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RECENT DECISIONS OF GST COUNCIL- AT A GLANCE

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RECENT DECISIONS OF GST COUNCIL- AT A GLANCE
By: Dr. Sanjiv Agarwal
June 2, 2021
All Articles by: Dr. Sanjiv Agarwal       View Profile
  • Contents

The GST Council met after a gap of seven months on 28th May, 2021 with five states being represented by new leaders (CM, DY CM or FMs) . This 43rd meeting was held in the backdrop of worries on compensation cess, shortfall in e-way bills in second wave of COVID, likely contraction in tax revenue and recession in economy, particularly , services sector.

Some of the major decisions / recommendations include relief to taxpayers by way of amnesty scheme to reduce late fees payable on return filings, annual return(Form-9) to be optional for small assessee's for the financial year 2020-21, relaxation in GST/ IGST rates for COVID related supplies till 31 August,2021, setting up of two groups of ministers to recommend GST rate reductions within 10 days, retrospective amendment in section 50 of CGST Act, 2017 wef 1.7.2017 to provide for payment of interest on net cash basis and so on .

The GST Council in its 43rd meeting took the following decisions relating to changes in GST rates on supply of goods and services and changes related to GST law and procedure.

  1. To make present GSTR-1/3B system as default return filing system. This amendment is being brought because of challenge in several High courts regarding non-implementation of original return filing system (GSTR 1, GSTR-2, GSTR-3).
  2. Section 50 of CGST Act , 2017 (payment of interest liability on net basis) to be notified with retrospective effect from 01.07.2017.
  3. Time limit for completion for various actions, by any authority/person, which falls between 15.04.2021 to 29.06.2021 to be extended to 30.06.2021. In case where timeline extension given by Supreme Court applies, that shall prevail.
  4. COVID Equipments

As a COVID-19 relief measure, specified COVID-19 related goods such as medical oxygen, oxygen concentrators and other oxygen storage and transportation equipment, certain diagnostic markers test kits and COVID-19 vaccines, etc., have been recommended for full exemption from IGST, even if imported on payment basis, for donating to the government or on recommendation of state authority to any relief agency. This exemption shall be valid upto 31.08.2021. Hitherto, IGST exemption was applicable only when these goods were imported “free of cost” for free distribution. The same will also be extended till 31.8.20201. It may be mentioned that these goods are already exempted from Basic Customs duty.

  1. Education Sector
  • Services supplied to an educational institution including anganwadi (which provide pre-school education also), by way of serving of food including mid- day meals under any midday meals scheme, sponsored by Government is exempt from levy of GST irrespective of funding of such supplies from government grants or corporate donations.
  • Services provided by way of examination including entrance examination, where fee is charged for such examinations, by National Board of Examination (NBE), or similar Central or State Educational Boards, and input services relating thereto are exempt from GST.
  1. Government Sector
  • Service by way of milling of wheat/paddy into flour/rice to Government/Local Authority etc. for distribution of such flour or rice under PDS is exempt from GST if the value of goods in such composite supply does not exceed 25%. Otherwise, such services would attract GST at the rate of 5% if supplied to any person registered in GST.
  • Services supplied to a Government Entity by way of construction of a rope-way attract GST at the rate of 18%.
  • Services supplied by Govt. to its undertaking/PSU by way of guaranteeing loans taken by such entity from banks and financial institutions is exempt from GST.
  1. Real Estate
  • Landowner promoters could utilize credit of GST charged to them by developer promoters in respect of such apartments that are subsequently sold by the land promotor and on which GST is paid. The developer promotor shall be allowed to pay GST relating to such apartments any time before or at the time of issuance of completion certificate.
  • GST is payable on annuity payments received as deferred payment for construction of road. Benefit of the exemption is for such annuities which are paid for the service by way of access to a road or a bridge.
  1. Amnesty scheme for pending returns

Period of Amnesty scheme 

July, 2017 to April, 2021

Return 

GSTR-3B

Returns to be filed between

01.06.2021 to 31.08.2021

Relaxation

If NIL liability

Maximum of ₹ 500 (₹ 250-CGST, ₹ 250-SGST) per return

Other taxpayers

Maximum of ₹ 1000 (₹ 500-CGST, ₹ 500-SGST) per return

  1. Rationalization of late fees (for prospective tax periods)

GSTR-1/3B

 

If NIL liability / Nil outward supplies

Maximum ₹ 500 (₹ 250-CGST, ₹ 250-SGST) per return

Others

 

Taxpayer with average annual turnover in preceding year upto 1.5 Crore.

