Budget 2021- Details of GST Amendment

Last Updated On: Feb. 12, 2021, 9:51 p.m.



The budget 2021, which was announced by the Finance Minister on Feb 1, 2021, proposed many changes in a range of finance sectors. The sectors which were affected the most by the recent Indian budget are taxation, personal finance, pensioners, etc. A number of proposals for amendment in certain GST rules were also proposed by the Finance Ministry with the aim to make the GST regime simpler and more beneficial for taxpayers and also to increase the GST revenue of the government.


Prior to Amendment

  • A registered person making zero rated supply shall be eligible to claim a refund under either of the following options, namely:––
  • he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards, and procedure as may be prescribed, without payment of integrated tax and claim a refund of the unutilized input tax credit,


View Section 7 Amendment of CGST Act 2017

Clause 99 of the Finance bill proposes an amendment in section 7 of the CGST Act, saying that a new clause (aa) to be added in sub-section 1 with effect from 1st July 2017. This will ensure that tax is levied on transactions involving the supply of goods or services by any person, except for an individual, to its members or vice-versa. Supplies made for cash, deferred payment, or other valuable consideration are applicable for the purpose.


Section 16 Amendment of 2017 CGST Act

Clause 100 of the Finance Bill proposes an amendment in section 16 of the Act, seeking to insert a new clause (aa) in subsection 2, according to which input tax credit (ITC) on invoice or debit note may be claimed only if the supplier has furnished details of such invoice or debit note in his/her statement of outward supplies and has also mentioned the details on the invoice or debit note of the recipient.

The said amendment is expected to replace Rule 36(4), which was introduced earlier.


CGST Act 2017 – Section 35 and Section 44 Amendments

Clause 101 of the budget bill proposes to remove subsection(5) of section 35, which will remove the need to get accounts audited annually and the reconciliation statement submitted to the Council by a certified professional.

Clause 102 of the Bill proposes to replace section 44 with a new section, seeking to remove the mandatory requirement of providing a reconciliation statement audited & signed by the said professional and also to allow the filing of annual returns on a self-certification basis.


CGST Act 2017 – Check Amendment in Section 50

Clause 103 of the finance bill suggests an amendment in section 50 of the CGST Act, seeking to substitute provision to subsection(1) with effect from 1st July 2017. According to the new rule, interest will only be paid on the net tax liability, after balancing the credit in the electronic credit ledger, given that the person has not been issued any show-cause notice under section 73 or 74.


CGST Act 2017 – Read Amendments in Section 74, 129 and 130

In the new budget bill, sections 129 and 130 have been deleted. While section 129 deals with detention, seizure and release of goods/conveyance in transit, section 130 is concerned with confiscation of goods or conveyance and levy of penalty in cases where tax has not been paid. The new rule seeks to delink these two sections, along with section 74. Also, it proposes to remove all the mentions of words “tax” and “interest” from these two sections, thereby making them strictly penalty sections.


CGST Act 2017 – Section 75 Amendment

Clause 105 of the Finance bill proposes to add an explanation in subsection (12) of section 75 of CGST Act, clarifying that “self-assessed tax” means the tax payable concerning details of outward supplies furnished under section 37. The same must not have been included in the return furnished under section 39.


Check Amendment in Section 83 of CGST Act 2017

In section 83 of CGST Act, 2017, subsection 1 is proposed to be substituted. The said subsection says that in the case where the commissioner, after initiating any proceeding under chapter XII, chapter XIV or chapter XV, believes it necessary for the purpose of protecting the government revenue, may order in writing to attach, provisionally, any property or bank account of the taxpayer.

CGST Act 2017 – Section 107 Amendment

The proposed amendment in section 107 seeks to change the amount to be deposited for filing an appeal to the appellate authority. Earlier the appellant was required to deposit 10 percent of the disputed tax amount before the authority. Now, that amount has been increased to 25 percent of the disputed tax.


View Amendment in Section 129 of CGST Act 2017

The amendment seeks to substitute clauses (a) and (b) of section 129, which deals with the segregation of penalty based on whether or not the owner comes forward to claim goods.

Clause (a) says that a penalty of 100 percent of the tax payable is applicable in case of taxable goods, while the penalty will be equal to two percent of the value of goods or twenty-five thousand rupees, whichever is less, in case of exempted goods.

Clause (b), where the penalty is levied when the owner does not claim goods, says that a penalty equal to fifty percent of the value of goods or two hundred percent of the tax payable, whichever is higher must be levied in case of taxable goods, and a penalty equal to five percent of the value of goods or twenty-five thousand rupees, whichever is less, to be applied in case of exempted goods.

CGST Act 2017 – Section 130 Amendment

An amendment in the second provision of section 130 suggests substituting the penalty amount as provided under section 129(1) with a penalty equal to 100 percent of the tax amount. Earlier, the penalty amount was equal to 200 percent of the tax payable on such goods.


Section 152 Amendment of CGST Act 2017

The provision in section 152 is related to the publishing of information concerning an individual return for the purpose of section 150 or 151 of the act. It says that access to such information should be given without the written consent of the concerned individual or his authorized representative. The amendment seeks to insert words “without giving an opportunity of being heard to the person concerned” to the said provision, thereby introducing the principle of natural justice.


IGST Act 2017 – Amendment in Section 16

According to this section, the refund will be given only if the supply of goods or services is used for authorized operations only.

According to the provisions of section 54 of the CGST Act, a registered person making only zero-rated tax supplies can claim a refund of unutilized ITC on the supply of goods or services or both, without having to pay integrated tax. Now, the government is planning to discontinue the option of payment route, except for certain categories, which is expected to affect exporters who will not be allowed to claim a refund of credit on capital goods under the LUT method.


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