SOME OF THE PROVISIONS THAT CAME INTO EFFECT FROM 01.01.2021 & CAN LEAD TO CANCELLATION OF GST REGISTRATION OF TAXPAYER

 With the latest update of GST came on 02.01.2021, the taxpayers have to be now more precise and alert in filing their returns as there are many hard changes that has came into effect from 01.01.2021

• Claim of ITC has been reduced from 120% to 105% of GSTR 2B.
• A proper officer can cancel GSTIN of  a taxpayer if the taxpayer has availed ITC more than 105% of GSTR 2B in any month.
• A proper officer can cancel GSTIN of a taxpayer if the Tax paid in GSTR 3B is less than the tax payable in GSTR 1 for any month, means if the outward supply of GSTR 1 is greater than GSTR 3B then cancellation of GSTIN can be initiated.
• If a proper officer has initiated the cancellation of GST and he has reasons to believe that the GSTIN has to be suspended of a taxpayer then the opportunity of being heard will no longer be available with the taxpayer.
• If there will be any difference in the comparison sheet means if there will be any difference in outward supplies of GSTR 3B & GSTR 1 and ITC of GSTR 3B & GSTR 2B which leads to any contravention of Act or that difference is difficult to explain and is complicated then the department will initiate for cancellation of GST registration and will serve a notice in FORM GST REG 31 asking for explanation of the differences in the comparison sheet.
• Taxpayer has to submit the reply within 30 days of receipt of FORM GST REG 31.
• Once The GSTIN is processed for Suspension or cancellation then no refund of tax under sec 54 can be availed by the taxpayer until the proceedings of suspension has been closed.
• Taxpayer if fails to file his/her GSTR 3B for two subsequent months then his GSTR 1 will be blocked for further months return filings, along with blocking of E-way bill facility.Taxpayers under composition Scheme also falls under the above clause and failure in filing of GSTR 3B of preceding quarter will block the GSTR 1 of subsequent quarter.
• Taxpayers whose outward supply (excluding exempt supply and zero rated supply) exceeds 50 lakhs in a month will not be able to claim 100% ITC to pay off their tax liabilities, means the taxpayer can take only 99% of his available ITC and rest 1% will have to be paid by his own through challan generation. 

For example : ITC available with Taxpayer is ₹ 2000 and the liability of tax to be paid against outward supplies is ₹ 2100 then the taxpayer can take only 99% of ₹ 2000 that is ₹1980 form the available ITC and rest ₹120 has to be paid through challan or cash ledger.

However there are few exceptions for the taxpayers who can avail more than 99% of ITC.

1. If the Taxpayer has paid INCOME TAX exceeding 1 lakh in 2 preceding Financial years.
2. If Taxpayer has received refund exceeding 1 lakh u/s 54 of CGST Act 2017.
3. If the taxpayer has used cash ledger to pay of their tax liabilities in previous months and the total of that tax paid through cash ledger is 1% of the total tax liability up to the said month.
4.  For example: Total tax liability of two (approx.) previous months preceding the current month is ₹ 500 and taxpayer has used cash ledger to pay ₹ 5 (1% of 500). Make sure that the 1% margin will be calculated of the tax liability up to the said month (Current Month for which you are filling return).

5. Taxpayer related to Government Department, Public Sector Undertaking (PSU), local authority or a statutory body.

• Validity of E-way Bill of 1 day per 100 km has changed to 200 km, means the E-way Bill of 200 km will be now valid for 1 day.