The Union Budget 2025 presented on 1st February, 2025 proposed certain changes in GST. The clause by clause impact are as follows
A simpler version explaining the Amendment in a jist can be read here : Budget 2025: GST Amendments and Their Impact – Explained Simply
1. Distribution of ITC by Input Service Distributor (ISD) for RCM supplies
Clause No.: 116
Old Provision
2(61) “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices towards the receipt of input services, including invoices in respect of services liable to tax under sub-section (3) or sub-section (4) of section 9, for or on behalf of distinct persons referred to in section 25, and liable to distribute the input tax credit in respect of such invoices in the manner provided in section 20.
New Provision
2(61) “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices towards the receipt of input services, including invoices in respect of services liable to tax under sub-section (3) or sub-section (4) of section 9 of this Act or under subsection (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act, 2017, for or on behalf of distinct persons referred to in section 25, and liable to distribute the input tax credit in respect of such invoices in the manner provided in section 20;
Impact: Clarifies ISD mechanism for businesses distributing ITC related to RCM.
Effective Date: 1st April 2025
2. Definition of ‘Local Authority’
Clause No.: 116
Old Provision
2 (69) (c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal or local fund;
New Provision
| 2 (69) (c) a Municipal Committee, a Zilla Parishad, a District Board, and any other authority legally entitled to, or entrusted by the Central Government or any State Government with the control or management of a municipal fund or local fund; Explanation. –– For the purposes of this sub-clause– (a) “local fund” means any fund under the control or management of an authority of a local self-government established for discharging civic functions in relation to a Panchayat area and vested by law with the powers to levy, collect and appropriate any tax, duty, toll, cess or fee, by whatever name called; (b) “municipal fund” means any fund under the control or management of an authority of a local self-government established for discharging civic functions in relation to a Metropolitan area or Municipal area and vested by law with the powers to levy, collect and appropriate any tax, duty, toll, cess or fee, by whatever name called |
Impact: Removes ambiguity in tax treatment of local authorities.
Effective Date: To be notified
3. Definition of Unique Identification Marking (UIM) for Track and Trace
Clause No.: 116
Old Provision
| No definition for “unique identification marking.” |
New Provision
| (116A) “unique identification marking” means the unique identification marking referred to in clause (b) of sub-section (2) of section 148A and includes a digital stamp, digital mark or any other similar marking, which is unique, secure and non-removable |
Impact: Enables implementation of a Track and Trace system for specific goods
Effective Date: To be notified
4. Deletion of Time of Supply for Vouchers
Clause No.: 117, 118
Old Provision
| Section 12. Time of supply of goods. (4) In case of supply of vouchers by a supplier, the time of supply shall be— (a) the date of issue of vouchers, if the supply is identifiable at that point; or (b) the date of redemption of vouchers, in all other cases. |
New Provision
| Section 12(4) is deleted |
Old Provision
| Section 13. Time of supply of services. (4) In case of supply of vouchers by a supplier, the time of supply shall be— (a) the date of issue of voucher, if the supply is identifiable at that point; or (b) the date of redemption of voucher, in all other cases. |
New Provision
| Section 13(4) is deleted |
Impact: Removal of specific provisions for vouchers. The same being neither supply of goods nor supply of services.
