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GST amendment in finance bill 2025

The Union Budget 2025-26 was tabled by the Union Minister for Finance and Corporate Affairs, Smt Nirmala Sitharaman in the Parliament on 01st February 2025. The budget introduces significant changes in GST laws, the major amendment to ensure trade facilitation.  In section 17 of the Central Goods and Services Tax Act, in sub-section (5), in clause (d),–– (i) for the words “plant or machinery”, the words “plant and machinery” shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July, 2017; (ii) the Explanation shall be numbered as Explanation 1 thereof, and after Explanation 1 as so numbered, the following Explanation shall be inserted, namely:––     ‘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”.’.   After this amendment, it will affect the ruling of recent landmark judgment SC, In the case of Chief Commissioner of Central Goods and Services Tax & Ors. Vs Safari Retreats Private Ltd. & Ors. (Supreme Court of India), Civil Appeal No. 2948 of 2023, dated 03/10/2024. Brief of ruling of the Supreme Court Implications for Real Estate, warehousing and Logistic sector The real estate industry is poised to feel the brunt of these changes. Developer constructing commercial properties for lease will now be ineligible to claim ITC on construction-related expenses. This move could escalate project cost, potentially leading to high rental and dampening investment enthusiasm in commercial real estate market. Further various Industry Players in the Warehousing and Logistics Sector who availed ITC upon the judgement of Safari (supra) shall have to reverse their ITC availed on any warehousing structure. The said loss of ITC is in the thousands of Crores for these players, thereby leading to higher overall logistics costs for consume. In section 34 of the Central Goods and Services Tax Act, in sub-section (2), for the proviso, the following proviso shall be substituted, namely:–– “Provided that no reduction in output tax liability of the supplier shall be permitted, if the–– As per the decisions taken in the 55th GST Council meeting government has amendment in CGST Act, 2017 in the budget 2025, after this amendment specifically provide for the requirement of reversal of input tax credit as is attributable to a credit note, by the recipient, to enable the reduction of output tax liability of the supplier. However, this places an additional compliance responsibility on recipients to monitor suppliers’ credit notes. Presently, there is no mechanism via which a supplier can check whether the recipient has reversed their ITC or not and therefore, it complicates the reconciliation process and may lead to inadvertent errors, resulting in disputes and penalties in the future leading to Additional Litigations. In section 38 of the Central Goods and Services Tax Act,–– (a) for the words “auto-generated statement  under”, the words “statement referred in” shall be substituted; (b) in clause (a), the word “and” shall be omitted;  (c)  in clause (b), after the words “by the recipient,”, the word “including” shall be inserted; (d) after clause (b), the following clause shall be inserted, namely:–– “(c) such other details as may be prescribed.”. As per the decisions taken in the 55th GST Council meeting government has amendment in CGST Act, 2017 in the budget 2025, after this amendment specifically provide a legal framework in respect of generation of FORM GSTR-2B based on the action taken by the taxpayers on the Invoice Management System (IMS). In section 107 of the Central Goods and Services Act, in sub-section (6), for the proviso, the following proviso shall be substituted, namely:–– “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.”. After this amendment 10% mandatory pre-deposit of penalty amount for appeals before Appellate Authority in cases involving only demand of penalty without any tax demand. In section 112 of the Central Goods and Services Act, in sub-section (8), the following proviso shall be inserted, namely:–– “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.”. After section 122A of the Central Goods and Services Act, the following section shall be inserted, namely:― “122B. Notwithstanding anything contained in this Act, where any person referred to in clause (b) of sub-section (1) Amendment of section 38. Amendment of section 39. Amendment of section 107. Amendment of section 112. Insertion of new section 122B. Penalty failure for to 68 comply with 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.”. These all amendments shall take effect retrospectively with effect from the 1st day of July, 2017. 127.  After section 148 of the Central Goods and Services Act, the following section shall be inserted, namely:–– “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