𝗚𝗦𝗧 𝗖𝗵𝗮𝗻𝗴𝗲𝘀 𝗯𝘆 𝗕𝘂𝗱𝗴𝗲𝘁 𝟮𝟬𝟮𝟱 𝗙𝗶𝗻𝗮𝗻𝗰𝗲 𝗕𝗶𝗹𝗹 𝟮𝟬𝟮𝟱.

Provision

Details

What is Changing?

• Section 2(61) is amended to explicitly allow the Input Service Distributor (ISD) to distribute input tax credit (ITC) for inter-state supplies on which tax is paid under reverse charge.
• Section 20(1) & Section 20(2) amended to enable ITC distribution for reverse charge inter-state supplies by ISD.

Why is This Change Needed?

Ensures that Input Service Distributors (ISD) can now legally distribute ITC on inter-state supplies where reverse charge mechanism (RCM) is applicable.

Effective Date

This amendment will come into effect from 1st April 2025.

Impact on ISD

ISD will now be able to distribute GST for inter-state supply of common input services under reverse charge, enhancing the flexibility and clarity in tax distribution.

Objective

To align the provisions of the CGST Act with the IGST Act, ensuring smoother distribution of ITC by ISDs on reverse charge transactions for inter-state supplies

📌 Key Takeaway:

The amendments will allow ISDs to distribute ITC for reverse charge on inter-state supplies from 1st April 2025, providing more clarity and expanding the scope of ITC distribution.

Provision

Details

What is Changing?

• Clause (c) of Section 2(69) is being amended to:

1. –  Replace “municipal or local fund” with “municipal fund or local fund”.
2. Insert an Explanation to provide clear definitions of the terms ‘Local Fund’ and ‘Municipal Fund’ for the purpose of defining “local authority” under the clause.

Why is This Change Needed?

The amendment clarifies the scope of “Local Fund” and “Municipal Fund”, ensuring clearer understanding of these terms as part of the definition of local authority under GST law.

Impact on Businesses

Provides clarity on the usage of Local Fund and Municipal Fund in local authority definitions, helping businesses better understand their GST obligations related to local authorities.

Objective

To clarify and standardize the definitions, ensuring there is no ambiguity when interpreting these terms in the GST context.

📌 Key Takeaway:

The amendment clarifies the terms “Local Fund” and “Municipal Fund” and ensures better understanding of their role in the definition of local authority for GST purposes.

Provision

Details

New Clause: Section 2(116A)

Introduces the definition of Unique Identification Marking (UIM) for implementing the Track and Trace Mechanism.

New Section: 148A

Provides an enabling mechanism for Track and Trace for specified commodities, as per the 55th GST Council recommendation.

Objective

To track evasion-prone commodities and enhance supply chain transparency.

Key Feature

Unique Identification Marking (UIM) to be affixed on goods or their packages for tracking purposes.

55th GST Council Recommendation

1. Empower the Government to enforce Track and Trace through Section 148A.
2. UIM-based system will provide a legal framework for tracking commodities.

📌 Key Takeaway:

This amendment strengthens GST compliance by ensuring traceability of high-risk commodities and preventing tax evasion. 

Provision

Details

New Section: 122B

Introduces penalties for non-compliance with the Track and Trace Mechanism under Section 148A.

Penalty Amount

Whichever is higher of the following:

a)   ₹1,00,000, or

b)  10% of the tax payable on such goods.

Applicability

Applies to businesses dealing with evasion- prone commodities that fail to comply with the Track and Trace system.

Additional Penalty

This penalty is over and above any other penalties under Chapter XV or other provisions of the CGST Act.

Objective

Ensures strict enforcement of Track and Trace regulations to curb tax evasion and improve compliance.

📌 Key Takeaway:

Businesses must strictly adhere to the Track and Trace Mechanism, as failure to comply will result in substantial financial penalties.

Provision

Details

What is changing?

Sections 12(4) & 13(4) (related to Time of Supply for Vouch

Reason for Deletion?

