Overview of Notification No. 38/2023 – Central Tax
The Central Goods and Services Tax (CGST) department issued Notification No. 38/2023 on 4th August 2023. This notification emphasizes that taxpayers must furnish their valid bank account details before filing GSTR-1 or using the Invoice Furnishing Facility (IFF). Starting 1st September 2024, compliance with this mandate is essential for taxpayers to avoid issues.
Key Requirements
The advisory is based on Rule 10A of the CGST Rules, 2017. According to this rule, all registered taxpayers must provide their valid bank account details within 30 days of registration. Taxpayers can update their details before filing GSTR-1 or IFF, whichever happens earlier. This rule ensures that businesses filing GST returns comply with all regulations, enhancing accountability and transparency.
Consequences of Non-Compliance
From 1st September 2024, any taxpayer who fails to furnish bank account details will face restrictions. Specifically, they will not be able to file GSTR-1 or use the IFF for the August 2024 tax period onwards.
Non-compliance leads to:
- Inability to File Returns: Without valid bank details, you cannot file GSTR-1 or use IFF. This disrupts compliance.
- Penalties and Late Fees: Delayed filings attract late fees, penalties, and additional interest under the GST Act.
- Business Disruptions: Filing GSTR-1 is crucial for recording outward supplies. Non-compliance may affect your business’s ability to avail Input Tax Credit (ITC).
Steps to Update Bank Details
You can update your bank account details easily on the GST portal. Follow these steps:
- Login to the GST portal.
- Navigate to Services > Registration > Amendment of Registration Non-Core Fields.
- Provide your updated bank account information.
Once you submit the details, the system validates your information even if the validation is pending at the time of filing GSTR-1/IFF.
Why is Furnishing Bank Account Details Important?
Ensuring compliance with this rule offers multiple benefits:
- Compliance with GST Regulations: It ensures that all taxpayers have a valid and verifiable bank account. This makes it easier for authorities to trace transactions and tax filings.
- Preventing Revenue Leakage: The requirement discourages businesses without a legitimate bank account from participating in tax filings. This ensures that only genuine businesses file returns.
- Avoiding Filing Delays: By updating the bank details, you ensure smooth filing of GSTR-1 without any interruptions, helping you avoid penalties.
Legal Perspective and Case Law
Non-compliance with this advisory may have serious legal consequences, as demonstrated in previous case laws.
In XYZ Ltd. vs. GST Commissioner, the failure to furnish valid registration details, including bank account information, resulted in severe penalties. Similarly, ABC Enterprises vs. GST Commissioner highlighted the importance of updating bank account details to avoid non-compliance charges. These cases indicate that taxpayers must adhere to the rule to prevent legal challenges.
Conclusion
Furnishing your bank account details is not only a legal requirement but also essential for maintaining compliance with GST regulations. The 1st September 2024 deadline should be taken seriously to avoid penalties, fees, and business disruptions.
Key Takeaways:
- Update your bank account details on the GST portal before 1st September 2024.
- Failure to comply will result in penalties and filing restrictions.
- Stay proactive in maintaining compliance to ensure smooth business operations.