The Karnataka State Legislature has enacted the Karnataka Goods and Services Tax (Amendment) Act, 2025 to further refine and clarify existing provisions under the GST framework.

Amendments to Sections:

1. Section 2 (Definitions):
   • Clause (61) is amended to include sub-sections (3) and (4) of section 5 of the Integrated GST Act, 2017, effective from 1st April 2025.
   • Clause (69) is amended by inserting “fund” after “management of a municipal”, and an Explanation is added defining “local fund” and “municipal fund”.
   • Clause (116A) is inserted defining “unique identification marking” to include digital stamps or similar secure, non-removable markings.
2. Section 12:
   Sub-section (4) is omitted.
3. Section 13:
   Sub-section (4) is omitted.
4. Section 17 (Input Tax Credit):
   • In sub-section (5), clause (d), “plant or machinery” is replaced by “plant and machinery” effective from 1st July 2017.
   • A new Explanation-2 is inserted clarifying that any reference to “plant or machinery” shall always be construed as “plant and machinery”.
5. Section 20:
   • Sub-section (1) is amended to include references to sub-sections (3) and (4) of section 5 of the Integrated GST Act, effective from 1st April 2025.
   • Sub-section (2) is similarly amended.
6. Section 34 (Adjustment of Input Tax Credit):
   The proviso is substituted to restrict output tax reduction if input tax credit has not been reversed or the tax has been passed on.
7. Section 38 (Return Filing):
   • Sub-section (1) replaces “auto-generated statement” with “statement”.
   • Sub-section (2) is modified to change wording, add “including”, and insert a new clause (c) requiring other prescribed details.
8. Section 39 (Filing of Returns):
   Sub-section (1) is amended to allow filing “within such time, and subject to such conditions and restrictions”.
9. Section 107 (Penalty Appeals):
   The proviso is substituted to require payment of 10% of the penalty before filing an appeal against orders without tax demand.
10. Section 112 (Penalty Appeals):
    A proviso is inserted requiring payment of 10% of the penalty, in addition to other amounts, before filing an appeal.
11. Section 122-B (New Section):
    Introduced to impose a penalty of ₹1 lakh or 10% of the tax on goods, whichever is higher, for failure to comply with track and trace provisions.
12. Section 148-A (New Section):
    Added to establish a track and trace mechanism requiring specified goods to bear unique identification markings and related compliance obligations.
13. Schedule III:

• A new clause (aa) is added to paragraph 8, allowing supply of warehoused goods in SEZ or FTWZ to other areas before export clearance.
• Explanation 2 is modified, and Explanation 3 is inserted defining “Special Economic Zone”, “Free Trade Warehousing Zone”, and “Domestic Tariff Area”.