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Transitions in GST Rules Which are Applicable From 01st January 2021

In light of the GST investigation wing recently find few cases of fake invoices and fake firms, which also resulted in the arrest of some individuals CBIC has issued few notifications amending the CGST Act, 2017 and the CGST Rules, 2017 which are applicable with effect from 1st January 2021.

With the increase in the number of fraudulent cases, fake invoicing by many concerns, and creation of dummy firms the GST department amends the CGST rules, 2017 that are made effective from 1st January 2021.  These amendments are very important and crucial to understand by all businesses whether small or big, to comply with the GST laws of the country.

These are the essential transitions that are notified by the departments are given below-:

Input Tax Credit on debit notes

The period for taking benefit of ITC on debit notes has been changed from the date of the invoice to the date of the debit notes.

The Quarterly Return Monthly Payment Scheme

Introduction of the QRMP (Quarterly Return Monthly Payment) scheme for the registered person having turnover up-to 5crore in the preceding financial year. The option for availing of this facility is available till 31st January 2021 and if not selected to date then the default option is selected automatically.

Restriction in availing credit

There is a major change in the CGST Rules, 2017- rule 36(4) which said the limit for availing provisional ITC. Previously the limit prescribed by the rules is 10% of the credit available in GSTR-2B which has changed now to 5% of the credit in GSTR-2B.


E-invoicing becomes compulsory applicable to the registered person having turnover more than INR 100crore in any financial year starting from 2017-2018.

What are the Restriction in the utilization of credit?

According to the CGST Rules, 2017- Rule 86B, every registered person having turnover of more than INR 50 lacs in a month (other than exempt and zero-rated supplies) shall not utilize input tax credit to discharge his/her output tax liability in excess of 99% of such liability. In other words, the registered person is required to pay 1% of such liability in cash.

This restriction does not apply in these-:

  1. the registered person has paid income-tax exceeding INR 100,000 in two preceding financial years;
  2. the registered person has received a refund exceeding INR 100,000 under section 54 of CGST Act 2017;
  3. the registered person has used electronic cash ledger to pay liability on outward supplies, which cumulatively makes 1% of the total liability up to the said month;
  4. A person is a :-
    • Government Department,Or
    • Public Sector Undertaking,Or
    • Local Authority, Or
    • A Statutory Body.

The E way Bill validity and general law

The validity of an e-way bill distance has been enhanced to 200 Km, earlier it was 100 km for an e-way bill which is valid for one day. E way bill is restricted in the following cases-:

  1. Where a taxpayer has defaulted in furnishing returns for consecutive two tax periods instead of two months.
  2. If the registration of the registered person has been suspended according to the rule 21A (2) /2A

Cancellation or suspension of Registration

The registration of the taxpayer will be cancelled in the following cases-:

  1. Avails ITC in violation of section 16 or the rules made thereunder, or
  2. Furnishes details of outward supplies in GSTR-1 for one or more tax periods which is in excess of the output details declared by him/her in GSTR-3B, or
  3. Violates the provision of rule 86B.

An authorized officer will suspend the registration of a person without giving him/her a reasonable opportunity of being heard, in cases where such officer has reason to believe that the registration is liable to be cancelled.

In Last:-

These amendments in the CGST Rules, 2017 by the government are much required for eliminating the tax evasion and leakages, but it may also cause hardships to some of the taxpayers that conduct their business genuinely and transparently.