{"id":2164,"date":"2021-02-10T09:16:34","date_gmt":"2021-02-10T09:16:34","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=2164"},"modified":"2021-02-10T13:13:45","modified_gmt":"2021-02-10T13:13:45","slug":"implications-of-union-budget-2021-on-gst-act","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/","title":{"rendered":"Implications of Union Budget 2021 on GST Act: A Complete Guide"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Recently, the Union Budget 2021 was presented by our\nUnion Finance Minister, <strong>Ms. Nirmala Sitharaman<\/strong>,\non 01.02.2021. By way of the same, there were several minor changes made in the\nprovisions of the Goods and Service Act 2016. In this blog, we will discuss\nabout the Implications of Union Budget 2021 on GST Act.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a54e6271dc87\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a54e6271dc87\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Concept_of_Goods_and_Service_Tax\" title=\"Concept of Goods and Service Tax\">Concept of Goods and Service Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Reasons_to_Make_Changes_in_GST_Act\" title=\"Reasons to Make Changes in GST Act\">Reasons to Make Changes in GST Act<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Key_Implications_of_Union_Budget_2021_on_GST_Act\" title=\"Key Implications of Union Budget 2021 on GST Act\">Key Implications of Union Budget 2021 on GST Act<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Widened_Scope_of_term_%E2%80%9CPerson%E2%80%9D\" title=\"Widened Scope of term \u201cPerson\u201d\">Widened Scope of term \u201cPerson\u201d<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Stringent_Conditions_Concerning_ITC_Claim\" title=\"Stringent Conditions Concerning ITC Claim\">Stringent Conditions Concerning ITC Claim<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Omission_of_GST_Audit_Reconciliation_Statement\" title=\"Omission of GST Audit &amp; Reconciliation Statement\">Omission of GST Audit &amp; Reconciliation Statement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Levy_of_Interest_on_Net_Cash_Liability\" title=\"Levy of Interest on Net Cash Liability\">Levy of Interest on Net Cash Liability<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Separate_Proceeding_for_Transporter_and_Supplier\" title=\"Separate Proceeding for Transporter and Supplier\">Separate Proceeding for Transporter and Supplier<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Definition_of_Self_Assessed_Tax\" title=\"Definition of Self Assessed Tax\">Definition of Self Assessed Tax<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Provisional_Attachment_under_Section_83_1\" title=\"Provisional Attachment under Section 83 (1)\">Provisional Attachment under Section 83 (1)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Deposit_25_of_Penalty_for_Appeal\" title=\"Deposit 25% of Penalty for Appeal\">Deposit 25% of Penalty for Appeal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Deposit_of_Funds_under_section_129\" title=\"Deposit of Funds under section 129 \">Deposit of Funds under section 129 <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Changes_Made_in_Section_16_of_the_IGST_Act\" title=\"Changes Made in Section 16 of the IGST Act\">Changes Made in Section 16 of the IGST Act<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/swaritadvisors.com\/blog\/implications-of-union-budget-2021-on-gst-act\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Goods_and_Service_Tax\"><\/span>Concept of Goods and Service Tax<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The term GST or Goods and Service Tax denotes an\nIndirect Tax regime, which has replaced several prevailing indirect tax laws,\nsuch as Excise Duty, VAT (Value Added Tax), Service Tax, etc. Further, the said\nact came into force on 01.07.2017. <\/p>\n\n\n\n<p>The different laws compiled under GST Act are as\nfollows:<\/p>\n\n\n\n<ul><li>CGST Act\n(Central Goods and Service Tax);<\/li><li>SGST Act (State\nGoods and Service Tax);<\/li><li>IGST (Integrated\nGoods and Service Tax);<\/li><\/ul>\n\n\n\n<p>Also, it shall be significant to state that, any business entity or an individual, who is earning an annual business turnover of Rs 40 lakhs and Rs 20 lakhs in special states, need to apply for GST Registration on a mandatory basis.<\/p>\n\n\n\n<p><strong>Also, Read:<\/strong> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/legal-entity-identifier\/\">Legal Entity Identifier: Implementation of LEI by RBI for Large Value Transactions<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reasons_to_Make_Changes_in_GST_Act\"><\/span>Reasons to Make Changes in GST Act<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The main reasons behind the amendment and changes made in GST Act are as follows:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/02\/without-heading.png\" alt=\"Reasons to Make Changes in GST Act\" class=\"wp-image-2166\" width=\"398\" height=\"359\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/02\/without-heading.png 985w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/02\/without-heading-300x270.