Summary of Key Amendments to the Central Goods and Services Tax (CGST) Act, 2017 in the Finance Bill 2025
1. Amendment of Section 2 (Definitions)
Clause 61: Expanded the definition of “local fund” and “municipal fund” to include entities managing civic functions in Panchayat or Metropolitan areas, empowered to levy taxes.
Clause 116A: Introduced “unique identification marking” (e.g., digital stamps) for goods under a track-and-trace mechanism, effective from 1 April 2025.
2. Amendment of Section 12 (Time of Supply of Goods)
Sub-section (4) omitted, simplifying rules for determining tax liability timing for goods.
3. Amendment of Section 13 (Rates of Tax)
Sub-section (4) removed, potentially streamlining tax rate applicability for services.
4. Amendment of Section 17 (Input Tax Credit – ITC)
Sub-section (5), clause (d) clarified that “plant or machinery” includes both terms, ensuring consistent ITC claims for capital goods.
5. Amendment of Section 20 (Time of Supply of Services)
Sub-sections (1) and (2) updated to align with IGST Act provisions, ensuring uniformity in service tax timing rules.
6. Amendment of Section 34 (Returns)
New proviso restricts output tax adjustments if recipients fail to reverse ITC or pass on tax burdens, enhancing compliance.
7. Amendment of Section 38 (Records and Documents)
Revised requirements for “statements” filed by taxpayers, including mandatory details like digital marks and machinery details (e.g., capacity).
8. Amendment of Section 39 (Monthly Returns)
Returns must now comply with additional conditions/restrictions, tightening filing norms.
9. Amendment of Section 107 (Appeals)
Appeals involving penalties require a 10% deposit of the penalty amount, discouraging frivolous appeals.
10. Amendment of Section 112 (Appeals)
Similar to Section 107, appeals with penalties require a 10% deposit plus amounts under Section 107’s proviso.
11. Insertion of New Section 122B (Penalty for Track-and-Trace Non-Compliance)
Imposes a penalty of ₹1 lakh or 10% of tax payable (whichever is higher) for non-compliance with the track-and-trace mechanism for specified goods.
12. Insertion of New Section 148A (Track-and-Trace Mechanism)
Mandates unique identification markings for certain goods, with provisions for electronic storage and reporting by specified entities.
13. Amendment of Schedule III (Exemptions)
Added exemptions for goods warehoused in SEZs/Free Trade Warehousing Zones before export or clearance to the Domestic Tariff Area.
14. No Refund of Collected Tax (Clause 129)
Tax collected under the amended Schedule III (e.g., pre-2025 rules) will not be refunded, ensuring continuity in revenue collection.
Impact: The amendments aim to enhance compliance, improve tax administration efficiency, and align CGST rules with evolving economic activities (e.g., SEZ operations). Key changes include stricter penalties, digital tracking for goods, and clarified definitions to reduce ambiguity.