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Changes in GST from 1st July 2021

As we know, Earlier we had to make the interest payment on the gross liability in case of Goods and Service Tax that is GST.

Due to this assessees and professionals were facing a lot of issues as assesses were paying higher amount than actually what they're liable for and professionals are being expected to answer why they're asked to Pay on Gross liability.


GST Council and Government are in constant touch with professional and Professional bodies for making our lives better.

Via The Finance Act, 2021 GST Council have notified many amendments in the CGST and IGST Acts 2017, but they will be  coming into effect from July 1, 2021.

Let us know about them in details.

Amendments applicable in GST from July 1st, 2021. Here are some of them -

Following are the amendments, some of which are new introduced, some are omitted and rest are amended.

1. Addition of New clause (aa) in Section 7(1) of the CGST Act-

As per the amended section 7 of the Central Goods and Services Tax Act, 2017, this amendment will be effective from the 1st July, 2021, with retrospective effect from 1st july 2017.

This new clause (aa) in inserted in sub-section (1) , which ensure that tax will be levied on activities or transactions including those supplies of goods or services by any person, other than an individuals, to its members or constituents or vice versa, with respect to cash, deferred payments or other valuable consideration such as barter system.

With this clause an explanation is also introduced in the act, which states that the person and its members or constituents shall be considered  two separate persons and the supply of activities unlik earlier, inter se shall be deemed to take place from one such person to another person.

2. Interest to be paid on net tax liability-

Like we discussed earlier,

There is an amendment in the section 50 of the CSGT act, which had substituted proviso to sub section(1). Again this will come with a retrospective effect from 1st july,2017 and will be effective from 1st July 2021.

Earlier Interest was to be paid on gross liability of the assessee, but from now on, the interest has to be paid on net tax liability provided the person, but only those who has not been issued any show cause notice under the following sections 73 or section 74.

But even after these, issues of litigation will be there as the tax which will be  deposited in electronic cash ledger before the due date of filing of return will be causing the point of dispute .As the credit lying in electronic credit ledger and treated as an advance tax .

A. What problem can we Face with amount available in Electronic Cash ledger?

The amount in electronic cash ledger before the due date might be  treated as an advance tax. And till now payment of tax in filing of return is not allowed in GST. So till date notices asking to pay GST on gross tax liability still face disputes.

Solution -

This will be resolved after the amendment will be introduce.

For this assessees should file returns on time.


This proviso isn't applied whenever SCN comes into play.

Last but not the least, and can be considered as one of the most important amendment. As this will be effecting every transactions which took place earlier and will be taking place in the near future. So here's the amendment.

3. Omission of para 7 from Schedule II of the CGST Act

The Finance Act, 2021 has omitted paragraph 7 of Schedule II of the Central Goods and Services Tax Act, with retrospective effect from the 1st day of July, 2017.

Amendment in Schedule II.

This was related to the definition of Supply of goods and services. If a transaction fulfills the criteria mentioned in this para of the schedule then as per that only it was considered as Supply of Goods or Services or vice versa.

This amendment will be providing an ease while deciding the transaction is Supply of goods or Services.

Whereas at the same time it would effect the future transactions as which was considered supply of service might be considered as supply of goods or vice versa.

And since it's retrospective it might lead to scrutiny in old files.

As we have seen all the major amendments coming from July 1st, 2021. And the amendments look good and no doubt will make our lives easier.

 But as we know, there are always two sides I the coin and these are retrospective in effect and we will be needing bit time to understand it pros and cons so it would be better for us to take decisions wisely and not in hurry. Most important thing to file returns on time.

Read Also: Non-Payment of GST to Government – who is liable to whether Seller or buyer?




The author of the above article is Sneha Bhalotia.

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