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/02\/without-heading-768x692.png 768w\" sizes=\"(max-width: 398px) 100vw, 398px\" \/><\/figure><\/div>\n\n\n\n<ul><li>To Simplify the\nInterpretation of Law;<\/li><li>To Ease out the\nWorking of Law;<\/li><li>To Avoid\nDifficulty in the Enforcement of Law;<\/li><li>To Ensure\nSeamless Tax System;<\/li><li>To Confirm the\nFlow of Credit;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Implications_of_Union_Budget_2021_on_GST_Act\"><\/span>Key Implications of Union Budget 2021 on GST Act<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The key implications of Union Budget 2021 on GST Act\nare as follows:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Widened_Scope_of_term_%E2%80%9CPerson%E2%80%9D\"><\/span>Widened Scope of term \u201cPerson\u201d<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The scope of the\ndefinition of the term \u201cPerson\u201d has been increased by inserting clause (aa) in\nsub section (1) of section 7. The same is deemed to have a retrospective\neffect, i.e., the same is in force from 01.07.2017.<\/p>\n\n\n\n<p>Based on the\nprovisions of clause (aa), from now onwards a person and its constituents or\nmembers will be considered as two separate persons. Also, the transactions or\nsupply of activities between the said person and its member will be deemed to\nhave taken place from one person to another.<\/p>\n\n\n\n<p>Now, on the basis\nof the amended provisions, a club will be considered separate from its members.\nTherefore, the Principal of Mutuality, given by the Apex Court in the case\nState of West Bengal v. Calcutta Club Limited, 2019 (29) G.S.T.L. 545 (SC),\nwill not be applicable on GST Act.<\/p>\n\n\n\n<p>Also, it shall\nbe considerate to take into consideration that, due to the amendment in the\nprovisions of section 7, Para 7 of Schedule II stands omitted from 01.07.2017.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stringent_Conditions_Concerning_ITC_Claim\"><\/span>Stringent Conditions Concerning ITC Claim<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>One of the main implications of Union Budget 2021 on\nGST Act is stringent conditions concerning ITC claim. So, to eradicate the\nissue of illegal ITC Claim and discrepancies in the data entered by recipient\nand supplier for ITC Claim, it has now become compulsory for the suppliers to\nenter the details of the debit note or invoice in the statement of Outward Supply,\ni.e., in GSTR 1, and only after that, he\/ she will become eligible to claim ITC\nunder section 16 of the GST Act.<\/p>\n\n\n\n<p>It shall be considerate to note that such a clause\nwas already recognised under the provisions of section 37 (1) of the CGST Act. However,\nthe same has now been inserted by way of section 16 (2) (aa) as well.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Omission_of_GST_Audit_Reconciliation_Statement\"><\/span>Omission of GST Audit &amp; Reconciliation Statement<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Based on the provisions of section 35 (5) and 44 (2)\nof the CGST Act, the requirement to furnish the GST Audit and Reconciliation\nStatement, after getting the books of accounts audited by a certified Chartered\nAccountant has now been omitted. <\/p>\n\n\n\n<p>Also, it shall be considerate to note that the\nprovisions of section 44 of the CGST Act has been substituted with a new one,\nand as per new provisions, there is a need for the taxpayer to submit a self\ncertified reconciliation statement, together with the audited annual financial\nstatement. That means, once such amendments come into force, form GSTR 9C can\nbe filed easily without any certification.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Levy_of_Interest_on_Net_Cash_Liability\"><\/span>Levy of Interest on Net Cash Liability<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Based on the speech given by our Union Finance\nMinister on the <strong><a href=\"https:\/\/swaritadvisors.com\/blog\/union-budget-2021\/\" class=\"text-primary\">Union Budget 2021<\/a><\/strong>,\na proviso has been inserted in the Finance Act 2019, which states that an\ninterest will be charged on the Net Cash Liability only, and the same has\nretrospective effect, i.e., applicable from 01.07.2017.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Separate_Proceeding_for_Transporter_and_Supplier\"><\/span>Separate Proceeding for Transporter and Supplier<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>From now onwards, the confiscation, seizure of\ngoods, and conveyance used in transit will have a separate proceeding for the\ntax recovery. That means if in case the supplier of such goods wants to\nconclude the proceeding by paying of the tax levied together with the penalty\nimposed for such confiscation and seizure, then, in that case, proceedings\nstarted against the transport will continue to exist till the time the said\nissue is resolved.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Definition_of_Self_Assessed_Tax\"><\/span>Definition of Self Assessed Tax<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As per section 75 (12) of the CGST\nAct, the term self-assessed will now comprise of tax payable in the outward\nsupply, i.e., amount declared in form GSTR 1. However, it shall be considerate\nto take into consideration that amount declared in Form GSTR 3B will not be\nconsidered for the same.