CGST (Second Amendment) Rules, 2022 – ITC, Compliance & Return Filing Changes

Notification No.: 19/2022 – Central Tax
Date of Notification: 28th September 2022

Relevant Sections and Rules:

• Central GST Act, 2017:
  • Section 16(2) – ITC payment condition
  • Section 39(1) – Return filing (monthly/quarterly)
  • Section 50 – Interest on delayed tax
  • Section 49(6) – Refund from Electronic Cash Ledger
  • Section 164 – Power to make rules
• CGST Rules, 2017 (Amended):
  • Rule 21, 36, 37, 38, 42, 43, 60, 83, 85, 89, 96
  • Rules 69–77, 79 and Forms GSTR-1A, GSTR-2, GSTR-3 – Omitted

Summary of Notification

1. Expansion of Grounds for Cancellation of Registration – Rule 21:
   Two new clauses added:

• Clause (h): Cancellation if a monthly return filer under Section 39(1) fails to file returns for 6 continuous months.
• Clause (i): Cancellation if a quarterly return filer fails to file returns for 2 consecutive tax periods.

2. Amendment in Rule 36 – Documentary Requirement for ITC:

• Reference to furnishing details in GSTR-2 removed.
• Clarification: Input Tax Credit (ITC) must be available in respect of relevant details under clause (b) of Rule 36(4).

3. Major Revision in Rule 37 – ITC Reversal on Non-payment to Suppliers:

• Failure to pay value + tax within 180 days mandates ITC reversal in GSTR-3B, along with applicable interest.
• Supply without consideration (Schedule I) or deemed additions under Section 15(2)(b) are considered paid.
• Re-availment allowed upon actual payment.
• Old sub-rule (3) deleted.

4. Rule 38 Updated – ITC Distribution by ISD:

• Removal of dependency on GSTR-2.
• Balance ITC to be reversed in GSTR-3B.
• Clause (d) omitted.

5. GSTR-2 Based Reporting Omitted from Rules 42 & 43:

• Invoice-level and FORM GSTR-2 references deleted to align with current return system.

6. Rule 60(7) – Word “Auto-drafted” replaced with “Auto-generated”
7. Deletion of Rules 69–77 and 79:

• These rules related to GSTR-1A, GSTR-2, GSTR-3, GSTR-6A, GSTR-7A, GSTR-8A, etc. which are now obsolete.

8. Other Changes:

• Rule 83(8)(a): Words “and inward” removed.
• Rule 85(2): Clause (c) omitted.
• Rule 89(1): Refund permitted from electronic cash ledger per Section 49(6).
• Rule 96(3): Reference updated to GSTR-3B only (removes GSTR-3).
• Forms GSTR-1A, GSTR-2, and GSTR-3 – Omitted
• FORM GST PCT-05: The phrase “and inward” removed from the activity list.

Source: Notification No.: 19/2022 – Central Tax