To remove ambiguity in the treatment of vouchers under GST.

Effect of This Change?

Vouchers are neither goods nor services, and no GST applies to voucher transactions.

55th GST Council Recommendations

• Omit Sections 12(4) & 13(4) from CGST Act and Rule 32(6) from CGST Rules.
• No GST on vouchers (not treated as goods or services).
• Principal-to-Principal distribution of vouchers not taxable.
• Principal-to-Agent distribution taxable only on commission/fee earned by the agent.
• Additional services (advertising, marketing, co-branding, etc.) related to vouchers are taxable.
• Unredeemed vouchers (breakage) are not taxable under GST.

📌 Key Takeaway:

This amendment ensures that voucher transactions are not taxed, except where there are related services or agent commissions.

Provision

Details

What is Changing?

The phrase “plant or machinery” in Section 17(5)(d) is replaced with “plant and machinery”.

Reason for Change?

To align the wording with the intent of the section and remove ambiguity after the Safari Retreats Pvt. Ltd. case.

Effective Date

Retrospective from 1st July 2017, overriding any court judgments or orders.

Supreme Court’s Ruling (Safari Retreats Case)

SC ruled that ITC cannot be denied on “plant” due to the wording of “plant or machinery”, interpreting it as an intentional legislative choice rather than a drafting error.

55th GST Council Recommendation

•  To correct the drafting issue and align with the intent of Section 17(5). 
• Ensure the term “plant and machinery” is interpreted as per the Explanation at the end of Section 17.
• Retrospective amendment nullifies the impact of the SC judgment.

📌 Key Takeaway:

This amendment removes ambiguity in ITC disallowance on immovable properties, ensuring consistent interpretation as per the Explanation in Section 17 of the CGST Act.

Provision

Details

What is Changing?

The Proviso to Section 34(2) is amended to explicitly require ITC reversal by the recipient for a supplier to claim a tax reduction via a credit note.

Why is This Change Needed?

Ensures that when a supplier reduces their output tax liability via a credit note, the corresponding ITC is reversed by the recipient to prevent revenue loss for the government.

Impact on Compliance

GSTR-3B and IMS are being modified to ensure proper tracking of credit notes and ITC reversals.

Effect on Businesses

• Businesses must ensure ITC reversal when receiving credit notes.
•  Suppliers can only reduce output tax when the recipient reverses the ITC.

Objective

• Prevents double benefits – i.e., supplier reducing output tax and recipient still availing ITC.
• Ensures fair tax adjustments and better compliance.

📌 Key Takeaway:

This amendment tightens compliance by ensuring that suppliers can only claim a tax reduction on a credit note if the recipient reverses the ITC accordingly. 

Provision

Details

What is Changing?

• Section 38(1) & (2) – The term “auto- generated” is omitted regarding the statement of ITC.
• Section 38(2)(b) – The word “including” is inserted after “by the recipient” to make the provision more inclusive.
• New Clause (c) in Section 38(2) – Allows other details to be included in the ITC statement.

Reason for Change?

Aligns ITC statement generation with taxpayer actions on the Invoice Management System (IMS) instead of relying on an auto-generated system.

Impact on Businesses

FORM GSTR-2B will now be generated based on taxpayer actions in IMS, ensuring greater accuracy and control.

55th GST Council Recommendation

• Provide a legal framework for ITC reconciliation using IMS.
• Shift from system-generated ITC statements to taxpayer-driven actions.

Objective

• Improves ITC accuracy by considering real-time actions on invoices.
• Reduces discrepancies in ITC claims and prevents incorrect credit availment.

📌 Key Takeaway:

The amendment eliminates auto-generated ITC statements and ensures ITC is determined based on taxpayer actions in IMS, leading to better control and compliance. 

Provision

Details

What is Changing?

Section 39(1) amended to introduce conditions & restrictions for filing returns.

Why is This Change Needed?