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Provisional_Attachment_under_Section_83_1\"><\/span>Provisional Attachment under Section 83 (1)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>After the amendments made in the provisions of the\nGST Act, the concept of Provisional Attachment of Property will now be valid\nall through the proceedings, commencing from the initiation of assessment\nproceeding under chapter XII or XIV or XV till one year of the expiry of the\norder.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deposit_25_of_Penalty_for_Appeal\"><\/span>Deposit 25% of Penalty for Appeal<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It shall be considerate to take into consideration\nthat a new provision has been inserted under section 107 (6), which state that\nit is compulsory for the appellant to deposit 25% of the penalty levied for\nfiling an appeal against the order of seizure or detention.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deposit_of_Funds_under_section_129\"><\/span>Deposit of Funds under section 129 <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>For releasing the goods\ndetained in transit or for contravening the provisions of this Act, the\nconcerned person will now be held liable to pay a penalty equal to 200% of the\namount payable as tax. Earlier, the said limit was fixed at 100%. <\/p>\n\n\n\n<p>Also, it shall be\nsignificant to state that prior to the proposed changes, there was a need for\nthe taxpayer to pay tax on the release of goods as well. Moreover, in the case,\nwhere the owner does come forward, then, in that case, 200% of the tax payable\nor 50% of the total value of the goods, whichever is higher. <\/p>\n\n\n\n<p>Further, it is the duty\nof the proper officer to issue a notice of 7 days. The same must specify the\namount of penalty levied. However, if in case, the owner or the transporter fails\nto pay the penalty levied, then, in that case, the proper officer will seize\nthe goods in question and will sell the same to recover the imposed penalty.\nBut, in the case of perishable goods, the officer appointed may reduce the\nperiod of 15 days.<\/p>\n\n\n\n<p>Further, the conveyance\nused for the transportation of goods seized will be released as well on the\npayment of Rs 1 lakh.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Changes_Made_in_Section_16_of_the_IGST_Act\"><\/span>Changes Made in Section 16 of the IGST Act<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the case of Zero rated supply, the provisions of the\nGST Act provides for the Non Payment of GST or Refund of GST. However, now\nbased on the amendments made, if in case the export or sale proceeds is not\nreceived with the prescribed time under <a href=\"https:\/\/en.wikipedia.org\/wiki\/Foreign_Exchange_Management_Act\">FEMA<\/a>,\nthen, in that case, GST shall be payable, together with the interest.<\/p>\n\n\n\n<p>Further,\nit shall be significant to take into the note that parallel provisions have\nbeen inserted in the Customs Act as well, wherein it has been planned that any\ngoods, which are entered for exportation by making a wrongful claim of\nremission or refund will be liable for confiscation. To give effect the same a\nsub-section (ja) has been added to section 113 of the Customs Act. <\/p>\n\n\n\n<p>Furthermore, a new provision named section 114 AC\nhas been inserted in the Customs Act, to prescribe a penalty in particular\ncases, wherein any person who claims refund of tax or duty discharged, by using\nfraudulent invoices, on the exports of goods.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> In a nutshell, the main agenda behind the implications of Union Budget 2021 on GST Act was to make the interpretation and working of law simplified, together with the seamless tax system. Further, in case of any doubt or dilemma, contact our proficient experts at <strong><a href=\"https:\/\/swaritadvisors.com\/\" class=\"text-primary\">Swarit Advisors<\/a><\/strong>, who are always ready to cater to all your queries and doubts.<\/p>\n\n\n\n<p><strong>Also, Read:<\/strong> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/patent-law-in-india\/\">Everything You Must Know About Patent Law in India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recently, the Union Budget 2021 was presented by our Union Finance Minister, Ms. Nirmala Sitharaman, on 01.02.2021. By way of the same, there were several minor changes made in the provisions of the Goods and Service Act 2016. In this blog, we will discuss about the Implications of Union Budget 2021 on GST Act. Concept [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":2165,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[39,50,1],"tags":[363],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/2164"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=2164"}],"version-history":[{"count":4,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/2164\/revisions"}],"predecessor-version":[{"id":2170,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/2164\/revisions\/2170"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/2165"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=2164"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=2164"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=2164"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}