04 Feb 2020Posted By: Mudit Handa

Union Budget 2020: Changes in the GST Laws

The Union Budget 2020, which was presented on 1st February 2020 at the parliament, by the Honorable Finance Minister of India Smt. Nirmala Sitharaman was indeed tax-friendly in nature. It has been centered upon the objective to give a boost to the economy by reducing the tax burden on taxpayers and increasing their purchasing power. This will gradually raise consumption, which will then elevate the production.

With this intent, the government has introduced the all-new Income tax regime, wherein income up to ₹5 lakhs shall be totally tax-free.

Apart from that, the government has also brought noteworthy measures to improve the indirect tax system. Several measures have been proposed to enhance the Goods & Service Tax Network (GSTN) and simplify compliance for the taxpayers having GST registration. 

Here, the noteworthy measures proposed by the government to improve the GST framework have been explained for a better understanding of the general taxpayers having GST registration


#1. J&K to be included in the list of Union territories

Section 2(114) of the CGST Act 2017 shall be amended to update the definition of Union Territories. 

  • This is to include Jammu & Kashmir in the list of Union territories as per the Jammu & Kashmir Reorganization Act 2019.

  • Further, the Dadra & Nagar Haveli and Daman & Diu (Merger of Union territories) Act 2019 shall also be brought into force.

  • Accordingly, the amendment shall also be made in the UTGST Act 2017.

#2. Amendment in Composition scheme

The government has proposed to revise the GST Composition scheme. Following persons shall not be eligible for GST registration under Composition scheme:-

  • Those involved in GST exempt services.

  • Those involved in the interstate supply of services.

  • E-commerce operator doing supply of services.

#3. Non-linking of date of Debit note & GST invoice

The government has proposed to amend section 16(4) CGST Act 2017. For the purpose of easing the process to avail ITC, the date of raising a debit note shall be delinked from the date of raising the GST invoice.

#4. GST Cancellation of Voluntary registered person

Section 29(1)(c) of the CGST Act 2017 shall now be amended so that a person who got voluntary GST registration, can get GST cancellation if he is no longer liable for the GST registration. 

Know more about GST cancellation.

#5. Extension of deadline to revoke GST Cancellation

Till now, if a person has got GST Cancellation and wishes to revoke it, he has to file the application for revocation of GST Cancellation within 30 days of receiving the Cancellation order.

  • Now, the deadline to file such revocation shall be extended further to 60 days for some special (deserving) cases. 

  • A separate proviso to Section 30(1) shall soon be added for this purpose.

#6. Manner of issuing a GST invoice

The government is going to amend rules for issuing a GST invoice. Very soon, the taxpayers may have to specify the manner of issuance of GST invoices, as the rules will be prescribed for the same. 

#7. Tax deductors don’t need to file TDS certificate

The government has proposed to amend section 51 of the CGST Act 2017. Very soon, the taxpayers having GST registration u/s 51 shall no longer require to file the GST TDS certificate in the Form GSTR-7A.

Accordingly, the late fee in the case of GSTR-7A shall also be waived off.

#8. Beneficiaries of fake ITC liable for a huge penalty

These days, the problem of claiming fake ITC is causing huge trouble. In order to take strict action against the same, the government has proposed to penalize the beneficiaries of transactions due to the fake ITC claim similar to the person who claims fake ITC.

  • As per Section 122, if any person indulges in violation of GST compliance or makes fake ITC claim is liable to a high penalty of INR 10,000/- or the tax evaded, whichever is higher. 

  • Now, very soon this section will be amended to make the beneficiaries of transactions due to the fake ITC claim also be liable for such a high penalty.

  • Further, section 132 shall also be amended to make fake ITC claim a non-bailable offense. Now, the fake ITC claimant, as well as the beneficiaries of transactions, will be liable for the imprisonment term as specified in this section. 

This is to provide for strict measures against fake ITC claims.


These are some of the proposed by the government in the Union Budget 2020 to improve the GST framework.

Also, read about the Direct tax reforms in Union Budget 2020.

If you need any further guidance as regards the GST registration or the GST return filing procedure, please feel free to contact our business advisors at 8881-069-069.

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