04 February 2023

Budget 2023 – Changes in Customs and GST laws

The Hon’ble Finance Minister of India presented the Union Budget 2023 as usual on 1st of February. Though the pre-budget speculation that the Union Budget would bring in some amnesty scheme for direct taxes and customs, turned out to be false, the 5th and last budget of the current government has made various significant tax proposals. Few important changes in the Customs and GST laws have been highlighted below.


  • 31 exemptions are being discontinued with effect from 31 March 2023.
  • 152 exemptions have been extended up to 31 March 2024.
  • 7 exemptions have been extended up to 31 March 2025.
  • 5 exemptions have been extended up to 31 March 2028.
  • A proviso has been introduced to Section 25(4A) of Customs Act, 1962 to exclude certain categories of conditional exemptions from the purview of said section which provides for sunset of conditional notifications. Categories excluded include notifications issued under any multilateral or bilateral trade agreement, obligations under an international agreement, treaty, convention, etc., schemes under the Foreign Trade Policy, re-import, temporary imports, goods imported as gifts or personal baggage, etc.
  • Sub-clause (8A) to Section 127C of the Customs Act, 1975 proposes to introduce time limit for passing an order by the Settlement Commission. The order will now be required to be passed within 9 months from the last date of the month in which application is made. This can be extended by another 3 months.
  • Sections 9, 9A and 9C of the Customs Tariff Act, 1975 is proposed to be amended to overcome the Court/Tribunal orders where it was held that the Ministry of Finance’s decisions to not levy duties can be challenged under Section 9C as they were without reasons.

Goods and Services Tax (GST):

  • Input Tax Credit is not available on supplies used for activities/obligations under Corporate Social Responsibility (CSR). Clause (fa) has been proposed to be inserted under Section 17(5) of the Central Goods and Services Tax Act, 2017.
  • Section 23, which provides for persons not liable for registration, has been proposed to be amended (with effect from 1 July 2017) to give an overriding effect over Section 22 and 24 of the CGST Act.
  • Registered person will not be allowed to furnish GSTR1, GSTR 3B, GSTR 9, GSTR 8 after a period of 3 years from the due date of furnishing of such returns/statements. Government however can extend by way of notification, the said time limit, subject to certain conditions and restrictions as may be prescribed.
  • Section 56 of the CGST Act is being amended so as to provide for an enabling provision to prescribe manner of computation of period of delay for calculation of interest on delayed refunds.
  • Section 132 of the CGST Act is being amended to decriminalize certain offences and to increase the monetary threshold for launching prosecution for the offences under the said Act from INR one crore to INR two crore, except for the offences related to issuance of invoices without supply of goods or services or both. The offences which are proposed to be decriminalised are the offence of obstruction or prevention of any officer in the discharge of his duties under the CGST Act; offence of tampering with or destroying any material evidence or documents; offence of failing to supply any information which he is required to supply under the CGST Act or the CGST Rules or supplying false information, unless the person is under a reasonable belief (the burden of proving which shall be upon him) that the information supplied by him is true; and the attempts to commit, or abetment of the commission of the aforesaid offences.
  • The option of compounding will not be available to any person who has been accused of committing the offence of issuance of fake invoices, leading to the wrongful availment/utilisation of ITC or refund of tax.
  • The definition of online information and database access or retrieval (OIDAR) services under Section 2(17) of the Integrated Goods and Services Tax Act, 2017 is being amended to exclude the requirement of the supply being ‘essentially automated and involving minimal human intervention’ for a supply to qualify as supply of OIDAR services.

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