The Finance (No. 2) Bill, 2024 proposes significant amendments to the GST framework, affecting the Central Goods and Services Tax Act (CGST), Integrated Goods and Services Tax Act (IGST), Union Territory Goods and Services Tax Act (UTGST), and Goods and Services Tax (Compensation to States) Act. Key changes include exempting Extra Neutral Alcohol used in liquor production from tax, introducing new provisions for the regularization of tax shortfalls, and adjusting input tax credit rules. Specific amendments address the time of supply for reverse charge transactions, input tax credit conditions for various financial years, and limitations on refund claims for export duties. The Bill also proposes reductions in pre-deposit requirements for appeals and updates procedures for tax determinations and appeals. These amendments are set to enhance compliance and streamline tax administration, with most changes effective from July 1, 2017, and certain updates applying from August 2024.
GOODS AND SERVICE TAX
Note: (a) CGST Act means Central Goods and Services Tax Act, 2017
(b) IGST Act means Integrated Goods and Services Tax Act, 2017
(c) UTGST Act means Union Territory Goods and Services Tax Act, 2017
(d) Cess Act means Goods and Services Tax (Compensation to States) Act, 2017
Unless specified otherwise, amendments proposed in the Finance (No. 2) Bill, 2024, vide clause 110 to 153 will come into effect from a date when the same will be notified concurrently, as far as possible, with the corresponding amendments to the similar Acts passed by the States & Union territories with legislature.
Page Contents
I. Amendments In the CGST ACT, 2017:
| S. No. |
Amendment | Clause of the Finance(No. 2) Bill, 2024 |
| 1. | Section 9 is being amended to take Extra Neutral Alcohol used in manufacture of alcoholic liquor for human consumption out of purview of central tax. Similar amendments are also proposed in IGST Act and UTGST Act. | [110] |
| 2. | Sub-section (5) of section 10 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said subsection. | [111] |
| 3. | Section 11A is being inserted to empower the government to regularize non-levy or short levy of central tax due to any general practice prevalent in trade. Similar power is being proposed in IGST Act, UTGST Act and GST (Compensation to States) Act. | [112] |
| 4. | Amendment is proposed in sub section (3) of Section 13 of CGST Act to provide for time of supply of services where the invoice is required to be issued by the recipient of services in cases of reverse charge supplies. | [113] |
| 5. | Sub-section (5) is being inserted in section 16 of the CGST Act, so as to carve out an exception to the existing sub-section (4) and to provide that in respect of an invoice or debit note under the said subsection, for the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed upto the 30th day of November, 2021.
Sub-section (6) is being inserted in the said section so as to allow the availment of input tax credit in respect of an invoice or debit note in a return filed for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancellation of registration, filed within thirty days of the date of order of revocation of cancellation of registration, subject to the condition that the time-limit for availment of credit in respect of the said invoice or debit note should not have already expired under sub-section (4) of the said section on the date of order of cancellation of registration. The aforesaid amendments are made effective from the 1st day of July, 2017. Further, where the tax has been paid or the input tax credit has been reversed, no refund of the same shall be admissible. |
[114] |
| 6. | Sub-section (5) of section 17 of the CGST Act is being amended, so as to restrict the non-availability of input tax credit in respect of tax paid under section 74 of the said Act only for demands upto Financial Year 2023-24.
It also removes reference to sections 129 and 130 in the said sub-section. |
[115] |
| 7. | Section 21 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [116] |
| 8. | A new proviso in sub-section (2) of section 30 of the CGST Act is being inserted, so as to provide for an enabling clause to prescribe conditions and restrictions for revocation of cancellation of registration. | [117] |
| 9. | Clause (f) of sub-section (3) of section 31 of the CGST Act is being amended, so as to incorporate an enabling provision for prescribing the time period for issuance of invoice by the recipient in case of reverse charge mechanism supplies.
Explanation in sub-section (3) of the said section is also inserted so as to specify that a supplier registered solely for the purposes of tax deduction at source under section 51 of the said Act shall not be considered as a registered person for the purpose of clause (f) of sub-section (3) of section 31 of the said Act. |
[118] |
| 10. | Sub-section (6) of section 35 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [119] |
| 11. | Sub-section (3) of section 39 of the CGST Act is being substituted, so as to mandate the electronic furnishing of return for each month by the registered person required to deduct tax at source, irrespective of whether any deduction has been made in the said month or not.
