The GST Authority has decided to set a 30-day time limit for invoice reporting on the Invoice Registration Portal (IRP) for taxpayers with Aggregate Annual Turnover (AATO) greater than or equal to Rs. 100 Crores. This limit will apply from the date of the invoice.

The decision to impose such a restriction has been taken with the aim to enhance compliance with GST regulations and streamline the reporting process. The advisory issued by the National Informatics Centre states that the restriction will apply to all document types requiring Invoice Reference Numbers (IRNs). This includes invoices, credit notes, and debit notes. For example, if an invoice is dated November 1, 2023, it must be reported no later than November 30, 2023.

This GST directive which will come into force w.e.f. November 1, 2023, is in supersession of the previous advisory dated April 17, 2023, through which the Centre informed of the Government’s decision to impose a 7-day time limit.

The Goods and Services Tax (GST) Council recently convened its 50th meeting, marking a significant milestone in the country’s tax reforms journey. It was held under the chairpersonship of the Union Finance and Corporate Affairs Minister, Smt. Nirmala Sitharaman.

Some of the major recommendations are as follows: –

1. Changes in GST Tax Rates – The GST Council recommended various changes in GST rates on goods to address specific issues and promote certain sectors.

• Reduction in GST rates on uncooked/unfried snack pellets to 5%, and regularisation of GST payments made in the past on these products, on an “as-is” basis. This reduction aims to provide relief to manufacturers and promote the snack industry.
• IGST exemption on medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases listed under the National Policy for Rare Diseases, 2021, when imported for personal use. This exemption was extended to FSMP imported by Centres of Excellence for Rare Diseases or recommended by any of the listed Centres.
• Imposition of tax at the rate of 28% on activities of online gaming, casinos, and horse racing. In the case of casinos, this tax will be applicable on the face value of chips purchased and in horse racing, it’ll be on the full value of the bets placed with the bookmaker/ totalisator. When it comes to online gaming, the 28% tax will apply to the full value of bets placed.

2. Measures for Facilitation of Trade – The GST Council introduced measures to simplify trade processes and reduce compliance burdens.

• Recommendation regarding the Goods and Services Tax Appellate Tribunal (Appointment and Conditions of Service of President and Members) Rules, 2023. To ensure that the GST Appellate Tribunal is constituted soon, it is proposed that the relevant provisions of the Finance Act, 2023, be notified w.e.f. August 1, 2023. These rules were aimed at streamlining the dispute resolution mechanism.
• Continuation of the relaxations provided in the previous financial year for filing annual returns (FORM GSTR-9 and FORM GSTR-9C). Further, taxpayers with an aggregate annual turnover of up to Rs. 2 Crores were exempted from filing annual returns (in FORM GSTR-9/9A) to ease the compliance burden on smaller taxpayers.
• Clarifications on various GST-related issues through circulars. These include clarifications on GST liability and input tax credit reversal in cases involving warranty replacements, refund-related issues, TCS liability in multi-operator transactions, and invoicing requirements for specific services.

3. Measures for Streamlining Compliance in GST – To enhance compliance and minimize fraudulent practices, the GST Council proposed several measures.

• Bringing in an amendment to the CGST Rules, 2017 to improve the registration process and address fake and fraudulent registrations. The changes proposed include the requirement to furnish details of a valid bank account within 30 days of registration and allowing system-based suspension of registrations for non-compliance.
• Adopting a mechanism for system-based intimation to taxpayers regarding excessive Input Tax Credit (ITC) claims in FORM GSTR-3B compared to FORM GSTR-2B. Taxpayers would be required to explain the reasons for the differences or take remedial action. This aims to reduce ITC mismatches and misuse.
• Adding a new rule in the CGST Rules, 2017 and introducing FORM GST DRC-01D to provide for the procedure of tax and interest recovery in respect of the amount intimated under rule 88C which hasn’t been paid and for which no satisfactory explanation has been furnished by the registered person.

The Ministry of Finance recently announced that the tax rate applicable to remittances for purposes other than education and medical treatment under the Liberalized Remittance Scheme (LRS) and for the purchase of overseas tour program packages will be increased from 5% to 20% w.e.f. October 1, 2023.

