The Union Budget 2021 was presented on 1 February 2021. This budget focuses on strengthening the staggered nation post-COVID-19. Various provisions have been considered in this budget. Modification of GST laws is one among them. Please note: The proposed changes will be effective from the date they are notified. The key proposals are-
In the CGST Act, 2017- Insertion of a new clause (aa) after Section 7(1)(a) and omission of Paragraph 7 under Schedule II is proposed. The new clause (aa) proposes to expand the scope of supply under Section 7 of the CGST Act 2017. Henceforth, the supply of goods or services, by a person other than an individual, i.e., a club or association, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration will attract GST. Hence, it aims to remove the principle of mutuality which treats a club/association and its members as the same person. Once notified, this clause shall take effect retrospectively (from 1 July 2017). A similar change has been proposed under Schedule II of the CGST Act 2017 because of which Paragraph 7 has been omitted.
In the CGST Act, 2017- Insertion of New clause (aa) after Section 16(2)(a) is proposed. The new clause (aa) proposes an additional condition to determine if the taxpayer is eligible to avail the Input Tax Credit (ITC). Henceforth, ITC will be available to a taxpayer only if the details of the relevant invoices or debit note have been furnished by the supplier in their GSTR-1 or using Invoice Furnishing Facility (IFF). Moreover, the details that have been furnished need to be communicated to the taxpayer.
In the CGST Act, 2017- Omission of Section 35(5) is proposed. The Finance Minister has proposed to omit the mandatory requirements of:
In the CGST Act 2017- Substituting the entire Section 44(1) and (2) with Section 44 is proposed.
In the CGST Act, 2017- Substituting proviso to Section 50(1) is proposed. It has been proposed to charge interest on delayed payment of tax on the net cash liability retrospectively from 1 July 2017. That means, when the notification is passed, interest on delayed payment of tax under GST will be payable on the net cash liability and not on the gross tax liability.
In the CGST Act, 2017 – Removal of Section 129 and 130 from the purview of Explanation 1(ii) of Section 74 is proposed. The budget seeks to remove Section 129 (Detention, seizure and release of goods and conveyances in transit) and Section 130 (Confiscation of goods or conveyances and levy of penalty) from the purview of Section 74 of the Act. Which means, henceforth, the conclusion of proceedings under:
will be only under:
That means, the conclusion of proceedings under Section 73 and 74 will not be in the purview of:
In the CGST Act 2017- A new Explanation to Section 75(12) is proposed to be added. An explanation has been added to clarify the term “Self-Assessed Tax”. The scope of self-assessed tax will also include the tax payable in respect of outward supplies that have been furnished in the GSTR-1 but not included in the GSTR-3B. In addition to this, authorised officers can initiate recovery proceedings for the tax payable on the outward supplies shown in GSTR-1 as well.
In the CGST Act, 2017- Substituting subsection (1) in Section 83 is proposed. subsection 1 of Section 83 of the Act has been substituted to provide that, provisional attachment made to any property, including bank account, will remain valid from the date of initiation of any proceedings under:
This attachment will be valid for a period of one year from the date of the provisional order issued under Section 83(1) of the Act.
In the CGST Act, 2017- A Proviso to Section 107(6) is proposed. The budget seeks to add a proviso, that states that, if the taxpayer’s goods or conveyances have been detained or seized, they cannot file an appeal unless they have deposited 25% of the penalty amount. This pre-deposit requirement has been increased from 10% to 25%.
|Time limit for issuing notice upon detaining or seizing goods or conveyance||Within 7 days from the date when the goods or conveyances were detained or seized. The notice should also specify the penalty payable. The tax amount should no longer be demanded once the notification is announced.|
|Time limit for passing an order under Section 129||Within 7 days from the date, the notice for payment of penalty was served.|
In the CGST Act, 2017- Under Section 130, subsection (1) and the second proviso to subsection (2) have been substituted, and subsection (3) has been omitted. The proposed change aims to delink the provisions of Section 129 from Section 130 of the Act. The goods and conveyances that have been detained or seized cannot be confiscated or penalised as per Section 130. Earlier, the aggregate of penalty and fines charged under this section could not be less than the penalty leviable under Section 129(1). Henceforth, the minimum limit has been set at 100% of the tax payable on such goods that have been confiscated.
In the CGST Act. 2017- Substitution of Section 151 has been proposed. Earlier, the Commissioner could provide directions for collecting statistics or call upon the concerned person to furnish the required information. Henceforth, the section authorises the Commissioner to call upon any person to furnish any information as required in connection with the matters dealt under the CGST Act 2017.
In the CGST Act 2017- Under Section 152, substituting subsection (1) and omitting subsection (2) are proposed. Information collected as per Section 150 and 151 of the Act should not be used for any proceedings under the Act without allowing the concerned person an opportunity to be heard.
In the CGST Act, 2017- Substitution of subsection (2) under Section 168 is proposed. The section has been amended to give the Commissioner the right to exercise his power under Section 44 (Annual Return). Additionally, Section 151 (Power to collect statistics) is removed from the purview of this section.
In the IGST Act, 2017- Substitution of subsection (1) clause (b), subsection (3) and adding subsection (4) under Section 16 are proposed.
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