Introduction
The Union Budget 2025, presented on 1st February 2025, introduces major changes in GST compliance, ITC claims, tax liability, and penalties. Here’s a complete analysis of the changes and their impact.
Key GST Amendments in Budget 2025
1. Key Definition Changes
| Section | Amendment | Effective Date |
|---|---|---|
| 2(61) | ISD can distribute ITC on interstate supply, even if tax paid under RCM. | 1st April 2025 |
| 2(69)(c) | Clarification of “Municipal Fund or Local Fund”. | Upon Notification |
| 2(116A) | Introduction of Unique Identification Marking for Track & Trace Mechanism. | Upon Notification |
Impact: Improved ITC distribution for ISD entities. 
Businesses must comply with Track & Trace rules. 2. ITC Restrictions & Time of Supply for Vouchers Removed
| Change | Section | Impact |
|---|---|---|
| Time of Supply for Vouchers Removed | 12(4) & 13(4) | Vouchers are not treated as supply of goods/services. |
| ITC on Construction Disallowed | 17(5)(d) | ITC not available for leased property construction (retroactive from 1st July 2017). |
3. Changes in ITC Claim (GSTR-2B)
- Auto-generation removed – Allows manual corrections.
- New restrictions – Ensures better ITC claim validation.
4. Pre-Deposit for Appeals & E-Way Bills Reduced
| Change | Section | Previous Rule | New Rule |
|---|---|---|---|
| E-Way Bill Penalty Appeals | 107(6) | 25% pre-deposit | 10% pre-deposit |
| Appeal to GST Tribunal | 112(8) | No specific rule | 10% of penalty amount required |
5. Track & Trace Mechanism (New Sections 148A & 122B)
New penalties introduced for non-compliance:
₹1,00,000 OR 10% of tax payable on goods involved.
Mandatory Unique Identification System for specified goods.
6. SEZ & Free Trade Warehousing Zone (FTWZ) Transactions
| Change | Amendment | Effective Date |
|---|---|---|
| SEZ/FTWZ transactions before clearance NOT considered supply | New Clause (aa) in Schedule III | Retrospective from 1st July 2017 |
| No ITC refunds for such transactions | Finance Bill Clause 128 & 129 | Upon Notification |
Hi, I’m Vishal
Founder of FinTaxExpert.in, with 7+ years of experience in taxation, audits, and corporate finance.
✍️ I’m passionate about writing and researching in the fields of taxation and finance.
📖 Learn more about us at FinTaxExpert.in.