Recommendations of the 42nd GST Council Meeting

The42nd GST Council meeting

has been held through video conferencing under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman. The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Finance Ministers of States & UTs and senior officers of the Ministry of Finance& States/ UTs.

The GST Council has made the following recommendations:

Compensation to States

(a) Extension of levy of compensation cess :-

Council has decided and recommended to extend levy of Compensation Cess even beyond the transition period of five years ( i.e. beyond June, 2022), for how long levy will be effective is still to be worked out.

(b) Release of Compensation:-

Centre is releasing compensation of Rs.20,000 crore to States today towards loss of revenue during 2020-21 and an amount of about Rs.25,000 crore towards IGST of 2017-18 by next week.

Relaxation in Return Filing

In its 39^th Meeting held in March 2020, the Council had recommended an incremental approach to incorporate features of the new return system in the present familiar GSTR-1/3B scheme. Various enhancements have since been made available on the GST Common Portal.

With a view to further enhance Ease of Doing Business and improve the compliance experience, the Council has approved the future roadmap for return filing under GST. The approved framework aims to simplify return filing and further reduce the taxpayer’s compliance burden in this regard significantly, such that the timely furnishing of details of outward supplies (GSTR-1) by a taxpayer and his suppliers would –(i) allow him to view the ITC available in his electronic credit ledger from all sources i.e. domestic supplies, imports and payments on reverse charge etc. prior to the due date for payment of tax, and (ii) enable the system to auto-populate return (GSTR-3B) through the data filed by the taxpayer and all his suppliers. In other words, the timely filing of GSTR-1 statement alone would be sufficient as the return in FORM GSTR-3B would get auto prepared on the common portal.

Now Council has decided and recommended the following:

Due date of furnishing quarterly GSTR-1 by quarterly taxpayers to be revised to 13^th of the month succeeding the quarter w.e.f. 01.1.2021;

Roadmap for auto-generation of GSTR-3B from GSTR-1s by:

i. Auto-population of liability from own GSTR-1 w.e.f. 01.01.2021; and

ii. Auto-population of input tax credit from suppliers’ GSTR-1s through the newly developed facility in FORM GSTR-2B for monthly filers w.e.f. 01.01.2021 and for quarterly filers w.e.f. 01.04.2021;

c. In order to ensure auto population of ITC and liability in GSTR 3B as detailed above, FORM GSTR 1would be mandatorily required to be filed before FORM GSTR3B w.e.f. 01.04.2021.

d. The present GSTR-1/3B return filing system to be extended till 31.03.2021 and the GST laws to be amended to make the GSTR-1/3B return filing system as the default return filing system.

Relaxation to small Taxpayers :-

Taxpayers having aggregate turnover less than Rs.5 crore :- with effect from 01^st January 2021 such tax payer shall file quarterly Return instead of the monthly return, however they will have to tax on monthly basis.

Further an option to pay reduced amount of 35% o the tax liability has been given to such taxpayer, it means for the first two months of the quarter, they have an option to pay 35% of the net cash tax liability of the last quarter using an auto generated challan.

Revised Requirement of declaring HSN Code :-

From 01^st April 2021 new rule of for declaring HSN code for goods and SAC for services in invoices would be as under:

a. HSN/SAC at 6 digits for supplies of both goods and services if aggregate annual turnover is above Rs. 5 crores;

b. HSN/SAC at 4 digits for B2B supplies of both goods and services if aggregate annual turnover upto Rs. 5 crores;

c. Government to have power to notify 8 digit HSN on notified class of supplies by all taxpayers.

Amendment to the CGST Rules: Various amendments in the CGST Rules and FORMS have been recommended which includes provision for furnishing of Nil FORM CMP-08 through SMS.

Refund in Bank Account linked with PAN & ADHAR

Refund to be paid/disbursed in a validated bank account linked with the PAN & Aadhaar of the registrant w.e.f. 01.01.2021.

Exemption to certain agencies

To encourage domestic launching of satellites particularly by young start-ups, the satellite launch services supplied by ISRO, Antrix Corporation Ltd. and NSIL would be exempted.

Ministry of Finance

Recommendations of the 42nd GST Council Meeting

Posted On: 05 OCT 2020 7:44PM by PIB Delhi

The 42nd GST Council met under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman through video conferencing here today. The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Finance Ministers of States & UTs and senior officers of the Ministry of Finance& States/ UTs.

The GST Council has made the following recommendations:

1. Levy of Compensation Cess to be extended beyond the transition period of five years i.e. beyond June, 2022, for such period as may be required to meet the revenue gap. Further details to be worked out.

2. Centre is releasing compensation of ₹ 20,000 crore to States today towards loss of revenue during 2020-21 and an amount of about ₹ 25,000 crore towards IGST of 2017-18 by next week.

