Notification:
The Central Board of Indirect Taxes and Customs (CBIC), following the 55th GST Council Meeting on December 21, 2024, issued Notification No. 07/2025-Central Tax (Rate), which amends the applicability of the Reverse Charge Mechanism (RCM) for sponsorship services. This change alters the tax responsibility for body corporates by shifting their sponsorship services from the RCM to the Forward Charge Mechanism (FCM).
Amendment:
The amendment modifies Serial Number 4 of Notification No. 13/2017, specifically in column (3), by adding the phrase “other than a body corporate” after “Any person.” The revised provision now states that sponsorship services provided to body corporates or partnership firms will be taxed under FCM. This means that body corporates will be responsible for collecting and depositing GST, unlike earlier when such services were taxed under RCM. However, services provided by non-body corporates to body corporates or partnership firms will continue to be subject to RCM.
Additionally, the amendment excludes taxpayers under the Composition Levy Scheme from the RCM for renting commercial or immovable property (other than residential) under Entry 5AB.
In summary, the changes clarify that body corporates must now apply FCM for sponsorship services, while non-body corporates will still be subject to RCM. This update aims to streamline GST collection and compliance, shifting responsibility for sponsorship services from the recipient to the supplier, in the case of body corporates.
Notification link:
https://taxinformation.cbic.gov.in/view-pdf/1010275/ENG/Notifications
GST & Taxation Reforms in Union Budget 2025:
The Union Budget 2025 was presented Finance Minister Nirmala Sitharaman on February 1, introducing the key reforms focused majorly upon simplifying compliance, improving transparency, and driving economic growth.
GST Reforms in brief:
- Rate Rationalization: A committee has been set up by the Government which is working to simplify GST’s complex rate structure, aiming to reduce disputes and duty inversion issues.
- Input Tax Credit (ITC): Business owners now have to upload the invoices in real-time and the new system auto matches the input credits with supplier invoices, reducing frauds since matching is now essential for availing ITC. Sector-specific credit rules are also being introduced.
- E-Invoicing: E-Invoicing is now mandatory for businesses with ₹5 crore+ turnover which was initially ₹10 Crore+. An AI-powered GST portal is now live to streamline automated filing and reconciliation.
- Benefits for MSME: GST registration threshold raised to ₹50 lakh; MSMEs can now file quarterly returns, and a simplified composition scheme eases regulatory load.
Important changes regarding invoices and number series:
- New invoice series to be started at the beginning of every financial year.
- The series has to be in sequential and should consist of non-duplicative numbers.
- The series cannot be reset mid-year.
- Separate types of document types must have different and independent set of series
Income Tax Changes:
- Zero Tax Till ₹12 Lakh: Under the new regime, no tax is levied on annual income up to ₹12 lakh providing a great relief for the middle class.
- Revised Slabs: Tax rates have been revised ranging from 5% to 30% across new income brackets, starting at ₹4 lakh.
- TDS/TCS Relaxation: TDS on interest for senior citizens has been increased to Rs. 1 lakh from Rs 50,000/- and thresholds for TDS on rent, interest, and dividends have been raised. Section 206AB and 206CCA which impose Higher TDS/TCS for non-filers has been proposed to be omitted.
- Updated Returns Timeline: You now get four years to file updated income tax returns as the deadline has been doubled the previous limit.
(Disclaimer: The information provided here is based on legally sourced online materials and is intended for general informational purposes only. While all reasonable efforts have been made to ensure the accuracy and legality of the content, it is not a substitute for professional legal advice. The user is encouraged to consult with a qualified legal professional or relevant authority for advice pertaining to specific situations. The author and publisher do not accept any responsibility for any loss or damage arising from the use of this information, nor do they guarantee that it is applicable to individual circumstances.)
Paras Sharma (Adv.)
(Ba LLB, LLM)