GST Changes by Budget 2025 / Finance Bill 2025 in simple words...

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1) Section 2(61) and Section 20 of the CGST Act.

Section 2(61) is being amended to explicitly provide for the distribution of input tax credit by the Input Service Distributor (ISD) in respect of inter-state supplies on which tax has to be paid on a reverse charge basis, by inserting reference to Section 5(3) and Section 5(4) of the IGST Act.

This amendment will be effective from 1st April 2025.

After this amendment, Input Service Distributor (ISD) will be able to distribute GST under reverse charge for inter-state supply of common input services.

- Corresponding amendments are also being in Section 20 of the CGST Act.

Section 20(1) and Section 20(2) are being amended to explicitly provide for distribution of input tax credit by the Input Service Distributor in respect of inter-state supplies, on which tax has to be paid on reverse charge basis, by inserting reference to sub-section (3) and sub-section (4) of section 5 of Integrated Goods and Services Tax Act in said sub-sections of section 20 of Central Goods and Services Tax Act.

The amendment will be effective from 1st April 2025.

2) Section 2(69)(c) of the CGST Act.

Clause (c) of Section 2(69) is being amended to replace "municipal or local fund" with "municipal fund or local fund" and to insert an Explanation after the said sub-clause, to provide for definitions of the terms ‘Local Fund’ and ‘Municipal Fund’ used in the definition of “local authority” under the said clause so as to clarify the scope of the said terms.

3) Section 2(116A) and Section 148A of the CGST Act.

A new clause (116A) is being inserted in section 2 to provide definition of Unique Identification Marking for implementation of Track and Trace Mechanism.

Also, a new section 148A is being inserted to provide for an enabling mechanism for Track and Trace Mechanism for specified commodities as per recommendation of 55th GST Council.

55th GST Council recommendation:

a) Council recommended to insert an enabling provision in CGST Act, 2017 through Section 148A so as to empower the Government to enforce the Track and Trace Mechanism for specified evasion prone commodities.

b) The system shall be based on a Unique Identification Marking which shall be affixed on the said goods or the packages thereof. This will provide a legal framework for developing such a system and will help in implementation of mechanism for tracing specified commodities throughout the supply chain.

4) Section 122B - Penalty for failure to comply with track and trace mechanism.

New section 122B is being inserted to provide penalty for contraventions of provisions related to the Track and Trace Mechanism provided under section 148A.

Quantum of Penalty under Section 122B shall be - 

a) Rs.1,00,000 or.

b) 10% of the tax payable on such goods.

whichever is higher.

Note: This penalty will be in addition to any other penalties already specified under Chapter XV or the provisions of this chapter.

5) Section 12(4) and section 13(4) relating to time of supply in respect of Vouchers to be deleted.

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