| Sl No | Section | Pre-Budget 2025 | Post-Budget 2025 | Remarks |
| 1 | Amendment of Section 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;] | (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;] | Section 2(61) of the CGST Act is being amended to provide for the distribution of input tax credits explicitly by ISD – regarding inter state supplies on which tax has to be paid on a reverse charge basis, by inserting the reference to subsection (3) and sub-sections (4) of section 5 of the IGST Act. – This amendment will be effective from 1st April 2025. (Applicable from FY 25-26) With the Finance Act II 2024 making ISD registration mandatory, a curative amendment, an insertion and reference have been introduced to include interstate RCM ITC. |
| 2 | 69) “local authority” means- (a) a “Panchayat” as defined in clause (d) of article 243 of the Constitution; (b) a “Municipality” as defined in clause (e) of article 243P of the Constitution; (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; (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006); (e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution; (f) a Development Board constituted under article 371 8[and article 371J] of the Constitution; or (g) a Regional Council constituted under article 371A of the Constitution; | (69) “local authority” means- (a) a “Panchayat” as defined in clause (d) of article 243 of the Constitution; (b) a “Municipality” as defined in clause (e) of article 243P of the Constitution; (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.’; (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006); (e) a Regional Council or a District Council constituted under the Sixth Schedule to the Constitution; (f) a Development Board constituted under article 371 8[and article 371J] of the Constitution; or (g) a Regional Council constituted under article 371A of the Constitution; | Explanation added to the definition of “Local Authority” The amendment, along with the insertion of an explanation, will clarify the definition of “municipal fund or local fund,” addressing the frequent litigations initiated under Section 2(69) by tax authorities. | |
| 3 | ‘(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;’; | Insertion of Clause 116A- Unique identification marking Given the above changes, verifying UIM would help stakeholders identify the notices, orders, etc. issued. Thus, it shall promote the implementation of the track-and-trace mechanism in litigation management. Essentially, it is aligned with the concept of digital evidence and digital evidence, considering the promotion of a faceless revenue assessment regime using tech initiatives in an optimum manner. | ||
| 4 | Amendment of Section 12 | (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. | Reason behind the ommission: Under Section 2(118) of the CGST Act, a “voucher” is an instrument accepted as consideration for goods or services, with supplier details indicated on it or in related documentation. The issuance of pre-paid instruments (PPIs) in India is regulated by the RBI under the Payment and Settlement Act, 2007. PPIs, as defined by RBI, store value paid by the holder and can be issued as cards, wallets, or other instruments. As per Section 2(75) of the CGST Act, “money” includes RBI-recognized instruments used to settle obligations. When a voucher qualifies as an RBI-recognized PPI and is used as consideration, it falls under “money,” which is excluded from the definitions of goods and services under Sections 2(52) and 2(102) of the CGST Act. Consequently, such voucher transactions are neither a supply of goods nor services. Additionally, as per Entry 6 of Schedule III of the CGST Act, actionable claims (except specified ones like betting and gambling) are not considered a supply of goods or services. Since vouchers do not fall under “specified actionable claims,” they are covered under this entry, further reinforcing that transactions in vouchers are neither a supply of goods nor services. | |
| 4 | Amendment of Section 13 | (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. | ||
| 5 | Amendment of section 17. | (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. | (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 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” | Amended to replace “or” with “and” Explanation 2 inserted. A curative amendment in response to the landmark supreme court judgement in the case of Safari Retreats Private Limited. |
| 6 | Amendment of section 20. | 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. | (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. | Insertion of words-”services mentioned in 5(3) or 5(4) of IGST Act” This amendment is in relation to the amendment to Section 2(61) as discussed in point 1 above. Thus, registered tax payer can distribute ITC on RCM input u/s 9(3) and/or 9(4) of the CGST Act 2017 (which was possible earlier as well), but now it would be possible for such interstate RCM distribution as Section 5(3) and 5(4) of the IGST Act 2017 is also inserted. |
