Invoice Management System (IMS) is made available to taxpayers from Today, 14th Oct, 2024. The new system shall facilitate taxpayers in matching their records/invoices vis a vis issued by their suppliers for availing the correct Input Tax Credit (ITC). Taxpayers can make use of this system to take action on the invoices reflecting on IMS from 14th Oct, 2024. The first GSTR-2B would be generated for the return period Oct’24 on 14thNovember, 2024 considering action taken on Invoice Management System. It may be noted that it is not mandatory to take action on invoices in IMS dashboard for GSTR-2B generation.
Starting FY 2023-24, GST system will auto-populate eligible ITC for domestic supplies (excluding reverse charge and imports ITC) from table 3(I) of GSTR-2B to table 8A of GSTR-9. These changes in GSTR-9 and 9C for the FY 2023-24 will be available on the GST portal from today i.e.,15th October 2024 onwards.
Further, a validation utility will be executed progressively (for validation by taxpayers) to complete the auto population of GSTR-9 from GSTR-2B for Apr-23 till Mar-24.
New GST Invoicing Rules: CBIC Introduces Rule 47A and Amends Rule 46 of CGST Rules
The Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 20/2024 – Central Tax on October 8, 2024, introducing key changes to the Central Goods and Services Tax (CGST) Rules, 2017. These changes will be effective from November 1, 2024, and primarily concern the introduction of Rule 47A, the omission of the second proviso in Rule 46, and amendments to the third proviso of Rule 46. These changes aim to streamline the invoicing process, particularly for transactions under the Reverse Charge Mechanism (RCM).
Key Changes Introduced
1. Insertion of Rule 47A: Time Limit for Issuing Tax Invoices
With the insertion of Rule 47A, a time limit has been set for issuing tax invoices where the recipient is required to issue the invoice. This rule primarily impacts transactions under the Reverse Charge Mechanism (RCM), where the recipient, rather than the supplier, is liable to pay tax.Rule 47A reads as follows:
“Notwithstanding anything contained in rule 47, where an invoice referred to in rule 46 is required to be issued under clause (f) of sub-section (3) of section 31 by a registered person, who is liable to pay tax under sub-section (3) or sub-section (4) of section 9, he shall issue the said invoice within a period of thirty days from the date of receipt of the said supply of goods or services, or both, as the case may be.”
This rule ensures that invoices under RCM must be raised within 30 days of receiving goods or services, thereby offering clarity to businesses regarding the time frame for compliance.
2. Amendment to Rule 46: Omission of the Second Proviso
The second proviso in Rule 46 has been omitted. This omission helps streamline the rules and remove any redundant provisions.
Before: The rule contained a second proviso after clause (s).
After: The second proviso is now omitted, making the rule more concise and removing unnecessary language.
3. Amendment to the Third Proviso in Rule 46
The third proviso in Rule 46 has been amended for better clarity and language structure. Specifically, the phrase “Provided also that in the case of” has been replaced with “Provided further that in the case of”.
This change is primarily structural, intended to harmonize the structure of the provisos in Rule 46.
Comparative Overview: Before and After Amendments
Provision
Before
After
Rule 47A (New)
Not applicable (no such provision existed before)
Time limit of 30 days for issuing tax invoice by the recipient under RCM, effective from November 1, 2024.
Omission of Second Proviso in Rule 46
Second proviso existed after clause (s) in Rule 46.
Second proviso has been omitted to streamline the rule.
Amendment to Third Proviso in Rule 46
“Provided also that in the case of…”
“Provided further that in the case of…” (structural change for better clarity)
Example: Impact of Rule 47A on Reverse Charge Invoices
Under the Reverse Charge Mechanism (RCM), the liability to pay GST shifts from the supplier to the recipient. With the introduction of Rule 47A, a registered person liable to pay tax under sub-section (3) or (4) of section 9 (i.e., under RCM) must issue a tax invoice within 30 days of receiving the goods or services.
For example:
Scenario: A company, XYZ Ltd., receives legal services from a lawyer, which falls under the RCM category.
Action Before: There was no specific rule governing the time frame for issuing the invoice by XYZ Ltd. under RCM.
Action After (Rule 47A): XYZ Ltd. must issue the tax invoice within 30 days of receiving the legal services.
This rule ensures that tax compliance timelines are clearly defined, preventing delays in invoicing and potential penalties.
Note :
The CBIC’s introduction of Rule 47A and the amendments to Rule 46 aim to create a more structured and organized framework for invoicing under GST, particularly concerning the Reverse Charge Mechanism (RCM). These amendments have the following implications:
Clarity for Businesses: The time limit for issuing invoices under RCM is now clearly defined, making it easier for businesses to comply.
Streamlined Rules: By omitting the second proviso and refining the language in the third proviso, the CGST Rules are more concise, reducing potential confusion.
