CGST amendments tighten taxation of related party supplies and revise returns, credit, interest, enforcement and appeal rules.
Finance Bill, 2021 amends the CGST Act to: tax supplies between non individuals and members retrospectively; limit input tax credit to supplier reported outward supplies; replace mandatory audited reconciliation and account audits with self certified annual returns; charge interest on net cash liability retrospectively; separate seizure/confiscation from tax recovery; make provisional attachment valid through proceedings and one year after order; condition certain appeals on payment of part of penalty; clarify self assessed tax includes outward supplies omitted from returns; expand information calling powers while preserving a hearing requirement.

Zero-rating of supplies to SEZs limited to authorised operations; zero-rating on payment restricted to notified taxpayers, refund linked to forex.
Amendments narrow zero-rated supplies to Special Economic Zone developers or units to transactions for authorised operations; restrict zero-rating on payment of integrated tax to notified classes of taxpayers or notified supplies; and connect export refund entitlement to actual foreign exchange remittance, thereby conditioning refunds on realization documentation.

Refund entitlement for unutilised input tax credit limited to credits from input goods under inverted duty structure.
The document contrasts two high court approaches to refund of unutilised input tax credit under an inverted duty structure: one holding that Net ITC for refund must include credits on inputs and input services and striking down a rule excluding input services as ultra vires; the other upholding the proviso that limits refund to credit accumulated because tax on input goods exceeds tax on output supplies, finding an amended rule that excludes input services to be intra vires and a valid legislative classification.

Advance Ruling System can reduce tax litigation and provide binding certainty for taxpayers, urging reform and institutional strengthening.
Recommend comprehensive reform of the Advance Ruling regime to reduce tax litigation by improving AAR capacity and timeliness, lowering the high resident eligibility threshold, and creating an institutional council modeled on Swedish and New Zealand systems so advance rulings become a practicable, binding, and transparent mechanism to provide tax certainty and narrow further challenges.

Supersession of regulations: new Transportation of Goods rules clarify governing instrument and resolve prior regulatory confusion.
CBIC issued the Transportation of Goods (Through Foreign Territory), Regulations, 2020, expressly superseding the 1965 Regulations; prior notifications had temporarily purported to supersede and then restore the 1965 Regulations, creating stakeholder confusion about governing instruments until the 2020 regulations clarified the supersession.

Retrospective GST amendments change exemption and levy rules and bar refunds on paid GST in specified goods.
Amendments give retrospective effect to changes in GST treatment for specified goods: fishmeal exemption is limited with no refunds for paid GST; reduced levy treatment for certain pulley and wheel parts used in agricultural machinery is applied retrospectively, also without refunds; and refunds of accumulated compensation cess credit on tobacco products arising from an inverted duty structure are disallowed retrospectively.

Removal of difficulties orders extended under GST compensation law to allow continued issuance for an additional statutory period.
Amendment to Section 14 of the Goods and Services Tax (Compensation to States) Act, 2017 expands the temporal scope for issuing removal of difficulties orders, enabling the grant of such orders for an additional two-year period and thereby extending authority to issue orders until five years from the Act's commencement.

Removal of difficulties orders extended to permit issuance beyond the original timeframe, enabling continued administrative corrections.
The UTGST Act is amended by modifying Section 26 to extend the statutory authority to issue removal of difficulties orders, permitting continuation of those orders beyond the Act's initial transitional window and thereby lengthening the period during which administrative corrections and clarifications may be made under the Act.

Extension of removal of difficulties orders: continuation permitted for two years under amended IGST Act provision.
The amendment to Section 25 extends the authority to issue removal of difficulties orders for an additional two years, allowing such orders to be made up to five years from the date of commencement of the IGST Act, thereby prolonging the administrative mechanism to address implementation issues.

Composition scheme exclusions expanded, affecting service suppliers and inter state service supplies and tightening input tax credit rules.
Amendments revise the definition of Union territory, narrow the composition scheme to exclude specified categories of service supplies, delink debit note date from invoice date for input tax credit, prescribe manner and time limits for transitional credit, and strengthen registration, procedural and enforcement provisions including cancellation and revocation rules, invoice issuance for services, removal of TDS certificate obligations, and enhanced penalties and cognizable treatment for fraudulent availment of input tax credit.

