Simplified GST Changes in Union Budget 2023



This article will explain the changes in GST in Union Budget 2023.




Finance Minister Nirmala Sitharaman proposed nine legislative revisions to the GST law in the Union Budget 2023.

Decriminalization GST Offences

  • From the current range of 50% to 150% of the tax amount, the compounding amount is lowered to a range of 25% to 100%. This was done in order to increase the minimum tax threshold for starting a GST prosecution from Rs 1 crore to Rs 2 crore. With the exception of the crime of issuing bills without providing goods or services, or both.
  • Decriminalized offenses include obstructing or impeding any officer from carrying out his responsibilities, purposeful tampering with tangible evidence, and failing to provide information.

Changes to Schedule III of the 2017 CGST Act

Neither a supply of goods nor a supply of services should be viewed as a result of any activities or transactions.

With effect from February 1, 2019, changes were made to Schedule III of the CGST Act, 2017 to keep certain transactions and activities outside the scope of the GST. Examples include the supply of goods from one location outside the taxable territory to another location outside the taxable territory, sales over the high seas, and the supply of warehoused goods prior to their home clearance.

The provisions are being included to make the stated adjustments effective as of July 1, 2017, in order to eliminate any uncertainty or doubt regarding the taxability of such transactions or activities throughout the period of July 1, 2017, to January 31, 2019, and to achieve this

However, if any tax has already been paid in relation to such transactions or activities within the period of July 1, 2017, to January 31, 2019, no refund of tax paid shall be allowed.


GST ITC for CSR-Related Expenditure

The Input Tax Credit shall not be receivable in respect of goods or services or both obtained by a taxable person that is used or intended to be utilized for activities relevant to their duties under corporate social responsibility, according to a provision being added to the CGST Act.

Data Sharing

A new section of the CGST Act is being added to allow the registered person to share information with other systems in a manner that will be prescribed, whether it be information provided in a return, registration application, statement of outward supplies, or details uploaded for the creation of electronic invoice, E-way bill, or any other details on the common portal.


Facilitate Microbusiness E-commerce Operators

Unregistered suppliers and composition taxpayers will now be able to provide goods within a state via E-Commerce operators(ECOs), subject to a few restrictions.


GST Amendments in Section 2 Clause (16) of IGST Act, 2017

To update the definition of “non-taxable online recipient,” clause (16) of section 2 of the IGST Act has been revised. This will be accomplished by eliminating the requirement that online information and database access and retrieval services be used for purposes other than those of commerce, industry, or any other business or profession in order to ensure that OIDAR services provided by any person located in non-taxable territory to an unregistered person receiving the aforementioned services and residing in a taxable territory are subject to taxation.

It also aims to make it clear that individuals registered only for purposes of clause (vi) of Section 24 of the CGST Act would be regarded as unregistered individuals for the purposes of the aforementioned clause.

Retrieval Services or Information and Database Access Online

The definition of “online information and database access or retrieval services” in the IGST Act is being revised to remove the need for the provision of the stated supply to be mostly automated and involve minimal human participation.


Place of Supply

In accordance with the IGST Act, the proviso to subsection (8) of section 12 of the IGST act is eliminated in circumstances where the recipient and the service provider are different, in order to designate the location of supply, regardless of the destination of the goods.


Section 17 – Apportionment of credit and blocked credit

Proposed Amendment- Restrict availing of ITC in respect of certain transactions specified in Para 8(a) of Schedule III – Supply of custom bonded warehouse goods before clearance for home consumption. Above stated supply will be included in the exempt supply. But whether this amendment will be prospective or retrospective still not clear.

Section 17 (5) -Blocked ITC – ITC on CSR expenses (Corporate social responsibility) referred to in Section 135 of the companies act 2013 is now blocked .


Section 23/22/24-  Persons who are required to take compulsory registration u/s 24 of CGST ACT 2017 need not to register themselves if they are not liable for registration /exempted u/s 23(1) of CGST ACT 2017. Very important amendment- A person engaged in exempted supply of goods or services  need not required to take compulsory registration even if required to do so as per section 24 of CGST ACT 2017.


Filing of belated GSTR-1, GSTR-3B, GSTR-9/9A & GSTR-8 not beyond three years of the due date-  Now three years time limit has been allowed from the due date of filling GSTR-1/GSTR-3B /GSTR-9/GSTR-9A/ GSTR-8 for furnishing these returns.

Section 54- Refund of tax-

A provisional refund of 90 % of the total amount claimed in case of zero-rated supplies is being amended to remove the reference to provisionally accepted input tax credit to align with the present scheme of availing of the self-assed input tax credit as per sec 41 (1) of the CGST ACT.

Section 56 -Interest on delayed refunds-

In case the refund is delayed beyond the period of 60 days then Interest will be calculated from the date of receipt of the application till the date of refund.

New Section  122(IB) -Penalty on E-commerce operators-

Penal provisions applicable to e-commerce operators in case of contravention of provisions relating to supplies of goods made through them by unregistered persons or composition taxpayers. So they need to build a system so that composition taxpayers need not make inter-state supplies.

Retrospective amendment of changes in Schedule III

Certain activities such as the

  • Supply of goods from a place outside the taxable territory to another place outside the taxable territory
  • High Sea Sales
  • Supply of warehouse goods before their home consumption Treated as neither supply of goods nor supply of services w.e.f 01.07.2017. It is also clarified that in case tax has been paid on the above-stated supplies, no refund of such tax shall be available.


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