It also empowers the Government to prescribe by rules, the form, manner and the time within which such return shall be filed. |
[120] |
| 12. | Sub-section (8) of section 49 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [121] |
| 13. | Sub-section (1) of section 50 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [122] |
| 14. | Sub-section (7) of section 51 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [123] |
| 15. | Sub-section (3) is being amended and a new sub- section (15) is being inserted in section 54 of the CGST Act, so as to provide that no refund of unutilised input tax credit or integrated tax shall be allowed in cases of zero rated supply of goods where such goods are subjected to export duty. | [124] |
| 16. | Sub-section (3) of section 61 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [125] |
| 17. | Sub-section (1) of section 62 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [126] |
| 18. | Section 63 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [127] |
| 19. | Sub-section (2) of section 64 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [128] |
| 20. | Sub-section (7) of section 65 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [129] |
| 21. | Sub-section (6) of section 66 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [130] |
| 22. | Sub-section (1A) is being inserted in section 70 of the CGST Act, to enable an authorised representative to appear on behalf of the summoned person before the proper officer in compliance of summons issued by the said officer. | [131] |
| 23. | Sub-section (12) is being inserted in section 73 of the CGST Act, so as to restrict the applicability of the said section for determination of tax pertaining to the period upto Financial Year 2023-24. | [132] |
| 24. | Sub-section (12) is being inserted in section 74 of the CGST Act, so as to restrict the applicability of the said section for determination of tax pertaining to the period upto Financial Year 2023-24. | [133] |
| 25. | Section 74A is being inserted in the CGST Act, so as to provide for determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason pertaining to the Financial Year 2024-25 onwards.
It also provides for the same limitation period for issuing demand notices and orders in respect of demands from the Financial Year 2024-25 onwards, irrespective of whether the charges of fraud, wilful misstatement, or suppression of facts are invoked or not, while keeping a higher penalty, for cases involving fraud, wilful misstatement, or suppression of facts. |
[134] |
| 26. | Sub-section (2A) is being inserted in section 75 in the CGST Act, so as to provide for redetermination of penalty demanded in a notice invoking penal provisions under clause (ii) of sub-section (5) of the proposed section 74A of the said Act to re-determine the penalty as per clause (i) of the sub-section (5) of the said section, in cases where the charges of fraud, wilful misstatement, or suppression of facts are not established.
It also amend section 75 of the said Act, so as to incorporate a reference to the sub-sections (2) and (7) of section 74A or the sub-sections thereof, in the relevant sub-sections of this section. |
[135] |
| 27. | Sub-section (1) of section 104 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [136] |
| 28. | Sub-section (6) of section 107 of the CGST Act is being amended, so as to reduce the maximum amount of pre-deposit for filing appeal before the Appellate Authority from rupees twenty five crores to rupees twenty crores in central tax.
It also amends sub-section (11) of the said section, so as to incorporate a reference to the proposed new section 74A in the said section. |
[137] |
| 29. | Section 109 of the CGST Act is being amended, so as to empower the Government to notify types of cases that shall be heard only by the Principal Bench of the Appellate Tribunal. | [138] |
| 30. | Sub-sections (1) and (3) of section 112 of the CGST Act are being amended, so as to empower the Government to notify the date for filing appeal before the Appellate Tribunal and provide a revised time limit for filing appeals or application before the Appellate Tribunal. The said amendment is made effective from the 1st day of August, 2024.
Sub-section (6) of the said section is also being amended so as to enable the Appellate Tribunal to admit appeals filed by the department within three months after the expiry of the specified time limit of six months. Sub-section (8) of the said section is also being amended so as to reduce the maximum amount of pre-deposit for filing appeals before the Appellate Tribunal from the existing twenty percent to ten percent of the tax in dispute and also reduce the maximum amount payable as pre-deposit from rupees fifty crores to rupees twenty crores in central tax. |
[139] |
| 31. | Sub-section (1B) of section 122 of the CGST Act is being amended, so as to restrict the applicability of the said sub-section to electronic commerce operators, who are required to collect tax at source under section 52 of the said Act.
The said amendment is made effective from the 1st day of October, 2023 when the said sub-section had come into force. |
[140] |
| 32. | Section 127 of the CGST Act is being amended, so as to incorporate a reference to the proposed new section 74A in the said section. | [141] |
| 33. | Section 128A in the CGST Act is being inserted, to provide for a conditional waiver of interest and penalty in respect of demand notices issued under section 73 of the said Act for the Financial Years 2017-18, 2018-19 and 2019-20, except the demands notices in respect of erroneous refund.
