In a move that will benefit homebuyers in case of cancelled bookings, the government has notified the procedure for filing of refund of Goods and Services Tax by unregistered buyers in the case of cancellation of agreement for supply of service. The procedure can also be used for refund in case of a cancelled long term insurance policy.
This, along with a host of other measures and procedures, has been notified by the Central Board of Indirect Taxes and Customs in line with the decisions taken at the 48th meeting of the Goods and Services Tax Council.
It has also amended Rule 37(1) of the CGST Rules with effect from October 1, 2022 to state that a registered person, who fails to pay to the supplier, the amount towards the value of such supply, whether wholly or partly along with the tax payable thereon, within the time limit, shall pay or reverse an amount equal to the ITC
The notification has also covered a long pending demand of the industry for re-availment of credit in case of reversal of credit due to non-payment by the supplier by insertion of a new rule 37A.
Abhishek Jain, Partner, Indirect Tax, KPMG in India, said this inclusion merits attention as it provides for the instances and the manner where input tax credit is required to be reversed in case of non-payment of tax by supplier. “Companies should take note of these changes and align business practices accordingly,” he said.
Ankur Gupta, Practice Leader, Indirect Tax, SW India, noted that how the recipient would be informed that supplier has made the payment is still a question mark.
Other procedural issues that have been notified by the CBIC include making Aadhar-based biometric verification mandatory for individuals and authorised persons, insertion of a new rule to provide the facility for withdrawal of an application of appeal up to certain specified stage and amending Rule 12(3) of the CGST Rule to state that the proper officer may cancel the registration on a request made in writing by a person to whom a registration has been granted.