FM Sitharaman Proposes Changes to GST Laws to Facilitate Trade in Budget 2025

The Union Minister for Finance and Corporate Affairs, Smt Nirmala Sitharaman in the Parliament addresses the Union Budget 2025-26. Amendments to the GST laws have been proposed under the budget to ensure trade facilitation. These proposed changes are-

• An updated clause has been provided to furnish the definition of Unique Identification marking to execute the Track and Trace Mechanism.
• To reduce the supplier’s tax liability, the provision for reversal of corresponding input tax credit is directed to a credit note, if available.
• Provision for distribution of input tax credit via the Input Service Distributor concerning inter-state supplies on which tax would required to be paid on a reverse charge basis, effective from 1st April 2025.
• 10% obligatory pre-deposit of penalty amount for appeals before Appellate Authority in cases concerning solely demand of penalty without any tax demand.
• Provision for penalties for violations of provisions associated with the Track and Trace Mechanism.
• Inclusion of definitions of ‘Local Fund’ and ‘Municipal Fund’ utilized in the definition of “local authority”.
• A provision in Schedule III of the CGST Act, 2017 expressing that the supply of goods warehoused in a Special Economic Zone or a Free Trade Warehousing Zone to any person before clearance for exports or to the Domestic Tariff Area shall be deemed neither as supply of goods nor as supply of services. Also, no tax refund paid earlier will be available for such transactions. With effect from 01.7.2017, this will be applicable.
• For filing of return specific conditions should be there.

Such amendment shall come into force from a notified date in coordination with states, under the suggestions of the GST council, budget cited.