3. Enhancement in features of return filing:In its 39^th Meeting held in March 2020, the Council had recommendedan incremental approach to incorporate features of the new return system in the present familiar GSTR-1/3B scheme. Various enhancements have since been made available on the GST Common Portal. With a view to further enhance Ease of Doing Business and improve the compliance experience, the Council has approved the future roadmap for return filing under GST. The approved frameworkaims to simplify return filing and further reduce the taxpayer’s compliance burden in this regard significantly, such that the timely furnishing of details of outward supplies (GSTR-1) by a taxpayer and his suppliers would –(i) allow him to view the ITC available in his electronic credit ledger from all sources i.e. domestic supplies, imports and payments on reverse charge etc. prior to the due date for payment of tax, and (ii) enable the system to auto-populate return (GSTR-3B)through the data filed by the taxpayer and all his suppliers. In other words, the timely filing of GSTR-1 statement alone would be sufficient as the return in FORM GSTR-3B would get auto prepared on the common portal.To this end the Council recommended / decided the following:

a. Due date of furnishing quarterly GSTR-1 by quarterly taxpayers to be revised to 13^th of the month succeeding the quarterw.e.f. 01.1.2021;

b. Roadmap for auto-generation of GSTR-3B from GSTR-1s by:

i. Auto-population of liability from own GSTR-1 w.e.f. 01.01.2021; and

c. In order to ensure auto population of ITC and liability in GSTR 3B as detailed above, FORM GSTR 1would be mandatorily required to be filed before FORM GSTR3Bw.e.f. 01.04.2021.

d. The present GSTR-1/3B return filing system to be extended till 31.03.2021 and the GST laws to be amended to make the GSTR-1/3B return filing system as the default return filing system.

4. As a further step towards reducing the compliance burden particularly on the small taxpayers having aggregate annual turnover < Rs. 5 cr., the Council’s earlier recommendation of allowing filing of returns on a quarterly basis with monthly payments by such taxpayers to be implemented w.e.f. 01.01.2021. Such quarterly taxpayers would, for the first two months of the quarter, have an option to pay 35% of the net cash tax liability of the last quarter using an auto generated challan.

5. Revised Requirement of declaring HSN for goods and SAC for services in invoices and in FORM GSTR-1w.e.f. 01.04.2021 as under:

a. HSN/SAC at 6 digits for supplies of both goods and services for taxpayers with aggregate annual turnover above Rs. 5 crores;

b. HSN/SAC at 4 digits for B2B supplies of both goods and services for taxpayers with aggregate annual turnover upto Rs. 5 crores;

c. Government to have power to notify 8 digit HSN on notified class of supplies by all taxpayers.

6. Amendment to the CGST Rules: Variousamendments in the CGST Rules and FORMS have been recommended which includes provision for furnishing of Nil FORM CMP-08 through SMS.

7. Refund to be paid/disbursed in a validated bank account linked with the PAN &Aadhaar of the registrant w.e.f. 01.01.2021.

8. To encourage domestic launching of satellites particularly by young start-ups, the satellite launch services supplied by ISRO, Antrix Corporation Ltd. and NSIL would be exempted.

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Note:- The decisions of the GST Council have been presented in this note in simple language for easy understanding. The same would be given effect to through Gazette notifications/ circulars which alone shall have force of law.

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Brief of outcomes of GST council meeting,notification/ circular is still to be issued for clarification

No penalty for non filing return if no tax liability

1️⃣ For all those who have no tax liability but have not filed GST returns for tax period July 2017 - Jan 2020 (prior to #COVID19 period), there shall be no late fee at all

Reduced penalty for non filing gst return

2️⃣ For people who have tax liability, maximum late fee for non-filing of GSTR-3B returns for period Jul 2017 - Jan 2020 has been capped to ₹ 500
This will apply to all returns submitted during Jul 1, 2020 - Sep 30, 2020

Reduced rate of interest for delayed filing of gst return

3️⃣ For small tax payers whose aggregate turnover is up to ₹ 5 crore, the rate of interest for late furnishing of GST returns for Feb, Mar and April 2020, beyond July 6, 2020: the rate of interest is being reduced from 18% to 9%

4️⃣ Small tax payers whose aggregate turnover is up to ₹ 5 crore will be provided a waiver of late fees and interest if they file the form GSTR-3B for the supplies affected in months of May, June and July 2020, by September 2020

Restoration of registration

5️⃣ Tax payers who could not get cancelled GST registrations restored in time are being given an opportunity to apply for revocation of cancellation of registration up to September 30, 2020
In all cases where registration has been cancelled till June 12, 2020

Source: Ministry of Finance - official Twitter channel

Notification shall be issued for implementing these decisions taken.