Brief summary of various sections of Finance Act 2021 Notified by CBIC

Central Board of Indirect Taxes & Customs [CBIC] issued Notification Number 39/2021 on 21st December 2021, notifying all sections of the Finance Act 2021 which were not notified earlier. These amendments will take effect on January 1, 2022.

Sections 108, 109, and 113 to 122 of the said Act, have been notified.

Click here to read the Notification

A brief summary is provided, along with key points to remember:

1. Section 16(2)(aa) has been notified

This clause has been added to the conditions for claiming Input Tax Credit [ITC]. Among the other four conditions, ITC can now be claimed only if the supplier has provided the invoice or debit note in its GSTR-1. As a result, Rule 36(4) is terminated, resulting in a 5% Adhoc credit. Only the ITC on invoices that is reflected in the supplier’s GSTR-1 is now eligible for ITC.

2. Sections 7(1)(aa) notified

Sections 7(1)(aa) is notified, which became effective Retrospectively on 01-07-2017 and included the within the purview of supply, i.e. transaction between the club and its members is supplied.

3. Interest is now payable on net cash liability [Amendment notified Retrospectively]

A change has been made in section 50, where Interest is now payable on net cash liability rather than the liability portion discharged through ITC. Another retrospective amendment takes effect on July 1, 2017.

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4. Self-assessed tax must include supplies and tax declared on GSTR-1.

Malpractice of passing on ITC by declaring in GSTR-1 but failing to pay tax in GSTR-3B would be curtailed by this explanation added in Section 75 (12) that “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37 [Ret -1], but not included in the return furnished under section 39 [Ret-3B].

5. Penalty provision in Section 129 has been increased from 100 percent to 200 percent

The penalty provision in Section 129 has been increased from 100 percent to 200 percent, and the pre-deposit amount in Section 107 has been increased. Sections 129 and 130 have also been delinked, and changes to both sections have been notified.