The CBIC issued Notification No. 16/2024-Central Tax dated 06.08.2024, to notify the effective dates for implementation of the amended GST law provisions as amended by the Finance Act, 2024. These Proposed changes relates to :

A. Changes relating to Input Service Distributor (Notified date w.e.f. 01.04.2025)

a. Substitution in the Definition of ISD to clarify that ISD can distribute credit under Reverse charge as well (Section 2(61) of the CGST Act) –  In accordance with the amendment in the definition of lnput Service Distributor it has been clarified that an lnput Service Distributor can distribute the credit of input services including invoices in respect of services liable to be taxed under reverse charge mechanism. 

b. Mandatory registration as ISD (Section 20(1)): Section 20(1) of CGST Act’2017 has been substituted to mandate the registration requirement as lnput Service Distributor (lSD) under Section 24(viii) of the CGST Act, 2017. Now, any office of the supplier receiving tax invoices for distinct person towards input services, including invoices in respect of services liable to tax under reverse charge mechanism, must take registration as an lnput Service Distributor. The lSD is then obligated to distribute the input tax credit for such invoices.

c. Distribution of Credit by ISD including the credit of tax paid under RCM paid by the distinct person registered in the same State as that of ISD, Manner of distribution of Credit by ISD (Section 20(2) and 20(3)):  Section 20(2) of CGST Act’2017 amended to take into consideration the fact that an Input Service Distributor shall be allowed to distribute the credit of input service invoices received by him including the credit on such input service invoices the tax on which have to be paid under reverse charge mechanism where such tax has been paid by the distinct person registered in the state as that of the Input Service Distributor.

Also, As per Section 20(3) of CGST Act’2017, the manner of distribution shall be prescribed in the rules. However, it has been stated in sub-section (3) of Section 20 if CGST Act’2017 that credit of Central Tax shall be distributed as Central Tax or Integrated Tax and that of Integrated Tax shall be Integrated Tax or Central Tax. In this respect Rule 39 of the CGST Rules, 2017 has also been amended vide Notification No. 12/2024-Central Tax dated 10.07.2024.

B. Insertion of new section 122A for levying penalty in case failure to register certain machines used in manufacture of goods as per special procedure notified u/s 148 of CGST Act (i.e. Tobacco, Pan-masala and similar items) (Notified date w.e.f. 01.10.2024):  Insertion of new Section 122A wherein a penalty has been imposed on failure to register the machines used for manufacture of goods as specified in Section 148 of CGST Act’2017.

The penalty imposed is Rs. 1 Lakh under CGST Act’2017 for every machine which has not been registered. Eventually, the said penalty shall be Rs. 2 Lakhs (Rs. 1 lakh under CGST & SGST each) as the proposed changes shall also be introduced in SGST Act’2017.

The Notification can be accessed at https://taxo.online/wp-content/uploads/2024/08/NN-16_2024-CT.pdf

The Finance Act, 2024 can be accessed at https://taxo.online/wp-content/uploads/2024/02/The-Finance-Act-2024.pdf