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KEY TAKEAWAYS

• In the budget of 2021, certain amendments have been proposed in Central Goods and Services Tax (CGST) Act and Integrated Goods and Services (IGST) Act, 2017 .

• In the CGST Act, 2017 it has been suggested that sub-section 5 of section 35 will be omitted which stated that every registered person whose turnover during a financial year exceeds the prescribed limit, has to get his accounts audited by a cost or chartered accountant. The copy of such audited accounts also has to be submitted.

• With the deletion of this sub-section the taxpayers will not be required to get their books audited by a chartered accountant or cost accountant.

FURTHER DETAILS

Nirmala Sitharaman, finance minister announced the paperless budget for financial year 2021. It has a six pillared view, including making healthcare infrastructure a priority. The budget is also dedicated to develop the agricultural sector and human capital. The last pillar envisioned in the bill is minimum government maximum governance.

Since GST Audit will be abolished (if bill is passed), this will result in a setback for Chartered Accountants. This has been stated in Clause 101 of the Finance Bill, 2021.

Section 44 of the Act is also being replaced by Clause 102 of the Finance Bill, 2021. The substitution will make it clear that the due date for filing of Annual Return will be authorized by notification of rules. Also, the new section allows uploading self-certified reconciliation statement instead of it being certified by CA or CMA (GSTR-9C).

The new section also empowers the Commissioner to exclude a class of taxpayers from filing annual return.

An additional clause is being inserted in sub-section (1) of Section 7 of the CGST Act with retrospective effect from 1st July, 2017. This will make sure that tax is levied on activities or transactions which include supply of goods or services by any person to its members for cash or other valuable consideration.

BACKGROUND

Before GST was introduced in India on 1st July 2017, there were discussions regarding the monopoly of Chartered accountants to practice the law. The taxation laws were being drafted with only the advice of CAs who worked in different Departments of the Government.

Also, after its introduction Industries were at calm that their tax will not be changed every year, but after this amendment such cannot be guaranteed. It has been proved that the Central Government can make amendments in the GST act.

CGST ACT AND IGST ACT

Central Goods and Services Tax is charged on intrastate supply of goods and services by the Central Government. Same is governed by the CGST Act, 2017.

Integrated Goods and Services Tax is charged on all interstate supplies of goods and services. Same is governed by IGST Act, 2017. Such tax is shared equally between the central government and state government.

These Acts were implemented to provide a simplified and single tax regime which can help in making a business more efficient.

CONCLUSION

A relief has been provided to the industry by the government by omitting Section 35 (5) but this may result in future complications as now the auditing will be done by the GST officials once in many years. The issues may remain unnoticed as checking will be irregular.

The substitution of Section 44 which allows for self-certification of reconciliation statements without getting attested by professionals can lead to unwanted situations when the audit will be done by departmental officials later. However, this will help in saving costs and time both.

It is also to be kept in mind that the industry may not be more vigil as GST audit will not be applicable. The data can be altered in a manner which will benefit them and make the industry profits look good.


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