In the year 2020, sub-section (1G) was inserted into Section 206C of the Income-tax Act, 1961 to impose a tax on remittances made under the LRS and those made towards Overseas Tour Program Packages. As per this provision, the authorized dealer who remits the money and the seller of the said package are required to collect tax.

The said provision was amended by the Finance Act, 2023 and the TCS rate was increased from 5% to 20% for remittances for purposes other than education and medical treatment under LRS and for the purchase of overseas tour program packages. The same was scheduled to come into effect on July 1, 2023.

Thereafter, the Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023 were notified by the Finance Ministry on May 16, 2023, which omitted Rule 7 from the 2000 Rules thereby bringing credit card transactions carried out by individuals in foreign countries within the ambit of the LRS. 

The following changes have been brought about through the press release: –

• The implementation of the amendment rules has been postponed so that banks and card networks have sufficient time to put in place the requisite IT-based solutions. Hence, credit card transactions carried out overseas are not covered under LRS and are not subject to TCS.
• It is specified that irrespective of purpose, TCS will not be applicable to foreign remittances of up to Rs.7 Lakh per financial year. Beyond this threshold, a TCS of 0.5% would apply if remittance is for education financed by a loan and 5% if it is for education or medical treatment. When it is for other purposes, the 20% rate will apply for remittances above the threshold limit. In the case of overseas tour program packages, the existing 5% rate would continue to apply for payment up to Rs. 7 Lakh and if the payment exceeds the said amount, the 20% rate would apply.
• The increased TCS rates will now be implemented from October 1, 2023, and not from July 1, 2023.

To remove any difficulty in the implementation of these changes, the Government released a circular dated June 30, 2023, with certain FAQs.

The Central Board of Direct Taxes (CBDT) has issued guidelines to address the concerns of stakeholders regarding the deduction of income tax on online game winnings under Section 194BA of the Income-tax Act, 1961. The said section was inserted vide the Finance Act, 2023, and is in operation w.e.f. April 1, 2023.

Considering that several gamers play with an insignificant amount and withdraw small amounts, it has been clarified that tax need not be deducted from net winnings if the amount withdrawn does not exceed Rs. 100 in a month.

Further, it is specified that any deposit in the form of a bonus, referral bonus, incentive, etc. by the online gaming intermediary into the user account would form part of net winnings and hence, tax is liable to be deducted at the time of withdrawal and at the end of the financial year under Section 194BA.

When one user has multiple wallets, the guidelines state that under Rule 133 of the Income-tax Rules, 1962, the user account would include every account of the user which is registered with the online gaming intermediary and where any taxable deposit, non-taxable deposit or winning of the user is credited and withdrawal by the user is debited.

The said rule was inserted by the Income-tax (Fifth Amendment) Rules, 2023 notified on May 22, 2023, and provides the following formula for calculating the net winnings from online games: – Net winnings = A-(B+C). Here, A refers to the amount withdrawn from the user account, B to the aggregate amount of non-taxable deposit made in the user account by the owner of such account during the financial year, till the time of such withdrawal and C is the opening balance of the user account at the beginning of the financial year.

The Ministry of Finance has clarified that the Tax Collection at Source (TCS) at the rate of 20% would not apply to payments made by individuals using international debit or credit cards up to Rs.7 lakh per financial year. Such small transactions have been excluded from the Liberalized Remittance Scheme (LRS) limits.

The press release dated May 19, 2023, also stated that the prevailing beneficial TCS treatment for education and health payments would continue.

As per the Foreign Exchange Management (Current Account Transactions) Rules, 2000, prior approval of the Reserve Bank of India (RBI) is required when foreign remittances are made, exceeding specified limits for purposes enumerated in Schedule III[1]. The rules also specified that this requirement does not apply to the use of international credit cards by persons for covering expenses while on a visit outside India[2].

However, the Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023 notified by the Finance Ministry on May 16, 2023, omits Rule 7 from the 2000 Rules thereby bringing credit card transactions carried out by individuals in foreign countries within the ambit of the LRS. A joint reading of the amendment rules and the Finance Act, 2023 would indicate that the TCS payable for such transactions exceeding Rs. 7 Lakh would be 20% w.e.f. July 1, 2023.

[1] Rule 5 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000

[2] Rule 7 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000