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Budget 2021: Updates as on 1st February 2021

  1. Section 16 amended to allow taxpayers’ claim of input tax credit based on GSTR-2A and 2B. Henceforth, ITC on invoices and debit notes 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, and such details have been communicated to the recipient of such invoice or debit note.

  2. Section 50 of the CGST Act is being amended to provide for a retrospective charge of interest on net cash liability, with effect from 1st July 2017.

  3. With respect to orders received on detention and seizure of goods and conveyance, 25% of penalty needs to be paid for making an application for appeals under section 107 of the CGST Act. Date of applicability is yet to be notified.

  4. GST audit requirement by specific professionals such as CAs and CMAs has been removed from the GST law. Section 35 and 44 have been amended in this regard. As per the amendment, only GSTR-9 annual returns on a self-certification basis need to be filed on the GST portal by taxpayers, completely removing the requirement for GSTR-9C, i.e. the reconciliation statement. However, the financial year and date of applicability are yet to be clarified by the government.

  5. section 7 of the CGST Act was amended to include a new clause under the definition of supply. 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 falls under supply and will be liable to tax. Earlier, this supply would have been considered as only supply of goods under schedule II. So, the scope is expanded now for levy.

  6. Seizure and confiscation of goods and conveyances in transit are now made a separate proceeding from the recovery of tax from Section 74.

  7. Self-assessed tax referred to under section 75 of the CGST Act shall also cover the outward supplies/sales as reported in the GSTR-1 under Section 37 of the CGST Act, but which has been missed out while reporting in the GSTR-3B under Section 39.

  8. The provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding till the expiry of a period of one year from the date of order made thereunder.

  9. Section 129 is delinked from Section 130. Accordingly, proceedings relating to detention, seizure and release of goods and conveyances in transit will be separate from the levy of penalty for the confiscation of goods and conveyance.

  10. The Jurisdictional Commissioner can now call for information from any person relating to any matter dealt with in connection with the Act under Section 151, together with section 168. Further, section 152 is amended to provide an opportunity of being heard before using information obtained under Sections 150 or 151 of the Act

  11. The IGST Act was also amended in Section 16, that defines a zero-rated supply. Three amendments were made – (1) To state that supply to SEZ units /developers will be zero-rated only if it is authorised operations. (2) Only notified persons or supplies of goods/services can avail the status of zero-rated when IGST is paid. (3) Foreign exchange remittance will be linked in case of export of goods with the refund.

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