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Today I am discussing Major GST Proposals in Union Budget 2021 in very simplified manner-

 Analysis of Proposed Provisions related to CGST ACT-

♠ Section 7(1)(a) –New clause inserted (aa) – Supply includes supply of goods or services by clubs or associations to its members and that to retrospective effect -01.07.2017 ,for cash ,deferred payment or other valuable consideration. Earlier we treat private clubs/associations and its members as same person and GST not levied but now GST is leviable that also with retrospective date.

♠ Section 16(2)-New clause inserted (aa)- Additional condition for claiming ITC details of invoice or debit note has been furnished by supplier in GSTR-1 or using IFF.

Now how can recipient takes responsibility of supplier-third person- whether he will furnish details of invoice in GSTR-1 or not for claiming TIC-RECIPIENT RIGHT. In future this amendment surely leads to litigation.

Section 35(5)- Provisions of section 35(5) omitted- It means now there will be no mandatory requirement to get annual accounts audited by Chartered Accountant or Cost Accountant and Reconciliation statement (GSTR-9C) to be submitted. But for F.Y 2019-20 GSTR-9C needs to be submitted. This amendment will

Section 44-Annual return- Now the Taxpayer to provide GSTR-9 on self-certification basis with reconciliation statement.It means reconciliation statement to be submitted by taxpayer himself instead of Auditor.

Proviso of Section 50(1)-Interest on delayed payment of tax- Proviso has been inserted so as to charge interest only on net cash liability w.e.f 01.07.2017 .So the issue will now finally settle

Amendment in Explanation 1(ii) to Section 74- Conclusion of proceedings u/s 73 or 74 will now mean conclusion of proceedings u/s 122 and u/s 125 but not conclusion of proceedings u/s 129 and 130. Now recovery of tax for proceedings u/s 129 and section 130 separate from Section 73 or 74.

♠ New explanation in Section 75(12)- Expression ‘’self-assessed tax’’  proposed to be widened –it means tax payable in respect of details of outward supplies declared U/S 37 i.e in GSTR-1 but not included in GSTR-3B.

Substitution of sub-section (1) in Section 83- Provisional attachment to protect revenue-

Now proposal is made to provisional attachment made to any property including bank account belonging to taxable person or any person specified in Sec 122(1A) i.e person who commit offenses and retains the benefit arising out of such offenses shall remain valid for entire period starting from initiation of any proceedings under Chapter XII-ASSESSMENT, Chapter XIV-Inspection, Search, Seizure & Arrest, Chapter XV-Demands & Recovery till expiry of period of one year from the date of provisional order made u/s 83(1) CGST ACT .

This amendment widened the power of provisional attachment but hope there will be no misuse of this power.

Proviso inserted in Section 107(6)-Appeals to Appellate Authority-  No appeal shall  be filed u/s 129(3) of CGST ACT (Detention & seizure of conveyance and goods  unless 25 % penalty has been paid by appellant.Earlier it was 10% of disputed tax liability.

♠ Clause (a) & (b) to be substituted in Section 129(1)-

√ Sub-section (1)(a) of Section 129 – Seeks to increase the payment of penalty from 100 to 200% for releasing of detained or seized goods or conveyance , earlier it was tax and penalty equal to 100 % but now it is penalty equal to 200% .

√ Sub-section (1)(b) of Section 129- Now Detained or seized goods of conveyance for taxable goods can be released where owner does not come forward on payment of penalty equal to –

    • 50% of value of goods or
    • 200 % of tax payable on such goods

Whichever is higher.

♠ Section 129(2)- shall be omitted- It means goods seized shall not be released on provisional basis upon execution of bond and furnishing of security .This means that penalty will be imposed in cash by taxpayer.

♠ Section 129(3)- The proper officer detaining or seizing goods or conveyance shall issue a notice with in 7 days of such detention or seizure specifying the penalty payable and thereafter pass an order with in period of seven days from date of service of notice for payment of penalty under clause( a )or (b ) of sub –section (1).

♠ Section 129(4)- No penalty shall be imposed without giving person oppotunity being heard.

Section 129(6)- Where person transporting any goods or owner of goods fails to pay the amount of penalty with in 15 days from date of receipt of copy of order passed under sub-section (3) ,the goods so detained or seized shall be sold or disposed off to recover penalty. Also that transporter can release conveyance on payment of penalty under sub-section (3) or Rs 100000 whichever is less , if owner does not come forward.

♠ Amendment in Section 130- Confiscation of goods or conveyance and levy of penalty-  Seeks to de-link the proceedings u/s 130 related to confiscation of goods or conveyances and levy of penalty from proceedings u/s 129 of CGST Act relating to detention , seizure and release of goods and conveyence in transit.

 Analysis of Proposed Provisions related to IGST ACT, 2017

Proposed Amendment in IGST ACT 2017-  Seeks to amend Section 16 of IGST ACT 2017 to provide that-

  • Zero rated supply of goods or services to SEZ developer OR SEZ Unit only when the said supply is for authorised operations.
  • Now only notified class of taxpayer or notified goods or services will be eligible for refund of IGST PAID ON ZERO –RATED SUPPLIES
  • If sale proceeds of goods exported are not realised with in time limit prescribed under FEMA then refund so received liable to be deposited with interest with in 30 days.


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Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.

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May 2024