Effective Date: To be notified
5. Clarification on ITC Restriction for Plant & Machinery
Clause No.: 119
Old Provision
| Section 17. Apportionment of credit and blocked credits. (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, Input tax credit shall not be available in respect of the following, namely:— (d) goods or services or both received by a Taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business Explanation.—For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property; |
New Provision
| Section 17. Apportionment of credit and blocked credits. (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, Input tax credit shall not be available in respect of the following, namely:— (d) goods or services or both received by a Taxable person for construction of an immovable property (other than plant and machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. Explanation 1 .—For the purposes of clauses (c) and (d), the expression “construction” includes re-construction, renovation, additions or alterations or repairs, to the extent of capitalisation, to the said immovable property; Explanation 2. ––For the purposes of clause (d), it is hereby clarified that notwithstanding anything to the contrary contained in any judgment, decree or order of any court, tribunal, or other authority, any reference to “plant or machinery” shall be construed and shall always be deemed to have been construed as a reference to “plant and machinery |
Impact: C
| Impact: Changes interpretation of “plant and machinery,” effective from 1st July 2017. Nullifies the Judgement of Safari Retreats |
Effective Date: 1st July 2017 (Retrospective Effect)
6. ISD ITC Distribution for RCM Supplies in Section 20
Clause No.: 120
Old Provision
| Section 20. Manner of distribution of credit by Input Service Distributor. (1) Any office of the supplier of goods or services or both which receives tax invoices towards the receipt of input services, including invoices in respect of services liable to tax under sub-section (3) or sub-section (4) of section 9, for or on behalf of distinct persons referred to in section 25, shall be required to be registered as Input Service Distributor under clause (viii) of section 24 and shall distribute the input tax credit in respect of such invoices. |
New Provision
| Section 20. Manner of distribution of credit by Input Service Distributor. (1) Any office of the supplier of goods or services or both which receives tax invoices towards the receipt of input services, including invoices in respect of services liable to tax under sub-section (3) or sub-section (4) of section 9 of this Act or under subsection (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act, 2017, for or on behalf of distinct persons referred to in section 25, shall be required to be registered as Input Service Distributor under clause (viii) of section 24 and shall distribute the input tax credit in respect of such invoices. |
Old Provision
| Section 20. Manner of distribution of credit by Input Service Distributor. (2) The Input Service Distributor shall distribute the credit of central tax or integrated tax charged on invoices received by him, including the credit of central or integrated tax in respect of services subject to levy of tax under sub-section (3) or sub-section (4) of section 9 paid by a distinct person registered in the same State as the said Input Service Distributor, in such manner, within such time and subject to such restrictions and conditions as may be prescribed. |
New Provision
| Section 20. Manner of distribution of credit by Input Service Distributor. (2) The Input Service Distributor shall distribute the credit of central tax or integrated tax charged on invoices received by him, including the credit of central or integrated tax in respect of services subject to levy of tax under sub-section (3) or sub-section (4) of section 9 of this Act or under subsection (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act, 2017 paid by a distinct person registered in the same State as the said Input Service Distributor, in such manner, within such time and subject to such restrictions and conditions as may be prescribed. |
Impact: Aligns ITC distribution mechanisms to include IGST invoices, effective from 1st April 2025.
Effective Date: 1st April 2025
7. Mandatory ITC Reversal for Credit Notes
Clause No.: 121
Old Provision
| Section 34. Credit and Debit notes. (2) Any Registered person who issues a Credit note in relation to a supply of goods or services or both shall declare the details of such Credit note in the return for the month during which such Credit note has been issued but not later than 3[the thirtieth day of November] following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed: Provided that no reduction in Output tax liability of the supplier shall be permitted, if the incidence of tax and interest on such supply has been passed on to any other person. |
New Provision
| Section 34. Credit and Debit notes. (2) Any Registered person who issues a Credit note in relation to a supply of goods or services or both shall declare the details of such Credit note in the return for the month during which such Credit note has been issued but not later than 3[the thirtieth day of November] following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed: Provided that no reduction in output tax liability of the supplier shall be permitted, if the–– (i) input tax credit as is attributable to such a credit note, if availed, has not been reversed by the recipient, where such recipient is a registered person; or (ii) incidence of tax on such supply has been passed on to any other person, in other cases |
Impact: Ensures that a reduction of tax liability can only happen when the recipient reverses the ITC.
