AMENDMENTS IN GOODS AND SERVICES TAX Union Budget 2025-26 (Full) + Finance Bill, 2025 - Finance Bill

Union Budget 2025-26 (Full) + Finance Bill, 2025 GOODS AND SERVICES TAX Note: (a) CGST Act means Central Goods and Services Tax Act, 2017 (b) Amendments carried out through the Finance Bill, 2025 will come into effect from the date when the same will be notified concurrently, unless specified otherwise, as far as possible, with the corresponding amendments to the similar Acts passed by the States Union territories with legislature. I. AMENDMENTS IN THE CGST ACT, 2017: S. No. Amendment Clause of the Finance Bill, 2025 1 Clause (61) of section 2 of the Central Goods and Services Tax Act is being amended to explicitly provide for distribution of input tax credit by the Input Service Distributor in respect of inter-state supplies on which tax has to be paid on reverse charge basis, by inserting reference to sub-section (3) and sub-section (4) of section 5 of Integrated Goods and Services Tax Act. This amendment will be effective from 1st April 2025. [116] 2 Sub-clause (c) of clause (69) of section 2 is being amended to replace municipal or local fund with municipal fund or local fund and to insert an Explanation after the said sub-clause, to provide for definitions of the terms Local Fund and Municipal Fund used in the definition of local authority under the said clause so as to clarify the scope of the said terms. [116] 3 A new clause (116A) is being inserted in section 2 to provide definition of Unique Identification Marking for implementation of Track and Trace Mechanism. [116] 4 Sub-section (4) of Section 12 relating to time of supply in respect of Vouchers is being deleted. Sub-section (4) of Section 13 relating to time of supply in respect of Vouchers is being deleted. [117, 118] 5 Clause (d) of sub-section (5) of section 17 is being amended to substitute the words plant or machinery with words plant and machinery . This amendment will be effective retrospectively from 1st July 2017, notwithstanding anything to the contrary contained in any judgment, decree or order of any court or any other authority. [119] 6 Section 20(1) and Section 20(2) are being amended to explicitly provide for distribution of input tax credit by the Input Service Distributor in respect of inter-state supplies, on which tax has to be paid on reverse charge basis, by inserting reference to sub-section (3) and sub-section (4) of section 5 of Integrated Goods and Services Tax Act in said sub-sections of section 20 of Central Goods and Services Tax Act. The amendment will be effective from 1st April 2025. [120] 7 Proviso to sub-section (2) of section 34 is being amended to explicitly provide for requirement of reversal of corresponding input tax credit in respect of a credit-note, if availed, by the registered recipient, for the purpose of reduction of tax liability of the supplier in respect of the said credit note. [121] 8 Section 38(1) is being amended to omit the expression auto generated with respect to statement of input tax credit in the said sub- section. [122] 9 Section 38(2) is being amended by omitting the expression auto generated with respect to statement of input tax credit in said sub- section and also to insert the expression including after the words by the recipient in clause (b) of said sub-section to make the said clause more inclusive. [122] 10 Section 38(2) is being amended by inserting a new clause (c) in the said sub-section to provide for an enabling clause to prescribe other details to be made available in statement of input tax credit. [122] 11 Section 39(1) is being amended so as to provide for an enabling clause to prescribe conditions and restriction for filing of return under the said sub-section. [123] 12 Section 107(6) is being amended to provide for 10% mandatory pre- deposit of penalty amount for appeals before Appellate Authority in cases involving only demand of penalty without any demand for tax. [124] 13 Section 112(8) is being amended to provide for 10% mandatory pre- deposit of penalty amount for appeals before Appellate Tribunal in cases involving only demand of penalty without any demand for tax. [125] 14 New section 122B is being inserted to provide penalty for contraventions of provisions related to the Track and Trace Mechanism provided under section 148A. [126] 15 New section 148A is being inserted to provide for an enabling mechanism for Track and Trace Mechanism for specified commodities. [127] 16 Schedule III of CGST Act is being amended, w.e.f. 01.7.2017 by inserting a new clause (aa) in paragraph 8 of Schedule III of the Central Goods and Services Tax Act, to provide that the supply of goods warehoused in a Special Economic Zone or in a Free Trade Warehousing Zone to any person before clearance for exports or to the Domestic Tariff Area shall be treated neither as supply of goods nor as supply of services. [128] 17 It further seeks to amend Explanation 2 of Schedule III of the Central Goods and Services Tax Act, w.e.f. 01.07.2017 to clarify that the said explanation would be applicable in respect of clause (a) of paragraph 8 of the said Schedule. [128] 18 It further seeks to amend Schedule III of CGST Act, w.e.f. 01.07.2017 by inserting Explanation 3 to define the terms Special Economic Zone , Free Trade Warehousing Zone and Domestic Tariff Area , for the purpose of the proposed clause (aa) in paragraph 8 of said Schedule. [128] 19 No refund of tax already paid will be available for the aforesaid activities or transactions referred to in clause 128. [129] Full Text : Union Budget 2025-26 (Full) + Finance Bill, 2025