Union Budget 2021: All about GST Changes in the Union Budget 2021

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As mentioned in our last article, Union Budget 2021: Key GST Changes to help small businesses and MSMEs, here we bring about a list of complete changes that were introduced in the Budget 2021 with respect to the GST Compliances.

Amendments in CGST, IGST and UTGST Acts, 2017:



Amendments carried out in the Finance Bill, 2021 will come into effect from the date when the same will be notified, as far as possible, concurrently with the corresponding amendments to the similar Acts passed by the States and Union Territories with Legislature.




a) A new clause (aa) in sub-section (1) of Section 7 of the CGST Act is being inserted, retrospectively with effect from the 1st July, 2017, so as to ensure levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.

Our View – This will affect the services provided by clubs/ other organizations to its members and may result in legal hardships for the past period.


b) A new clause (aa) to sub-section (2) of the section 16 of the CGST Act- is being inserted to provide that input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note have been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note.

Our View – This seems to be a very bold move by the MOF, now the receiver of goods/ services may claim GST only if his supplier has declared the invoice in his GSTR1. The effect may result in hardships due to multiple reconciliations between output filed and inputs claimed and the genuine receiver will be made to suffer by an act by his supplier.


c) Relaxing the audit limit u/s 35(5) or filing annual return u/s 44 for of the CGST Act-

Our View – The decision to ease the Annual filings/ Annual Audit under GST seems a welcome move by SMEs who at present are required to get their accounts audited by a professional. Easing of such compliance will result in ease of doing business and compliances.

However, at the same time, a self-declaration by the taxpayers (who are ideally not well versed in multiple provisions and restrictions) may result in computation that is not correct and may result in an increase of loss of revenue to the government.

However, the monetary limit for such taxpayers may be recommended by the council notification.


d) Amendment in Section 50(1) of the CGST Act –

Our View – This move is very much expected as the same has already been conveyed by MOF in their council meetings. It will give relaxation to SMEs to reduce the burden of interest/ liabilities on a net basis with retrospective effect.

e) Proviso to be inserted in Section 107(6) – Appeals to Appellate Authority – Clause 107 of the Finance Bill, 2021

This looks to insert a proviso that an appeal against the order passed in Section 129(3) of the CGST Act i.e. in Form MOV-09 cannot be filed unless 25% of the penalty has been paid by the appellant.  Earlier this was 10%.

f) Clause (a) & (b) to be substituted in sub section (1) of Section 129 – Detention, seizure and release of goods and conveyances in transit – Clause 108 of the Finance Bill, 2021

i) Increase in the payment of penalty (previously penalty and tax) from 100% to 200% for releasing of detained or seized goods and conveyance.

ii) Change options for release of detained or seized goods and conveyance for taxable goods where the owner does not come forward:

  • A penalty equal to 50% of the value of goods; or
  • 200% of tax payable on such goods

Whichever is higher.

iii)  Goods seized shall not be released on a provisional basis upon execution of a bond and furnishing of security, in such manner and of such quantum.

iv) Provision of the time limit of 7 days’ notice of such detention or seizure, specifying the penalty payable for issuance of MOV 07 and for passing an order in MOV 09 within a period of 7 days from the date of service of such MOV 07 under 129 (a) and (b) of the CGST Act.

v) No penalty shall be determined without an opportunity of hearing where the penalty is payable on detention or seizure of goods and conveyance.

vi) Delinking of the proceedings under the section relating to detention, seizure and release of goods and conveyances in transit from the proceedings under Section 130 of the CGST Act for confiscation of goods or conveyances and levy of penalty.



Section 16 of the IGST Act is being amended so as to:

(i) zero rate the supply of goods/ services to a SEZ unit only when the said supply is for authorised operations;

(ii) restrict the zero-rated supply on payment of integrated tax only to a notified class of taxpayers or notified supplies of goods or services; and

(iii) link the foreign exchange remittance in case of export of goods with refund

Our View – This will ease the process of refund incase of suppliers engaged in the business of export with direct link of FIRC with the refund applied.




We’re listening: 

There are a few other small changes that we have not covered in this article to maintain its brevity. 

For any query, support or feedback, reach us at India Tax and Legal Compliances or WA us at +91-9230033070 or Call us at 1800-102-7550

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