| 7 | 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. | (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. | Insertion of words- services mentioned in 5(3) or 5(4) of IGST Act” This amendment is in relation to the amendment to Section 2(61) as discussed in point 1 above. Registered taxpayer would be required to maintain robust accounting records to derive the details for the distribution of ISD as per the provisions of Section 20 of the CGST Act, 2017. Thus, such amendment shall increase the compliance burden obligations in the hands of registered tax payers holding multiple GST registrations. | |
| 8 | Amendment of section 34 | Providedthat 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. | “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.”. | Proviso to Section 34(2) is being amended to explicitly provide for the requirement of Reversal of corresponding input tax credit in respect of a credit note, if availed, by the registered recipient, for the purpose of reduction of tax liability of the supplier in respect of the said credit note. |
| 9 | Amendment of section 38. | (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. | (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. | Substitution of words “auto-generated statement” with “statement” in order to give effect to IMS |
| 10 | 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,–– | (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,–– (i) by any registered person within such period of taking registration as may be prescribed; or (ii) by any registered person, who has defaulted in payment of tax and where such default has continued for such period as may be prescribed; or (iii) by any registered person, the output tax payable by whom in accordance with the statement of outward supplies furnished by him under the said sub-section during such period, as may be prescribed, exceeds the output tax paid by him during the said period by such limit as may be prescribed; or (iv) by any registered person who, during such period as may be prescribed, has availed credit of input tax of an amount that exceeds the credit that can be availed by him in accordance with clause (a), by such limit as may be prescribed; or (v) by any registered person, who has defaulted in discharging his tax liability in accordance with the provisions of sub-section (12) of section 49 subject to such conditions and restrictions as may be prescribed; or (vi) by such other class of persons as may be prescribed.] (c) such other details as may be prescribed.”. | Substitution of words “auto-generated statement” with “statement” in order to give effect to IMS | |
| 11 | Amendment of section 39. | (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, in such form and manner as may be prescribed, 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, on or before the twentieth day of the month succeeding such calendar month or part thereof. | 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, in such form and manner as may be prescribed, 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 within such time, and subject to such conditions and restrictions, as may be prescribed, on or before the twentieth day of the month succeeding such calendar month or part thereof. | Inclusion of “within such time, and subject to such conditions and restrictions, as may be prescribed” as part of sec 39. The above amendment is essentially introduced to provide for the effective and efficient administration of the IMS. |
| 12 | Amendment of section 107. | Providedthat 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. | 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 | Section 107(6) is being amended to provide for 10% mandatory predeposit of penalty amount for appeals before Appellate Authority in cases involving only demand of penalty without any demand for tax |
| 13 | Amendment of section 112 | “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.”. Proviso to Section 112(8) | Insertion of Proviso to Section 112(8) Amendment in line with insertion of section 2(116A). | |
| 14 | Insertion of new section 122B | Insertion of new section 122B: Penalty for failure to comply with track and trace mechanism “122B. 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 per cent. of the tax payable on such goods, whichever is higher.”. | New section-122B with respect to “ Penalty for Track and Trace Mechanism” Insertion in line with insertion of section 2(116A). | |
| 15 | Insertion of Section 148A | Insertion of new section 148A: Track and trace mechanism for certain goods. “148A. (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.” | New section-148A with respect to “ Penalty for Track and Trace Mechanism” Insertion in line with insertion of section 2(116A). | |
| 16 | Amendment of Schedule III | Clause 8a inserted in Schedule III “(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;” | ||
| 17 | For the purposes of paragraph 8, the expression “warehoused goods” shall have the same meaning as assigned to it in the Customs Act, 1962 (50 of 1962) | For the purposes of clause (a) of paragraph 8, the expression “warehoused goods” shall have the same meaning as assigned to it in the Customs Act, 1962 (50 of 1962) | ||
| 18 | Explanation 3 inserted to Schedule III “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.”. | |||
| 19 | No refund of tax collected | No refund shall be made of all such tax which has been collected, but which would not have been so collected, had section 128 been in force at all material times. |