Maximum of ₹ 2000 (₹ 1000-CGST, ₹ 1000-SGST) per return

Taxpayer with average annual turnover in preceding year between 1.5 Crore to 5 Crore.

Maximum of ₹ 5000 (₹ 2500-CGST, ₹ 2500-SGST) per return

Taxpayer with average annual turnover in preceding year above ₹ 5 Crore

Maximum of ₹ 10000 (₹ 5000-CGST, ₹ 5000-SGST) per return

GSTR-4

 

If NIL liability

Maximum of ₹ 500 (₹ 250-CGST, ₹ 250-SGST) per return

Others

Maximum of ₹ 2000 (₹ 1000-CGST, ₹ 1000-SGST) per return

GSTR-7

₹ 50 per day (₹ 25-CGST + ₹ 25-SGST) to the extent of maximum of ₹ 2000 (₹ 1000-CGST, ₹ 1000-SGST) per return

  1. Relaxation in interest rates in filing of monthly return in form GSTR-3B

Concessional rate of interest in lieu of 18 % on delayed payment of tax in following cases:

Particulars

Return period

Actual rate of interest

Interest reduced

For registered persons having aggregate turnover > 5 crores

March , April , May , 2021

18 % p.a.

First 15 days : 9%

For registered persons having aggregate turnover =< 5 crores (including QRMP scheme)

March , April , May , 2021

18% p.a.

First 15 days : NIL (for all months)

Next 45 days : 9% (for March / quarter ending march return)

Next 30 days : 9% (for April return)

Next 15 days : 9% (for May return)

Composition taxpayers

January to March , 2021

  1. Simplification of Annual Return for Financial Year 2020-21:
  • Amendments in section 35 and 44 of CGST Act made through Finance Act, 2021 to be notified. This would ease the compliance requirement in furnishing reconciliation statement in FORM GSTR-9C, as taxpayers would be able to self-certify the reconciliation statement, instead of getting it certified by chartered accountants. This change will apply for Annual Return for FY 2020-21.
  • The filing of annual return in FORM GSTR-9 / 9A for FY 2020-21 to be optional for taxpayers having aggregate annual turnover upto ₹ 2 Crore;
  • The reconciliation statement in FORM GSTR-9C for the FY 2020-21 will be required to be filed by taxpayers with annual aggregate turnover above ₹ 5 Crore.
  1. Certain other COVID-19 related relaxations to be provided, such as

1. Extension of due date of filing GSTR-1/ IFF for the month of May 2021 by 15 days.

2. Extension of due date of filing GSTR-4 for FY 2020-21 to 31.07.2021.

3. Extension of due date of filing ITC-04 for QE March 2021 to 30.06.2021.

4. Cumulative application of Rule 36(4) for availing ITC for tax periods April, May and June, 2021 in the return for the period June, 2021.

5. Allowing filing of returns by companies using Electronic Verification Code (EVC), instead of Digital Signature Certificate (DSC) till 31.08.2021.

All the above are the recommendations of the GST Council and the same would be given effect through relevant Circulars/Notifications which alone shall have the force of law.

GST Council has today become a machinery for tweaking the tax rates, deciding on representations for tax exemptions or lowering of tax rates and state demands for more money and cess. Infact , it should act as a federal body looking into state economy vis-a-vis macro economics, fiscal issues and tax related policy issues rather than seekers- giver body for tax relaxations and tax revenues. The economic direction and tax revenue analysis should become integral part of GST Council agenda to ensure that all states and UTs contribute to economic growth of states and the country.

 Compensation cassis becoming a major issue and Infact, a hurdle in tax reforms. If it continues , as most of the states want in their political and fiscal interest, the desired benefits of GST will never be achieved and taxpayers as well as citizens will continue to suffer and bear the brunt. A 14 percent guaranteed growth in state tax revenues is not at all realistic and is like a magic wand in the hands of state governments. It has to go. GST Council and Parliament will have to take a tough stand on this. Political compulsions ca not rule for a long time and this so called mistake ought to be corrected now .

 

By: Dr. Sanjiv Agarwal - June 2, 2021

 

 

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