47th meeting of the GST Council that took place last month in Chandigarh.

What is new GST rate? ›

The GST rates are usually high for luxury supplies and low for essential needs. In India GST rate for various goods and services is divided into four slabs: they are 5% GST, 12% GST, 18% GST, & 28% GST.
...
Increase in GST.
CategoryNew RateOld Rate
Printed material, catalogue, and cards under Chapter 4918%12%
4 more rows

What is current GST rate? ›

GST percentage in India have been divided into four GST rates – 5%, 12%, 18%, and 28%. The GST council revises inclusions under these rates from time to time in order to ensure efficient pricing of different categories of products.

What are the 5 slabs of GST? ›

These comprise rates of 5%, 12%, 18%, and 28%. The GST Council periodically revises the items under each slab rate to adjust them according to industry demands and market trends.

Who first introduced GST in India? ›

The idea of moving towards GST was first mooted by the then Union Finance Minister in his Budget speech for 2006-07. Initially, it was proposed that GST would be introduced from 1st April 2010.

Who is the main of GST? ›

Shri Basavaraj Bommai

What percentage of GST is gold? ›

FAQs on Goods and Services Tax (GST) on Gold

A GST of 3% is charged on gold in India. Moreover, jewellers charge 5% of the price as GST making charge.

What percentage of GST is milk products? ›

12% GST Rate Products

The following types of milk, dairy products, honey and eggs attract 12% GST: Butter and other fats (ghee, butter oil, etc.) and oils derived from milk; dairy spreads. Cheese.

What is the rate of GST on milk in India? ›

(a) Fresh milk and pasteurised milk are fully exempt from GST. Further, milk products like curd, lassi, butter milk and paneer are also exempt from GST if sold in form other than those pre-packaged and labelled.

What is GST exemption limit? ›

The laws of GST states that any turnover up to 20 lakhs is completely exempted from GST, 10 lakhs for special category states except the state of “Jammu and Kashmir”, which is fully exempted from registration, while anything above these values are subject to registration.

What is the maximum GST exemption? ›

The Internal Revenue Code (IRC) allows a GST tax exemption just as it does with gift and estate taxes. All of these taxes share the same exemption: $11.7 million for the 2021 tax year and $12 million beginning in 2022.

What is lifetime GST exemption? ›

An exemption is an amount that can be directly transferred to grandchildren or into a generation-skipping trust for the benefit of grandchildren without incurring a federal GST. The GST shares the same lifetime exemption as the federal estate and gift taxes, and that is pretty significant as of 2022.

Who is eligible for GST? ›

Who should register for GST? All the businesses supplying goods whose turnover exceeds INR 40 lakh in a financial year are required to register as a normal taxable person. However, the threshold limit is INR 10 lakh if you have a business in the north-eastern states, J&K, Himachal Pradesh, and Uttarakhand.

Who is eligible for GST refund? ›

Any taxpayer can claim a refund of any tax, interest, penalty, fees or any other amount paid by him by filing an application electronically in FORM GST RFD-01 through the GST Common Portal or through a GST Facilitation Centre.

What month is the next GST payment? ›

GST/HST credits or payments are made four times per year in equal instalments. Anyone who qualifies to receive these payments can expect to receive the GST/HST payments for 2022 on these dates. The next GST/HST payment date occurs on January 5, 2022, and then subsequent payments will be made on: April 5, 2022.

Is GST getting increased in 2022? ›

New Goods and Services Tax (GST) rates as per recommendations of the 47th GST Council come into effect from 18 July 2022. The GST rates were hiked for over 20 goods and 10 services. A few household items and daily use items are also on the list of items that will face rate increases.

Are GST payments going up in 2022? ›

The GST Credit is indexed to inflation on an annual basis using Consumer Price Index data, as reported by Statistics Canada. For the July 2022 to June 2023 benefit year, the value of the GST Credit grew by 2.4 per cent based on the average Consumer Price Index over the October 2020 to September 2021 period.

Is GST increasing 2022? ›

New GST Rates come into effect from July 18- Check what is costlier, what is cheaper? New GST Rates 2022: The new GST rates came into effect from July 18, 2022. The new GST tax structure was approved during the 47th meeting of the GST Council that took place last month in Chandigarh.

Is GST increasing in 2022 on clothes? ›

From January 2022, the GST rate on fabrics has been raised to 12% from 5%, and the GST rate on garments of any value has been raised to 12%, compared to the previous rate of 5% on items priced up to INR 1,000.

What is the GST rate in India 2022? ›

The Central Board of Indirect Taxes and Customs (CBIC) has notified that 18% Goods and Services Tax (GST) rate will be applicable 1 J 1 January 2022 onwards and f the 12% GST rate for government contracts will be withdrawn.

Which state passed GST first? ›

Telangana was the first amongst states to pass the Act on April 9 followed by Bihar on April 24. Karnataka passed the bill on June 15. GST will be rolled out on the midnight of June 30 from the historic Central Hall of Parliament.

What is GST current rate? ›

GST percentage in India have been divided into four GST rates – 5%, 12%, 18%, and 28%. The GST council revises inclusions under these rates from time to time in order to ensure efficient pricing of different categories of products.

Who is eligible for GST? ›

Who should register for GST? All the businesses supplying goods whose turnover exceeds INR 40 lakh in a financial year are required to register as a normal taxable person. However, the threshold limit is INR 10 lakh if you have a business in the north-eastern states, J&K, Himachal Pradesh, and Uttarakhand.

What is the maximum income to qualify for GST? ›

The GST/HST credit is designed for low to moderate-income families. As a result, there is a maximum income for eligibility. For single individuals, the maximum is $48,012 before tax. For married or common-law couples with four children, the maximum combined net income is $63,412 before tax.

Who is eligible for GST refund? ›

Any taxpayer can claim a refund of any tax, interest, penalty, fees or any other amount paid by him by filing an application electronically in FORM GST RFD-01 through the GST Common Portal or through a GST Facilitation Centre.

Is GST 12% or 18 %? ›

Take a look at the announcements made. No GST on hotel accommodation with a transaction value of INR 1,000 or less per day. Transactions above INR 1,000-7,500 and above INR 7,500 will attract 12% and 18% GST, respectively.

How many GST slab rate in India? ›

In India, almost 500+ services and over 1300 products fall under the 4 major GST slabs. These comprise rates of 5%, 12%, 18%, and 28%. The GST Council periodically revises the items under each slab rate to adjust them according to industry demands and market trends.

What are the 3 types of GST? ›

Currently, the types of GST in India are CGST, SGST, and IGST. This simple division helps distinguish between inter-state and intra-state supplies and mitigates indirect taxes. To learn more, read about these three different types of GST.

What percentage of GST is gold? ›

FAQs on Goods and Services Tax (GST) on Gold

A GST of 3% is charged on gold in India. Moreover, jewellers charge 5% of the price as GST making charge.

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