Coherent Structure: The harmonization of language and structure in Rule 46 and the addition of Rule 47A contribute to a more organized legal framework under the GST regime.
These changes are expected to improve overall compliance and reduce legal ambiguities, benefiting both businesses and tax authorities.
The Union Budget 2024 introduced several significant changes in the tax deduction at source (TDS) on salary, specifically under the new tax regime. While the old regime remains unchanged, the new regime has undergone various amendments aimed at providing relief to taxpayers. Below are the key changes and their implications.
New Tax Regime
The new tax regime has revised the slab rates for the financial year 2024-25. The updated slabs are as follows:
Income Range (₹)
Tax Rate (%)
Up to 3,00,000
Nil
3,00,001 to 7,00,000
5%
7,00,001 to 10,00,000
10%
10,00,001 to 12,00,000
15%
12,00,001 to 15,00,000
20%
Above 15,00,000
30%
Increase in Standard Deduction
The standard deduction has been increased from ₹50,000 to ₹75,000 under the new regime.
Increase In Exemption of Family Pension:
The deduction u/s 57 increased from 15000 to 25000 under New Tax Regime
Employer’s Contribution to Pension Fund
The limit for the employer’s contribution to the pension fund under Section 80CCD(2), which is allowed as a deduction under both the old and new regimes, has been increased from 10% to 14% of the salary.
TDS Deduction Based on TCS Collection : Change in section 192
A new provision has been introduced where if TCS (Tax Collected at Source) is collected from an employee on any transaction and the employee declares this to the employer, the employer must consider this TCS for TDS deduction on salary. Previously, only TDS deducted was considered by the employer.
Old Tax Regime
For Individuals Below 60 Years
Up to ₹2.5 lakh: Nil
₹2,50,001 to ₹5 lakh: 5%
₹5,00,001 to ₹10 lakh: 20%
Above ₹10 lakh: 30%
For Senior Citizens (60 to 80 Years)
Up to ₹3 lakh: Nil
₹3,00,001 to ₹5 lakh: 5%
₹5,00,001 to ₹10 lakh: 20%
Above ₹10 lakh: 30%
For Super Senior Citizens (Above 80 Years)
Up to ₹5 lakh: Nil
₹5,00,001 to ₹10 lakh: 20%
Above ₹10 lakh: 30%
Rebate u/s 87A:
This is available only to Resident individual, not to non resident individual or any other person.
Rebate is allowed:
Under Old Tax Regime: only if total income is not exceeding Rs.500000,Rebate shall be allowed upto Rs.12500
Under New Tax Regime: only if total income is not exceeding Rs.700000, Rebate shall be allowed uptoRs.25000
Note:
Rebate shall not be allowed from LTCG u/s 112A
Not Allowed to HUF
Not allowed to NR
Allowed for LTCG/STCG u/s 111A, Casual Income ex. Lottery – under Old Regime Only
Examples to Illustrate the Changes
Example 1: Standard Deduction and New Slab Rates
Scenario:
Annual salary: ₹12,00,000
Applicable under the new regime
Calculation:
Gross Salary: ₹12,00,000
Standard Deduction: ₹75,000
Taxable Income: ₹12,00,000 – ₹75,000 = ₹11,25,000
Tax Computation:
Up to ₹3,00,000: Nil
₹3,00,001 to ₹7,00,000: 5% of ₹4,00,000 = ₹20,000
₹7,00,001 to ₹10,00,000: 10% of ₹3,00,000 = ₹30,000
₹10,00,001 to ₹11,25,000: 15% of ₹1,25,000 = ₹18,750
Total Tax Payable:
₹20,000 + ₹30,000 + ₹18,750 = ₹68,750
So TDS to be deducted in whole year based on this in equal amount.
Example 2: TDS Deduction Considering TCS
Scenario:
Annual salary: ₹10,00,000
TCS collected: ₹5,000
Employee declares TCS to the employer
Calculation:
Gross Salary: ₹10,00,000
Standard Deduction: ₹75,000
Taxable Income: ₹10,00,000 – ₹75,000 = ₹9,25,000
Tax Computation:
Up to ₹3,00,000: Nil
₹3,00,001 to ₹7,00,000: 5% of ₹4,00,000 = ₹20,000
₹7,00,001 to ₹9,25,000: 10% of ₹2,25,000 = ₹22,500
So TDS to be deducted in whole year based on this in equal amount.
The Budget 2024 has introduced several changes aimed at providing relief to taxpayers under the new tax regime. The increase in standard deduction, revised tax slab rates, higher deduction limits for employer contributions to pension funds, and adjustments for TCS collection are significant steps towards simplifying tax compliance and providing financial benefits to salaried individuals. Taxpayers should ensure their employers are informed about TCS collections to benefit from accurate TDS deductions on salary.