Effective Date: To be notified
8. Removal of ‘Auto-Generated’ from ITC Statement
Clause No.: 122
Old Provision
| Section 38. Communication of details of inward supplies and Input tax credit. (1) The details of outward supplies furnished by the Registered persons under sub-section (1) of section 37 and of such other supplies as may be prescribed, and an auto-generated statement containing the details of Input tax credit shall be made available electronically to the recipients of such supplies in such form and manner, within such time, and subject to such conditions and restrictions as may be prescribed. |
New Provision
| Section 38. Communication of details of inward supplies and Input tax credit. (1) The details of outward supplies furnished by the Registered persons under sub-section (1) of section 37 and of such other supplies as may be prescribed, and an a statement containing the details of Input tax credit shall be made available electronically to the recipients of such supplies in such form and manner, within such time, and subject to such conditions and restrictions as may be prescribed. |
Old Provision
| Section 38. Communication of details of inward supplies and Input tax credit. (2) The auto-generated statement under sub-section (1) shall consist of— (a) details of inward supplies in respect of which credit of input tax may be available to the recipient; and (b) details of supplies in respect of which such credit cannot be availed, whether wholly or partly, by the recipient, on account of the details of the said supplies being furnished under sub-section (1) of section 37,– |
New Provision
| Section 38. Communication of details of inward supplies and Input tax credit. (2) The statement referred in under sub-section (1) shall consist of— (a) details of inward supplies in respect of which credit of input tax may be available to the recipient; (b) details of supplies in respect of which such credit cannot be availed, whether wholly or partly, by the recipient including, on account of the details of the said supplies being furnished under sub-section (1) of section 37,– |
Old Provision
| No clause for additional prescribed details in the statement. |
New Provision
| Section 38. Communication of details of inward supplies and Input tax credit. (c) such other details as may be prescribed. |
Impact: Allows flexibility in the statement format for GST returns.
Effective Date: To be notified
9. Conditions & Restrictions for GSTR-3B Filing
Clause No.: 123
Old Provision
Section 39. Furnishing of returns. 6(1) Every Registered person, other than an Input Service Distributor or a non-resident Taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, a return, electronically, of inward and outward supplies of goods or services or both, Input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, as may be prescribed: |
New Provision
Section 39. Furnishing of returns. 6(1) Every Registered person, other than an Input Service Distributor or a non-resident Taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, a return, electronically, of inward and outward supplies of goods or services or both, Input tax credit availed, tax payable, tax paid and such other particulars, in such form and manner, and within such time, and subject to such conditions and restrictions, as may be prescribed:. |
Impact: Adds conditions and restrictions to the requirements for furnishing returns, providing more regulatory control over the return filing process.
Effective Date: To be notified
11. Mandatory Pre-Deposit for Penalty-Only Appeals (First Appeal)
Clause No.: 124
Old Provision
Section 107. Appeals to Appellate Authority. (6) No appeal shall be filed under sub-section (1), unless the appellant has paid— (a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and (b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order, subject to a maximum of twenty crore rupees, in relation to which the appeal has been filed. Provided that no appeal shall be filed against an order under sub-section (3) of section 129, unless a sum equal to twenty-five per cent. of the penalty has been paid by the appellant. |
New Provision
| Section 107. Appeals to Appellate Authority.(6) No appeal shall be filed under sub-section (1), unless the appellant has paid—(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and(b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order, subject to a maximum of twenty crore rupees, in relation to which the appeal has been filed. Provided that in case of any order demanding penalty without involving demand of any tax, no appeal shall be filed against such order unless a sum equal to ten per cent. of the said penalty has been paid by the appellant. |
Impact: Provides 10 % as pre deposit for appeal against order of penalty only
Effective Date: To be notified
12. Mandatory Pre-Deposit for Penalty-Only Appeals (Tribunal Appeal)
Clause No.: 125
Old Provision
| Section 112. Appeals to Appellate Tribunal. (8) No appeal shall be filed under sub-section (1), unless the appellant has paid— (a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and (b) a sum equal to ten per cent. of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order, subject to a maximum of twenty crore rupees, in relation to which the appeal has been filed. |
