Aadhaar Authentication & Rule Amendments – CGST (Third Amendment) Rules, 2020

Notification No.: 16/2020 – Central Tax
Date of Notification: 23rd March 2020

Relevant Sections and Rules:

• Central Goods and Services Tax Act, 2017:
  • Section 25 – Procedure for registration
  • Section 35(5) – Audit of accounts
  • Section 54 – Refund of tax
  • Section 73 / 74 – Recovery of erroneous refunds
  • Section 148 – Special procedure for certain registered persons
  • Section 164 – Power to make rules
• CGST Rules, 2017 Amended:
  • Rule 8(4A), Rule 9(1), Rule 25, Rule 43(1), Rule 80(3), Rule 86(4A), Rule 89(4), Rule 92(1A), Rule 96(10), Rule 96B (New), Rule 141(2), FORM GST RFD-01

Summary of Notification

1. Aadhaar Authentication for GST Registration (Rule 8 & 9):
   With effect from 01.04.2020, Aadhaar authentication is mandatory while applying for GST registration. If Aadhaar authentication fails, physical verification of the business premises will be required within 60 days (Rule 25).
2. ITC Attribution for Capital Goods (Rule 43):
   Amendments in Rule 43 revise the manner of attributing input tax credit (ITC) on capital goods used commonly, introducing new formulas, clarifications, and deleting clause (f).
3. Audit Requirement for FY 2018–19 (Rule 80):
   Registered persons with aggregate turnover exceeding ₹5 crore in FY 2018–19 are mandated to furnish audited annual accounts and reconciliation statement (GSTR-9C).
4. Refund Re-credit (Rule 86 & Rule 92):
   Where excess tax was paid and debited from the credit ledger, and refund is found admissible, it shall be re-credited through FORM GST PMT-03.
5. Zero-Rated Supply Turnover Cap (Rule 89):
   Cap introduced for zero-rated supply of goods to be either the actual export value or 1.5 times the value of like domestic goods, whichever is lower.
6. Refund Recovery if Export Proceeds Not Realised (Rule 96B – New):
   Refunds granted on exports will be recovered with interest if foreign exchange is not realised within time under FEMA. If later realised, the refund may be given back.
7. Explanation to Rule 96(10):
   Clarifies that exemption from customs duty alone (without IGST exemption) does not amount to availing of benefit under the rule, protecting exporter refund eligibility.
8. Change in Authority for Confiscated Goods (Rule 141):
   Replaces “Commissioner” with “proper officer” in the context of disposing of confiscated goods.
9. New Undertaking in FORM GST RFD-01:
   Applicants must now give an undertaking to return the refund amount with interest in case of non-receipt of foreign exchange as per Rule 96B.

Source: Notification No.: 16/2020 – Central Tax