Ensures FORM GSTR-3B for a tax period can be filed only after FORM GSTR-2B is available on the portal.

55th GST Council Recommendation

• Amend Section 39(1) & Rule 61 to link GSTR-3B filing with GSTR-2B availability.
• Allow government to impose additional conditions & restrictions beyond the time limit.

Impact on Businesses

• GSTR-3B cannot be filed before GSTR-2B is generated.
• Helps in better reconciliation of ITC and reduces errors in tax filings.

Objective

• Ensures accurate ITC claims before return filing.
• Reduces discrepancies & tax evasion.

📌 Key Takeaway:
With this amendment, GSTR-3B filing will depend on GSTR-2B availability, ensuring better tax compliance and ITC accuracy 

Provision

Details

What is Changing?

• Section 107(6) amended to provide for 10% mandatory pre-deposit for penalty amount when appealing for cases involving only penalty (no tax demand).
•  The proviso to Section 107(6) substitutes the pre-deposit amount from 25% to 10%

Why is This Change Needed?

The amendment aims to reduce the burden on taxpayers appealing penalties without tax demand, making the appeal process more accessible.

55th GST Council Recommendation

Reduce the pre-deposit requirement to 10% for appeals concerning penalty only (no tax).

Impact on Businesses

Pre-deposit for penalty-only cases will now be lower (10%), easing the financial burden on businesses appealing penalties.

Objective

Facilitates easier appeals by reducing the upfront cost for businesses facing penalty- only demands

📌 Key Takeaway:
The pre-deposit amount for appealing penalty-only cases is reduced from 25% to 10%, making the appeal process more taxpayer- friendly. 

Provision

Details

What is Changing?

New proviso inserted in Section 112(8) to require a 10% pre-deposit for filing appeals before the Appellate Tribunal in cases involving only penalty (no tax demand)

Why is This Change Needed?

The amendment introduces a pre-deposit requirement that did not exist previously, ensuring consistency with similar provisions in the appeal process for penalty cases.

55th GST Council Recommendation

Introduce a 10% pre-deposit requirement for penalty-only cases in appeals to the Appellate Tribunal.

Impact on Businesses

Pre-deposit of 10% is now mandatory for appealing penalties (without tax demand) before the Appellate Tribunal, reducing the financial burden on businesses.

Objective

Ensure uniformity in the appeal process by introducing pre-deposit requirements for penalty-only appeals, aligning with changes in the Appellate Authority appeals process.

📌 Key Takeaway:

A 10% pre-deposit is now required for penalty-only appeals before the Appellate Tribunal, which was previously not mandated. 

Provision

Details

What is Changing?

• New Clause (aa) inserted in Paragraph 8 of Schedule III of the CGST Act, effective from 01.07.2017, treating supply of goods warehoused in SEZ/FTWZ as neither a supply of goods nor a supply of services before clearance for exports or to the Domestic Tariff Area (DTA).
• Explanation 2 amended to clarify applicability only to entry (a) of Paragraph 8.
• Explanation 3 inserted to define terms such as SEZ, FTWZ, and DTA for the new provision.

Why is This Change Needed?

Aligns the treatment of goods warehoused in Special Economic Zones (SEZ) and Free Trade Warehousing Zones (FTWZ) with the existing provisions for customs bonded warehouses under GST.

Impact on Businesses

Transactions involving the supply of goods in SEZ/FTWZ will now be excluded from GST, similar to transactions in customs bonded warehouses, until goods are cleared for export or moved to the Domestic Tariff Area (DTA).

Refund Impact

No refund will be provided for any tax collected on these transactions before the amendment.

Objective

Harmonize the GST treatment of goods in SEZ and FTWZ with customs procedures, ensuring clarity and fairness in transactions.

📌 Key Takeaway:

The amendment exempts supply transactions of goods warehoused in SEZ/FTWZ from being treated as a supply of goods or services until cleared for export or DTA, aligning with customs-bonded warehouse provisions.