New Provision
| Section 112. Appeals to Appellate Tribunal. (8) No appeal shall be filed under sub-section (1), unless the appellant has paid— (a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and (b) a sum equal to ten per cent. of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order, subject to a maximum of twenty crore rupees, in relation to which the appeal has been filed. Provided that in case of any order demanding penalty without involving demand of any tax, no appeal shall be filed against such order unless a sum equal to ten per cent. of the said penalty, in addition to the amount payable under the proviso to sub-section (6) of section 107 has been paid by the appellant. |
Impact: Extends appeal provisions to penalty-only cases, requiring additional 10% payment of penalty amount as pre deposit (Total 20%) for filing appeals to the Appellate Tribunal
Effective Date: To be notified
13. Penalty for Violation of Track & Trace Mechanism
Clause No.: 126
Old Provision
| No Provision Earlier |
New Provision
| 122B. Notwithstanding anything contained in this Act, where any person referred to in clause (b) of sub-section (1) Penalty for failure to 68 of section 148A acts in contravention of the provisions of the said section, he shall, in addition to any penalty under Chapter XV or the provisions of this Chapter, be liable to pay a penalty equal to an amount of one lakh rupees or ten per cent. of the tax payable on such goods, whichever is higher |
Impact: Introduces penalty provisions for non-compliance with track and trace mechanisms – higher of ₹1 lakh or 10% of tax payable on goods
Effective Date: To be notified
14. Enabling Track & Trace Mechanism
Clause No.: 127
Old Provision
| No Provision Earlier |
New Provision
| 122B. Notwithstanding anything contained in this Act, where any person referred to in clause (b) of sub-section (1) Penalty for failure to 68 of section 148A acts in contravention of the provisions of the said section, he shall, in addition to any penalty under 148A. (1) The Government may, on the recommendations of the Council, by notification, specify, – Track and trace mechanism for certain goods. (a) the goods; (b) persons or class of persons who are in possession or deal with such goods, to which the provisions of this section shall apply. (2) The Government may, in respect of the goods referred to in clause (a) of sub-section (1), –– (a) provide a system for enabling affixation of unique identification marking and for electronic storage and access of information contained therein, through such persons, as may be prescribed; and (b) prescribe the unique identification marking for such goods, including the information to be recorded therein. (3) The persons referred to in sub-section (1), shall, –– (a) affix on the said goods or packages thereof, a unique identification marking, containing such information and in such manner; (b) furnish such information and details within such time and maintain such records or documents, in such form and manner; (c) furnish details of the machinery installed in the place of business of manufacture of such goods, including the identification, capacity, duration of operation and such other details or information, within such time and in such form and manner; (d) pay such amount in relation to the system referred to in sub-section (2), as may be prescribed.” Chapter XV or the provisions of this Chapter, be liable to pay a penalty equal to an amount of one lakh rupees or ten per cent. of the tax payable on such goods, whichever is higher |
Impact: Strengthens supply chain monitoring of specific goods.
Effective Date: To be notified
15. Tax Treatment of Supplies in SEZ/FTWZ (Retrospective Effect)
Clause No.: 128
Old Provision
| No Provision Earlier |
New Provision
| SCHEDULE III ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES (aa) Supply of goods warehoused in a Special Economic Zone or in a Free Trade Warehousing Zone to any person before clearance for exports or to the Domestic Tariff Area;”; (ii) in Explanation 2, after the words “For the purposes of”, the words, brackets and letter “clause (a) of” shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 2017; (iii) after Explanation 2, the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 2017, namely: –– “Explanation 3. –– For the purposes of clause (aa) of paragraph 8, the expressions “Special Economic Zone”, “Free Trade Warehousing Zone” and “Domestic Tariff Area” shall have the same meanings respectively as assigned to them in section 2 of the Special Economic Zones Act, 2005. |
Impact: Expands the scope of activities not considered as supply to include goods warehoused in SEZ/FTWZ before clearance for exports/DTA, with retrospective effect from July 1, 2017.
Effective Date: 1st July 2017 (Retrospective Effect)
16. No Refund for Certain Transactions in SEZ/FTWZ (Retrospective Effect)
Clause No.: 129
No refund shall be made of all such tax which has been collected, but which would not have been so collected, had clause 128 been in force at all material times.
Impact: Prevents refund claims based on retrospective changes.
Effective Date: 1st July 2017 (Retrospective Effect)
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