In cases where interest and penalty have already been paid in respect of any demand for the said financial years, no refund shall be admissible for the same. |
[142] |
| 34. | Sub-section (7) of section 140 of the CGST Act is being amended, so as to enable availment of the transitional credit of eligible CENVAT credit on account of input services received by an Input Services Distributor prior to the appointed day, for which invoices were also received prior to the appointed date.
The said amendment is made effective from 1st day of July, 2017. |
[143] |
| 35. | Proviso and Explanation is being inserted in sub- section (2) of section 171 of the CGST Act, so as to empower the Government to notify the date from which the Authority under the said section will not accept any application for anti-profiteering cases.
Explanation in the sub-section (3A) of the said section is being inserted, so as to include the reference of Appellate Tribunal in the Authority under the said section so that the Appellate Tribunal may be notified by the Government to act as an Authority under the said section. |
[144] |
| 36. | Paragraph 8 is being inserted in Schedule III to the CGST Act, so as to provide that the activity of apportionment of co-insurance premium by the lead insurer to the co-insurer for the insurance services jointly supplied by the lead insurer and the co-insurer to the insured in coinsurance agreements shall be treated as neither supply of goods nor supply of services, provided that the lead insurer pays the tax liability on the entire amount of premium paid by the insured.
Paragraph 9 is being inserted in Schedule III to the CGST Act, so as to provide that the services by the insurer to the re-insurer, for which the ceding commission or the reinsurance commission is deducted from reinsurance premium paid by the insurer to the reinsurer, shall be treated as neither supply of goods nor supply of services, provided that tax liability on the gross reinsurance premium inclusive of reinsurance commission or the ceding commission is paid by the reinsurer. |
[145] |
| 37. | No refund shall be made of all the tax paid or the input tax credit reversed, which would not have been so paid, or not reversed had the said clause 114 been in force at all material times. | [146] |
II. Amendments In the IGST ACT, 2017:
| S. No. |
Amendment | Clause of the Finance (No. 2) Bill, 2024 |
| 1. | Sub-section (1) in Section 5 in the IGST Act is being amended, so as to not levy integrated tax on Extra Neutral Alcohol used for manufacture of alcoholic liquor for human consumption. | [147] |
| 2. | Section 6A is being inserted in the IGST Act, so as to empower the Government to regularize non – levy or short levy of integrated tax where it is found that such non levy or short levy was a result of general practice. | [148] |
| 3. | Sub-section (4) in Section 16 in the IGST Act is being amended, so as to provide for notification of class of persons who may make zero rated supplies of goods or services or both or class of goods or services which may be supplied on zero rated basis, and refund of integrated tax in respect of which can be claimed, in accordance with the provisions of Section 54 of the Central Goods and Services Tax Act, subject to such conditions, safeguards and procedures as may be prescribed. Sub-section (5) is being inserted in the said Section to provide that no refund of unutilized input tax credit or of integrated tax paid on account of zero-rated supply of goods shall be allowed in cases where the zero-rated supply of goods is subjected to export duty. | [149] |
| 4. | Section 20 in the IGST Act is being amended, so as to reduce the maximum amount of pre-deposit payable for filing appeal before appellate authority from rupees fifty crores to rupees forty crores of integrated tax. Further, it proposes to reduce the maximum amount payable as pre-deposit for filing appeal before the Appellate Tribunal from rupees hundred crores to rupees forty crores of integrated tax. | [150] |
III. Amendments In the UTGST ACT, 2017:
| S. No. |
Amendment | Clause of the Finance (No. 2) Bill, 2024 |
| 1. | Sub-section (1) in Section 7 in the UTGST Act is being amended, so as to not levy union territory tax on Extra Neutral Alcohol used for manufacture of alcoholic liquor for human consumption. | [151] |
| 2. | Section 8A in the UTGST Act is being inserted, so as to empower the Government to regularize non –levy or short levy of union territory tax where it is found that such non levy or short levy was a result of general practice. | [152] |
IV. Amendments In the GST (Compensation to States) Act, 2017:
| S. No. | Amendment | Clause of the Finance (No. 2) Bill, 2024 |
| 1. | Section 8A is being inserted in the GST (Compensation to States ) Act, so as to empower the Government to regularize non –levy or short levy of cess where it is found that such non levy or short levy was a result of general practice. | [153] |
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