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Changes and Amendments in CGST, IGST and UTGST Acts, 2017 – Budget 2021

 



    The Finance Minister while announcing the Budget 2021, had tabled the changes and amendments brought about in GST. These amendments as carried out in the Finance Bill, 2021 will come into effect from the date when the same would be notified.

    A new clause (aa) has been introduced in sub-section (1) of Section 7 of the CGST Act, with retrospective effect from the 1st July, 2017, so as to ensure levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. Correspondingly clause 7 of schedule II has been omitted with effect from 1st July 2017 in as much as both supply of services / goods have been brought under the above new clause (aa).

    A new clause (aa) has been inserted in sub-section (2) of section 16 of the CGST Act to provide that input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note have been furnished by the supplier in GSTR1 mentioning the outward supplies and such details have been communicated to the recipient of such invoice or debit note.

    Sub-section (5) of section 35 of the CGST Act is being omitted so as to remove the mandatory requirement of getting annual accounts audited and reconciliation statement submitted by specified professional – requirement of annual return read with section 44 where the auditor gives a certified reconciliation statement of the annual return has been done away with. It further provides for the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return.

    Section 50 of the CGST Act is being amended, retrospectively, to substitute the proviso to sub-section (1) so as to charge interest on net cash liability with effect from the 1st July, 2017. Effectively, it would mean that interest is being calculated on the differential tax payable, but not on the total tax payable. In other words, the ITC credit adjustment would not be liable to interest in the above case.

    Penalties under section 129 and 130 have been separated from penalties for confiscation of goods. Section 74 of the CGST Act has been amended so as make seizure and confiscation of goods and conveyances in transit a separate proceeding from recovery of tax. Section 129 of the CGST Act is being amended to delink the proceedings under that section relating to detention, seizure and release of goods and conveyances in transit, from the proceedings under section 130 relating to confiscation of goods or conveyances and levy of penalty. Section 130 of the CGST Act is being amended to delink the proceedings under that section relating to confiscation of goods or conveyances and levy of penalty from the proceedings under section 129 relating to detention, seizure and release of goods and conveyances in transit.

    An explanation to sub-section (12) of section 75 of the CGST Act is being inserted to clarify that “self-assessed tax” shall include the tax payable in respect of outward supplies, the details of which have been furnished under section 37 (GRSTR1 – outward supply return), but not included in the return furnished under section 39 (GSTR3B – “furnishing of return”).

    Section 83 of the CGST Act has been amended so as to provide that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII (assessment) , Chapter XIV (inspection, search and seizure of an assessee or others (persons referred to in Section 122 (1A) so involved) or Chapter XV ( demands and recovery) till the expiry of a period of one year from the date of order made thereunder.

    Section 151 of the CGST Act is being substituted to empower the jurisdictional commissioner to call for information from any person relating to any matter dealt with in connection with the Act. Section 152 of the CGST Act is being amended so as to provide that no information obtained under sections 150 and 151 shall be used for the purposes of any proceedings under the Act without giving an opportunity of being heard to the person concerned.

    Section 168 of the CGST Act is being amended to enable the jurisdictional commissioner to exercise powers under section 151 to call for information.

    Section 16 of the IGST Act is being amended so as to:

    1. zero rate the supply of goods or services to a Special Economic Zone developer or a Special Economic Zone unit only when the said supply is for authorised operations
    2. restrict the zero-rated supply on payment of integrated tax only to a notified class of taxpayers or notified supplies of goods or services
    3. link the foreign exchange remittance in case of export of goods with refund