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Finance Bill 2025, Amendments in Goods and Services Tax Act, 2017

Section- 12(4) ( Time of Supply of Goods)

Deletion of provision related to Voucher
Old Provision
(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 -Omitted

Comment: With this amendment the GST applicability on voucher has been removed, thus there will be no GST liability on voucher. 

Section- 13(4) (Time of Supply of Services)

Deletion of provision related to Voucher
Old Provision
(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 -Omitted

Comment: With this amendment the GST applicability on voucher has been removed, thus there will be no GST
liability on voucher.

Section- 17(5) (d) (Block Credit)

Substitution under the current provision
Old Provision
(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 capitalization, to the said immovable property;

New Provision
(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.

Comment (effective From 01.07.2017)
To nullify the judgment passed by the Apex court in case of Safari Retreats, the government has replace “Plant or Machinery” with “Plant and Machinery” and also clarifies that this this interpretation applies despite any contrary judgment, decree, or order of any court, tribunal, or other authority.

Section- 34 (2) Credit and debit notes

Substitution of Old Proviso
Old Provision 
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 
“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.”

Comment
With this amendment the reduction in outward tax liability is restricted if the recipient has not reversed the input tax credit. This would create hardship on genuine Supplier if the recipient does not reverse the Input tax Credit. Further, this amendment would increase the compliance burden on supplier.

Section- 38 (1) Communication of details of inward supplies and input tax credit.

Substitution under current Provision
Old Provision 
(1) The details of outward supplies furnished by the registered persons under sub-section (1) of Section 37 and 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 
(1) The details of outward supplies furnished by the registered persons under sub-section (1) of Section 37 and such other supplies as may be prescribed, and 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.

Comment
With this amendment, the IMS (Invoice Management System) is obligatory and compulsory.

"Research data provided by CA Ajay Kumar".

Section 38 (2)- Communication of details of inward supplies and input tax credit.                       

Substitution under current Provision
Old Provision 
(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                                                                                                                                                         

(2) The 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.
(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, –

Comment: With this amendment, the IMS (Invoice Management System) is obligatory and compulsory.

Section 39 (1) - Furnishing of returns.

Substitution under current Provision
Old Provision
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: Provided that the Government may, on the recommendations of the Council, notify certain class of registered persons who shall furnish a return for every quarter or part thereof, subject to such conditions and restrictions as may be specified therein.

New Provision
Every registered person, other than an Input Service Distributor or a non-resident a 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, “within such time, and subject to such conditions and restrictions”, as may be prescribed:
Provided that the Government may, on the recommendations of the Council, notify certain class of registered persons who shall furnish a return for every quarter or part thereof, subject to such conditions and restrictions as may be specified therein.

Comment
With this Amendment the while filing GSTR 3B the taxpayer must now comply with specified conditions and restrictions within a given timeframe as prescribed under CGST Rules.

Section 107 (6). Appeals to Appellate Authority

Substitution under current Provision
Old Provision-
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 percent. 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 percent. of the penalty has been paid by the appellant.

New Provision:
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 the impugned order, as is admitted by him; and
(b) a sum equal to ten percent. 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 percent. of the said penalty has been paid by the appellant.”

Comment
Earlier, the proviso covered the appeal for penalty under section 129(3), where no appeal was admitted unless a sum equal to twenty-five percent. of the penalty has been paid by the appellant.
Now, for every order demanding penalty which is without involving the demand of any tax amount, a pre-deposit of 10% is to be paid for filing the appeal. 

Section 112 (8). Appeals to Appellate Tribunal.

New Section inserted
New Provision 
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 percent. 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.”

Comment
To file the appeal to Appellate tribunal against the order for demanding penalty only, the appellant must pay the pre-deposit sum equal to 10 % of the said penalty provided in order of the Appellate Authority, otherwise, no appeal would be accepted by the Appellate Tribunal.

Section 122B. Penalty for failure to comply with track and trace mechanism u/s 148A

New section inserted
Notwithstanding anything contained in this Act, where any person referred to in clause (b) of sub-section (1) 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 percent. of the tax payable on such goods, whichever is higher.”

Comment
Apart from the penalty provided under the GST Act, the Penalty of Rs.One lakh or 10% of tax payable to be paid if the taxpayer has not complied with track and trace mechanism provided under section 148A.

Section 148A.Track and trace mechanism for certain goods.

New section inserted
(1) The Government may, on the recommendations of the Council, by notification, specify
(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.”

Comment
A new mechanism i.e. track and trace mechanism is introduced by this section where the act has empower the government on the recommendation of the GST council to implement a track and trace mechanism for certain goods, requiring unique marking, electronic information storage, and compliance by a specified person. This includes affixing marking, maintaining records, and providing details of machinery used in production.

"Research data provided by CA Ajay Kumar".

Schedule III - ACTIVITIES OR TRANSACTIONS WHICH SHALL BE TREATED NEITHER AS A SUPPLY OF GOODS NOR A SUPPLY OF SERVICES

New Provision Inserted
(i) In paragraph 8, after clause (a), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July 2017, namely 
“(aa) Supply of goods warehoused in a Special Economic Zone or 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;
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.”

Comment
This amendment is a retrospective amendment which is effective from 01.07.2017, under this amendment any 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 DTA, is not a supply, and SEZ, FTWZ, and DTA has the same meaning as defined under SEZ Act, 2005.
Further, No refund shall be allowed if any tax has been paid by the taxpayer on above transactions.

Section- 2 (61) (Amendment in definition of Input Service Distributor)

Addition in Current Definition
Old Provision
(61) 17 [“Input Service Distributor” means an office of the supplier of goods or services or both of 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 
(61) 17 [“Input Service Distributor” means an office of the supplier of goods or services or both which receive 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 sub-section (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;]

Comment: (effective From 01.04.2025)
Earlier the RCM ITC under IGST Act, was not covered under the definition of Input service distributor,
However, the RCM ITC of CGST and SGST Act was covered, now with this amendment the ISD can pay
and distribute the ITC for RCM under the IGST Act. 

Section - 20 Manner of distribution of credit by Input Service Distributor

New addition under the section

Old Provision   

(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.
(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

(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 sub-section (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.
(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 sub-section (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.

Comments         

Earlier the provisions with respect to the IGST Act was not covered for Manner of distribution of credit by Input Service Distributor, now with this amendment the government has included specific IGST provisions.
Now with this amendment, the ISD can pay and distribute the ITC for RCM under IGST Act.

"Research data provided by CA Ajay Kumar".