CGST (Fourteenth Amendment) Rules, 2020 – Major Compliance & Registration Changes

Notification No.: 94/2020 – Central Tax
Date of Notification: 22nd December 2020

Relevant Sections and Rules:

Central GST Act, 2017:

• Section 25(6C) & (6D) – Aadhaar authentication provisions
• Section 16 – Eligibility for input tax credit
• Section 37 – Furnishing of details of outward supplies
• Section 39 – Furnishing of returns
• Section 54 – Refund of tax
• Section 164 – Power to make rules

CGST Rules, 2017 (Fourteenth Amendment Rules, 2020):

• Rule 8(4A), Rule 9, Rule 21, Rule 21A, Rule 22, Rule 36(4), Rule 59, Rule 86B, Rule 138, Rule 138E
• New Form: GST REG-31

Integrated GST Act, 2017:

• Not directly applicable

Summary of Notification

1. Aadhaar Authentication & Registration Timelines (Rules 8 & 9):
   Biometric-based Aadhaar authentication, photographs, and KYC verification introduced for applicants opting for Aadhaar/non-Aadhaar route. Timelines for grant of registration extended from 3 to 7 days, and up to 30 days in cases requiring Aadhaar failure or physical verification. Registration deemed approved if no action taken within timelines.
2. Grounds for Cancellation of Registration Expanded (Rule 21):
   Cancellation grounds widened to include: availing ITC in violation of Section 16, excess outward supplies reported in GSTR-1 over GSTR-3B, and violation of new Rule 86B restrictions.
3. Suspension of Registration (Rule 21A):
   New sub-rule 2A allows suspension where anomalies detected between GSTR-1, GSTR-3B, and suppliers’ returns. Suspended taxpayers barred from refunds. FORM GST REG-31 introduced for intimation of suspension and notice for cancellation.
4. Restrictions on ITC Utilization (Rule 86B):
   New rule limits use of ITC – taxpayers with monthly taxable supplies exceeding ₹50 lakhs cannot use ITC to pay more than 99% of output tax liability. Exemptions provided for high-income tax payers, refund recipients, government entities, and those discharging >1% liability in cash.
5. ITC Claim Restriction Tightened (Rule 36(4)):
   Effective 1st January 2021, ITC claim restricted to 5% (earlier 10%) of invoices not furnished by suppliers in GSTR-1/Invoice Furnishing Facility.
6. Blocking of GSTR-1 Filing (Rule 59):
   Taxpayers barred from filing GSTR-1 if they fail to file preceding GSTR-3B for two months/quarters, or if restricted under Rule 86B.
7. E-way Bill Rules (Rules 138 & 138E):
   Distance validity for e-way bills doubled from 100 km to 200 km per day. Restrictions extended to taxpayers with suspended registration.

Source: Notification No.: 94/2020 – Central Tax