Goods & Service Tax (GST) Proposals - Budget 2021-22

The Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman tabled the Union Budget 2021-22 in Parliament which included several changes with respect to GST.

It may be pertinent to note that the amendments carried out in the Finance Bill, 2021 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.

The following are the major Proposals in the same regards of the Budget 2021, along with extract from memorandum to the Finance Bill, 2021:

• Audited GST Reconciliation Statement : The provision for Audit under section 35(5) has been omitted with the insertion of Section 44 which requires a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement

Extract : Sub-section (5) of section 35 of the CGST Act is being omitted so as to remove the mandatory requirement of getting annual accounts audited and reconciliation statement submitted by specified professional. Section 44 of the CGST Act is being substituted so as to remove the mandatory requirement of furnishing a reconciliation statement duly audited by specified professional and to provide for filing of the annual return on selfcertification basis. It further provides for the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return.

• GST on Club/Association : A retrospective amendment has been proposed to ensure the levy of tax on the amounts collected from the members  involving supply of goods or services.

Extract :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, so as to ensure levy of tax on activities or transactions involving 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. Consequent to the amendment in section 7 of the CGST Act paragraph 7 of Schedule II to the CGST Act is being omitted retrospectively, with effect from the 1st July, 2017.

• Input Tax Credit : Input Tax Credit in respect of invoices and debit notes may be availed only to the extent they are furnished in the statement of outward supplies (GSTR-1) and thus appearing in GSTR-2A of the recipient.

Extract : A new clause (aa) to sub-section (2) of the 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 and such details have been communicated to the recipient of such invoice or debit note.

• Interest on Net Liability : The liability to pay interest shall be computed on the net cash liability declared in the return with effect from the 1st July, 2017.

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

• Seizure and Confiscation : Seizure and confiscation of goods or conveyances in transit shall have separate proceedings for recovery of tax and penalty.

Extract : Section 74 of the CGST Act is being amended so as make seizure and confiscation of goods and conveyances in transit a separate proceeding from recovery of tax

• Self-assessment Tax : It has been proposed to be clarified that  self-assessed tax shall include only the amount of tax payable in respect of details of outward supplies furnished in GSTR-1, but not included in GSTR-3B.

Extract : 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.

• Provisional attachment : It has been proposed to increase the ambit of provisional attachment by permitting proceeding under Chapter XII, XIV or XV for attachment of property including bank account belonging to taxable person or person who has retained benefits of offences under 122(1A).

Extract : Section 83 of the CGST Act is being amended so as 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 order made thereunder.

• Filing of Appeal under Section 129 : Proviso is propsed to be inserted in Sec 107(6), to make 25% penalty payment mandatory for filing Appeal under Section 129(3).

Extract : 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, unless a sum equal to twenty-five per cent. of penalty has been paid by the appellant.

• Detention, seizure and confiscation of goods : Section 129 and 130 have been amended to delink the proceedings for detention, seizure and confiscation of goods and conveyances and levy of penalty.

Extract : 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 confiscation of goods or conveyances and levy of penalty. Section 130 of the CGST Act is being amended to delink the proceedings under that section relating to 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.

• Power to collect information : The power of the Jurisdictional Commissioner has been extended to call for any information relating to any matter dealt with in connection with the Act.

Extract : 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. Section 152 of the CGST Act is being amended so as 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. Section 168 of the CGST Act is being amended to enable the jurisdictional commissioner to exercise powers under section 151 to call for information

• Zero-rated supplies : Section 16 of the IGST Act is proposed to amended so as to: (i) zero rate the supply of goods or services to SEZ unit only when the said supply is for authorised 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 refund.

Extract : Section 16 of the IGST Act is being amended so as to: (i) zero rate the supply of goods or services to a Special Economic Zone developer or a Special Economic Zone unit only when the said supply is for authorised 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 refund.

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