Excise duty increase and higher NCCD rates on tobacco products raise tax incidence and apply immediately.
Amendment increases excise and NCCD rates for specified tobacco and tobacco substitute tariff items in the Seventh Schedule to the Finance Act, 2001, listing revised unit and ad valorem rates by tariff heading and measurement unit. The changes take effect on enactment and are applied immediately under the Provisional Collection of Taxes Act, 1931.

Anti-circumvention measures expanded to enable investigations into circumvention of anti-dumping and countervailing duties.
Amendments broaden Anti-Dumping Rules to strengthen anti-circumvention measures and clarify investigation scope for dumping that injures domestic industry; corresponding changes add an explicit investigatory mechanism in Countervailing Duty Rules to address circumvention of countervailing duties and clarify procedural scope. The instrument also revokes specified anti-dumping duties on purified terephthalic acid originating from certain trading partners.

Social Welfare Surcharge exemption withdrawn; notification amended to remove specified tariff entries in certain chapters.
Exemption from the Social Welfare Surcharge previously applicable to specified imported goods is being withdrawn by amendment to the governing customs notification, which omits certain table entries so those goods no longer attract the earlier surcharge exemption.

Social Welfare Surcharge exemption on specified imported goods announced, covering foodstuffs, stone products and complete commercial vehicles.
Social Welfare Surcharge is exempted on a specified list of imported goods identified by HS codes and descriptions, including dairy products (whey, cheese), live plants, nuts (almonds, walnuts), cereals (wheat, maize), chewing gum, infant food preparations, various forms of orange juice, selected marble and calcareous stone products (tiles, blocks, monumental stone), and all commercial vehicles (including electric vehicles) imported as completely built units.

Customs tariff amendments tighten concession eligibility and harmonise BCD entries while removing redundant provisions.
Amendments to customs tariff notifications revise BCD entries by omitting redundant listings, consolidating inconsistent tariff provisions, and narrowing ambiguous item scope so concessions apply only to intended end uses. Procedural and eligibility changes include imposing an actual user condition on a bamboo import concession, aligning technical conditions for satellite testing equipment and scientific instruments, clarifying assistive device coverage for disabled users, and removing the techno economic clearance requirement for a fertilizer renovation concessional BCD.

Health cess on imported medical devices imposes an additional customs duty, excluding BCD exempt items and manufacturing inputs.
A Health Cess is proposed as an ad valorem customs duty on imported medical devices (HS headings 9018-9022) measured by import value under the Customs Act; export promotion scrips cannot be used for payment. Devices exempt from basic customs duty and inputs/parts used in manufacture are exempt from the Cess, and proceeds are to fund health infrastructure.

Customs duty exemptions withdrawn as obsolete; several notifications rescinded or consolidated into updated customs notifications.
Several earlier customs duty exemption notifications are being withdrawn as no longer relevant, including exemptions for Commonwealth Games imports, power-project imports, Advance Customs Clearance Permit imports, SAARC preferential trade, goods produced in Nepal, wool/woollen fabrics and paper money by humanitarian entities, preferential tariff items, and water-supply projects under Project Imports; certain entries have been merged or superseded and some exemptions are now available through notification No. 50/2017-Customs.

BCD exemption withdrawal removes concessional customs treatment for numerous listed import goods, restoring standard basic customs duty.
Review under the Finance Bill 2020 withdraws concessional basic customs duty exemptions by omitting specified entries from Notification No. 50/2017-Customs, thereby removing concessional BCD treatment for a broad list of listed imports - including agricultural and food products, oils, sugars, raw materials, polymers, films, chemicals, specified machinery and project-tied imports - with several entries subject to quantitative caps or conditional provisos.

Customs duty revisions reshape tariffs to protect domestic manufacturing while exempting inputs and conditioning concessional rates.
Proposed revision of basic customs duty rates reallocates protection by increasing duties on finished consumer and automotive imports while reducing or exempting inputs and designated end-use materials to promote domestic manufacturing. Concessional rates and exemptions are conditional on specified end-uses and registrations, such as RNI registration for newsprint; electronic and mobile-phone components face staged duty increases with effective dates; defense-related imports by specified public sector undertakings are exempted subject to listed items.

Basic Customs Duty increases apply to numerous tariff headings, altering import duty obligations from the effective date.
Amendments increase the Basic Customs Duty in the First Schedule to the Customs Tariff Act, 1975 for numerous tariff headings, specifying revised duty percentages for defined commodities and adding new tariff entries; certain new entries show an operative zero effective rate. The changes are effective 02.02.2020 and declared immediately collectible under the Provisional Collection of Taxes Act, 1931.