Changes in Budget 2024-25

On 23rd July 2024, following the Lok Sabha elections, the Hon’ble Finance Minister presented the Budget for the fiscal year 2024-25 in the Parliament. Here are the key highlights of the Budget 2024-25:

Amendments to the CGST Act, 2017

1. Section 9 (Levy and Collection):

Proposed amendment to exempt GST on un-denatured extra neutral alcohol or rectified spirit used in the manufacture of alcoholic liquor for human consumption. This expands the scope of the previous exemption, which was limited to the supply of alcoholic liquor for human consumption.

2. Section 74A (Time Limit):

Introduction of a common time limit for the issuance of demand notices and orders under Sections 73 and 74 from FY 2024-25 onwards, with consequential amendments to relevant sections such as Sections 10(3), 35(1), 50(1), 61(3), 65(7), and 127.

3. Section 11A (Empower the Government to regularize):

Proposed to empower the Government to regularize non-levy or short-levy of central tax if it is determined that such issues arose from general practice.

4. Section 13(3) (Time of Supply of Services):

Amendment to specify the time of supply of services where the invoice is required to be issued by the recipient of services in reverse charge supplies.

5. Section 16 (Input Tax Credit):

• Subsection (5): Proposed exception for invoices or debit notes issued for FY 2017-18, 2018-19, 2019-20, and 2020-21, allowing registered persons to avail ITC in any return filed up to 30th November 2021.
• Subsection (6): Allowance for the availment of ITC in respect of an invoice or debit note in a return filed from the date of cancellation of registration to the date of order of revocation of cancellation, provided the time limit for availment has not expired.

Retrospective application from 1st July 2017, with no refund for taxes already paid.

6. Section 17(5) (Restrictions on ITC):

Non-availability of ITC for tax paid under Section 74 is restricted to demands up to FY 2023-24. References to Sections 129 and 130 are proposed to be removed.

7. Section 30(2) (Revocation of Cancellation of Registration):

Empowerment for the Central Government to prescribe conditions and restrictions for revocation by rules.

8. Section 31(1) (Tax Invoice):

Empowerment for the Central Government to prescribe the time period for issuance of invoices by recipients in RCM cases.

9. Section 39(3) (Returns by TDS Deductor):

Mandate for TDS deductor’s to furnish monthly returns irrespective of deductions made, with the Government empowered to prescribe the rules, form, and manner of filing.

10. Section 70(1A) (Power to Summon Persons):

Enable authorized representatives to appear on behalf of summoned persons before GST authorities.

11. Section 74A (Insertion of New Section irrespective of charges or fraud, wilful misstatement or suppression):

Proposed to insert new Section 74A which will deal with the determination of tax not paid or short paid or erroneously refunded or wrongly ITC availed or utilised, irrespective of charges or fraud, wilful misstatement or suppression of facts are invoked or not. Earlier there were two different Sections were prescribed for non-fraud and fraud cases.

12. Section 107(6) (Appeal to Appellate Authority):

Reduction of the maximum pre-deposit amount for filing appeals from 25 Crore to 20 Crore in central tax.

13. Section 109 (Appeal to Appellate Tribunal):

Empowerment of the tribunal to adjudicate cases related to anti-profiteering measures, with the Government authorized to specify cases to be heard by the Principal Bench.

Reduction of the maximum pre-deposit amount for filing appeals from 50 Crore to 20 Crore in central tax.

14. Section 128A (Conditional waiver of interest and penalty):

Conditional waiver of interest and penalty for demand notices issued under Section 73 for FY 2017-18, 2018-19, and 2019-20, excluding erroneous refunds, with no refund for interest and penalty already paid.

15. Section 140(7) (Transitional ITC Arrangements):

Enable transitional input service credit received by an ISD prior to the appointed day, with invoices received before the appointed date.

16. Amendment in Schedule III:

Proposed to amend Schedule III of the CGST Act to provide that the activity of apportionment of co-insurance premium by the lead insurer to the co-insurer for the insurance services jointly supplied by the lead insurer and the co-insurer to the insured in coinsurance agreements shall be treated as neither supply of goods nor supply of services

The proposed changes in the Finance Bill (No. 2), 2024 will be enacted through notifications in the official gazette by the Ministry of Finance.