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Section wise analysis of GST changes in Budget 2021

The budget was presented on 01-02-2021 and amendment was carried out in the Finance Bill, 2021 which will come into effect from the date when the same will be notified, as far as possible, concurrently with the corresponding amendments to the similar Acts passed by the States and Union Territories with Legislature.

AMENDMENTS IN THE CGST ACT, 2017:

Clause of the

Finance Bill, 2021

Section

Before Budget

After Budget

Analysis

99

Section 7

Section 7 deals with Scope of Supply:

This clause has been newly inserted in Finance Bill.

A new clause (aa) in sub-section (1) of Section 7 of the CGST Act is being inserted, retrospectively with effect from the 1st July 2017.

Earlier this was included in paragraph 7 of Schedule II of Section 7. Now, this has been added in Section that was to ensure levy of tax on activities or transactions involving the 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.

100

Section 16

Section 16 deals with Eligibility and conditions for taking input tax credit:

This clause has been newly inserted in Finance Bill.

A new clause (aa) to sub-section (2) of section 16 of the CGST Act is being inserted.

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 the statement of outward supplies (i.e. GSTR-1, GSTR-4, GSTR-6, etc.) and such details have been communicated to the recipient of such invoice or debit note (i.e. GSTR-2A, GSTR-6A, etc.).

101

Section 35

Section 35 deals with Accounts and other records:

Section 35 (5) of CGST Act, 2017 states that every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub-section (2) of section 44 and such other documents in such form and manner as may be prescribed.

Sub-section (5) of section 35 of the CGST Act is being omitted.

To remove the mandatory requirement of getting annual accounts audited and reconciliation statement submitted by specified professional. Applicability of FY yet to be notified.

102

Section 44

Section 44 deals with Annual return:

Section 44 (1) Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person, and a non-resident taxable person, shall furnish an annual return for every financial year electronically in such form and manner as may be prescribed.

(2) Every registered person who is required to get his accounts audited in accordance with the provisions of sub-section (5) of section 35 shall furnish, electronically, the annual return under sub-section (1) along with a copy of the audited annual accounts and a reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year with the audited annual financial statement, and such other particulars as may be prescribed.

Section 44 of the CGST Act is being substituted.

To remove the mandatory requirement of furnishing a reconciliation statement duly audited by a specified professional and to provide for filing of the annual return on a self-certification basis. It further provides for the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return.

103

Section 50

Section 50 deals with Interest on delayed payment of tax:

Section 50 states that every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen percent., as may be notified by the Government on the recommendations of the Council.

Section 50 of the CGST Act is being amended, retrospectively, to substitute the proviso to sub-section (1) to charge interest on net cash liability with effect from the 1st July 2017.

Charge interest on net cash liability with effect from the 1st July 2017.

104

Section 74

Section 74 deals with the Determination of tax not paid or short paid or erroneously

refunded or input tax credit wrongly availed or utilized by

reason of fraud or any wilful misstatement or suppression of facts:

Section 74 of CGST Act, 2017 allows the proper officer to issue show cause notice where tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized because of fraud or any wilful misstatement or suppression of facts.

Section 74 of the CGST Act is being amended so as make

Seizure and confiscation of goods and conveyances in transit separate proceedings from the recovery of tax.

To make seizure and confiscation of goods and conveyances in transit a separate proceeding from the recovery of tax.

105

Section 75

Section 75 deals with General

Provisions relating to the determination of tax:

Section 75 (12) Notwithstanding anything contained in section 73 or section 74, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.

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 but not included in the return furnished under section 39.

This has been added 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 but not included in the return furnished under section 39.

 

106

Section 83

Section 83 deals with Provisional attachment to protect revenue in certain cases:

Section 83 of CGST Act, 2017 states that every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order

Section 83 of the CGST Act is being amended to provide that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII, Chapter XIV, or Chapter XV till the expiry of a period of one year from the date of the order made thereunder.

To provide that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII, Chapter XIV, or Chapter XV till the expiry of a period of one year from the date of the order made thereunder.

107

Section 107

Section 107 deals with Appeals to Appellate Authority:

This clause has been newly inserted in Finance Bill.

A proviso to sub-section (6) of section 107 of the CGST Act is being inserted.

To provide that no appeal shall be filed against an order made under sub-section (3) of section 129 (Detention, seizure, and release of goods and conveyances in transit) unless a sum equal to twenty-five percent of penalty has been paid by the appellant.

108

Section 129

Section 129 deals with Detention, seizure, and release of goods and conveyances in transit:

Section 129 state that conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure

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 the confiscation of goods or conveyances and levy of penalty.

109

Section 130

Section 130 deals with Confiscation of goods or conveyances and levy of penalty:

Section 130 provides power to the officer to confiscate the goods or conveyance used as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder.

Section 130 of the CGST Act is being amended.

To delink the proceedings under that section relating to the 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.

 

110

Section 151

Section 151 deals with power to collect statistics:

151. (1) The Commissioner may if he considers that it is necessary so to do, by notification, direct that statistics may be collected relating to any matter dealt with by or in connection with this Act.

Section 151 (2) of CGST Act, 2017 allows the Commissioner, or any person authorized by him in this behalf, upon such notification being issued, may call upon the concerned persons to furnish such information or returns, in such form and manner as may be prescribed, relating to any matter in respect of which statistics is to be collected.

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.

Amendment in the budget clarifies that here commissioner means jurisdictional commissioner.

111

Section 152

Section 152 deals with the bar on disclosure of information

Section 152 allows publishing the information relating to the class of taxable taxpayer if, in the opinion of the Commissioner, it is desirable in the public interest to publish such information.

Section 152 of the CGST Act is being amended 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.

Amendment in this section to restrict the utilization of information obtained under sections 150 and 151.

112

Section 168

Section 168 deals with the power to issue instructions or directions:

Section 168 of CGST Act, 2017 states that the Board may, if it considers it necessary or expedient so to do for uniformity in the implementation of this Act, issue such orders, instructions, or directions to the central tax officers as it may deem fit, and thereupon all such officers and all other persons employed in the implementation of this Act shall observe and follow such orders, instructions or directions.

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

Amendment in the budget clarifies that here commissioner means jurisdictional commissioner.

113

Section 7

Section 7 deals with Scope of Supply:

Schedule II of Section 7 of CGST Act, 2017 covers activities that are treated as supply of goods or supply of services.

Section 7 of the CGST Act paragraph 7 of Schedule II to the CGST Act is being omitted retrospectively.

This particular entry of Schedule II has been shifted in Section 7 of CGST Act, 2017

AMENDMENTS IN THE IGST ACT, 2017: 

Clause of the

Finance Bill, 2021

Section

Before Budget

After Budget

Analysis

114

Section 16

Section 16 deals with Zero-rated Supply:

Section 16 covers the definition of zero-rated supply which is defined as the supply of goods or services or both:

(a) Export of goods or services or both; or

(b) Supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

Section 16 of the IGST Act is being amended to:

(i) Zero-rated supply of goods or services to a Special Economic Zone developer or a Special Economic Zone unit only when the said supply is for authorized operations;

(ii) Restrict the zero-rated supply on payment of integrated tax only to a notified class of taxpayers or notified supplies of goods or services; and

(iii) Link the foreign exchange remittance in case of export of goods with the refund.

The impact of this amendment is:

(i) Supply is for authorized operation only.

(ii) Restrictions to a notified class of taxpayers or notified supplies.

(iii) Linkage of foreign exchange remittance.

 

 

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