Amendments in Indirect Taxes via Budget 2023

Amendments in CGST Act 2017

Input Tax Credit

• Explanation to Section 17(3) dealing with apportionment of credits and blocked credits has been expanded to include Supply of warehoused goods to any person before clearance for home consumption, in the value of exempt supply.
• Section 17 (5) dealing with apportionment of credits and blocked credits has been amended to provide that input tax credit will not be available in respect of goods or services used for activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013.
• Section 54 (6) dealing with refund of tax has been amended to remove the reference to the provisionally accepted input tax credit and to align the same with the present scheme of availment of self-assessed input tax credit as per Section 41(1) dealing with availment of input tax credit.
• The amount equivalent to Input Tax Credit availed on receipt of Goods or Services shall be paid along with interest as prescribed under section 50 dealing with interest on delayed payment of tax for the cases where recipient fails to make payment towards the value of goods or services along with tax thereon to the supplier within 180 days from date of issue of invoice. Earlier, the said amount of input tax credit was allowed to be added with the amount of output tax liability.

Amendments in IGST Act 2017

• The definition of “non-taxable online recipient” under section 2 (16) has been modified to also include the recipient who receives online information and database access or retrieval services (OIDAR) for purposes of commerce, industry or any other business or profession. Further, persons who are required to deduct tax under section 51, whether or not separately registered under Central Goods and Services Act shall be treated as unregistered person for the purpose of the this clause.
• Further, Section 2 (17) has been amended to widen the scope of OIDAR by removing the condition of rendering of the said supply being essentially automated and involving minimal human intervention.
• Proviso to section 12 (8) dealing with place of supply as the place of destination of goods in case where the transportation of goods is to a place outside India has been removed to specify the place of supply as location of the person if recipient is registered and location at which goods are handed over for transportation in cases where recipient is unregistered.

Amendments to the Customs Act 1962

• Section 25(4A) dealing with power to grant exemptions from duty has been amended to insert a proviso whereby the
  validity period of two years shall not apply to exemption notifications issued in relation to:
  a) multilateral or bilateral trade agreements;
  b) obligations under international agreements, treaties, conventions including with respect to UN agencies, diplomats, international organizations;
  c) privileges of constitutional authorities;
  d) schemes under Foreign Trade Policy;
  e) Central Government schemes having a validity of more than two years; re-imports, temporary imports, goods imported as gifts or personal baggage; and
  f) any duty of customs under any law for the time being in force including integrated tax leviable under sub-section (7) of Section 3 of the Customs Tariff Act, 1975, other than duty of customs leviable under section 12.
• Section 127 C (8A) dealing with procedure on receipt of an application under section 127B has been inserted so as to specify a time limit of nine months for disposal of the application filed for settlement before the Settlement Commission which can be further extended by three months.

Amendments to the Customs Tariff Act 1975

Retrospective Amendments (with effect from 01.01.1995)

• Amendments to the First Schedule to the Customs Tariff Act 1975