What changed for GST in the Union Budget 2021?

February 24, 2021

What changed for GST in the Union Budget 2021?

The Goods and Services Tax (GST) was a sweeping tax reform that sought to revolutionise the way in which tax is collected from businesses and professionals in India. To know the GST rate that your products or services fall under or the types of GST in India, download a PDF of the GST rates list (found online). If you have your GST login credentials, it is significantly easier to understand the taxes you are required to pay.

The Finance Bill, 2021, proposed some amendments to these tax reforms (read below), which you can read about below, as part of the Budget, 2021 highlights regarding GST.

  1. The term ‘Supply’ has been expanded to include the coverage of activities or transactions that involve the supply of goods by any person, other than an individual, for its members or constitutes or vice-versa, for cash, deferred payment or any other valuable consideration.
    This amendment will apply to private clubs and associations, and their members.

  2. An amendment to Section 16 of the Central Goods and Services Tax (CGST) Act has added an eligibility criterion for determination of Input Tax Credit (ITC). Now, ITC will only be available to the buyer or recipient, if the invoice or debit note provided by them has not been provided by the supplier through the GSTR-1 or by using IFF/GSTR-2B.

  3. Another amendment under the Finance Bill, 2021, has resulted in the GST Audit being abolished. Section 35 (5) of the CGST Law is seeing the sub Section 5 being omitted to remove the previously mandatory requirements of annual accounts audits and submission of reconciliation statements by professionals.

  4. Section 44 of the CGST Act is aimed at enabling people to self-certify now, with the requirement of audits by professionals being removed.

  5. There have been retrospective amendments made among the Union Budget, 2021 highlights, in order for interest to be charged on net cash liability. This provision is to retrospectively kick in, with effect from Jul 01, 2017, the day the GST laws were first passed.

  6. A further amendment in this year’s Union Budget has made the seizure and confiscation of goods and conveyances, while in transit, a separate proceeding from those related to recovery of taxes.

  7. Section 75 of the CGST Act will now bear an explanation to Sub-Section (12), which clarifies the scope of ‘Self-assessed tax’. It should include all the tax payable in respect of outward supplies, details of which have been included under Section 37, but not included in the return furnished under Section 39.

  8. Section 83 of the CGST Act, which deals with the validity period of the attachment, is being amended. Provisional attachment shall now be valid for the entire time period, starting at the time of initiation of proceedings under Chapter XII, Chapter XIV or Chapter XV, till the expiry of the period of one year from the date.

  9. Sub-Section (6) under Section 107 of the CGST Act is seeing an insertion, wherein, no appeal can be filed against an order made under Sub-Section (3) of Section 129, unless a sum equivalent to 25% of the penalty has already been paid by the appellant.

  10. Another amendment facilitates the delinking of proceedings relating to detention, seizure and release of goods and conveyances in transit, from the proceedings related to the confiscation of goods or conveyances and the levying of penalties.

  11. A further amendment has facilitated the delinking of proceedings relating to the confiscation of goods or conveyances and related penalties from proceedings relating to the detention, seizure and release of goods and conveyance, while in transit.

  12. The jurisdictional commissioner’s powers and range are being expanded through substitution of Section 151 of the CGST Act, which now empowers the jurisdictional commissioner to call upon any person for information relating to any matter being dealt with in connection to the CGST Act.

  13. Section 152 of the Act is being amended through the Finance Bill, 2021, to ensure that the information obtained under relevant sections of the Act, shall not be used for any proceedings, without there being an opportunity for the person concerned to hear it.

  14. The Integrated Goods and Services Tax (IGST) law, meanwhile, has been amended in connection to provisions relating to Special Economic Zones (SEZs). The supply of goods or services to a SEZ developer or a SEZ unit will now only see a zero rate when the supply is for authorised operations. The zero-rated supply on the payment of integrated taxes will be restricted to only a notified class of taxpayers or for notified supplies of goods and services.

GST rates on everything, including mobile GST rates, have overturned the nation’s understanding of the tax structure. The amendments to the CGST laws are a step further towards streamlining of the country’s entire taxation processes and systems, along with creating a unified and systematic database of the tax payers.

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