The 39th GST Council meeting was held on Saturday, 14th March 2020 at New Delhi. The Union Finance Minister Nirmala Sitharaman preceded the meeting. The meeting was attended by the Union Minister of State for Finance and Corporate Affairs Anurag Thakur besides Finance Ministers of States and UTs and seniors officers of the Ministry of Finance. Shri Nandan Nilekani also attended the council meeting on behalf of Infosys as the Information Technology giant is providing IT support to the GST Network.
Expectations from the meeting:
- e-Invoicing under GST to be deferred.
- Due Date Extension for Annual Returns and GST Audit (GSTR 9 and GSTR 9C)
- Current format of GST Returns – GSTR 1 and GSTR 3B to continue till September 2020
- GST Rate Changes for correction in Inverted Duty Structure
- Clarification on the interest collection on Gross GST Liability
- Aadhaar Based Authentication for GST
The 39th GST Council took several decisions.
Here are the following changes that will be implemented:
1. Simplified Returns and E-Invoicing:
- The implementation of the new GST return system has been postponed to 1st October 2020.
- e-invoicing and the QR code has been deferred to 1st October 2020.
- Certain class of registered persons (insurance company, banking company,financial institution, non-banking financial institution, GTA, passenger transportation service etc.) to be exempted from issuing e-invoices or capturing dynamic QR code;
- Taxpayers to continue the existing system of furnishing FORM GSTR-1 & FORM GSTR-3B till September, 2020
- Extension of the time to finalize e-Wallet scheme up to 31st March 2021
- Extension of the present exemptions from IGST and Cess on the imports made under the AA/EPCG/EOU schemes up to 31.03.2021.
2. GST Returns
- For taxpayers with turnover more than Rs. 1.5 cr. –GSTR1 to be filed before 10th of the following month
- For taxpayers with turnover up to Rs. 1.5 cr. – GSTR1 to be filed before 13th of the following month
- GSTR 1 is made compulsory only for making B2B supplies, exports
- Also, B2C and non-filers of GSTR 3B to be exempted from filing GSTR1
- The GSTR-2A can be generated on 14th of following month
- The requirement of furnishing FORM GSTR-1 for 2019-20 to be waived for taxpayers who could not opt for availing the option of special composition scheme under notification No. 2/2019-Central Tax (Rate) dated 07.03.2019 by filing FORM CMP-02.
- Extension of due dates for FORM GSTR-3B for the month of July, 2019 to January, 2020 till 24th March, 2020 for registered persons having principal place of business in the Union territory of Ladakh. Similar extension is also recommended for FORM GSTR-1 & FORM GSTR-7.
3. Annual Return
- Due date for GSTR-9 and 9C for FY 2018-19 has been pushed to 30th June 2020
- Relaxation to MSMEs from furnishing of Reconciliation Statement in FORM GSTR-9C, for the financial year 2018-19, for taxpayers having aggregate turnover below Rs. 5 crores
- Late fees not to be levied for delayed filing of the Annual return and the Reconciliation Statement for financial year 2017-18 and 2018-19 for taxpayers with aggregate turnover less than Rs. 2 crores
4. GST Rate Structure Calibration
The Fitment Committee recommended calibrating the GST rate structure to correct the inverted duty structure on various items like Mobile phones, Footwear etc. Following was finalised:
- Tax Rate on mobile phones and specified parts has been increased to 18 % from 12 % allowing a full claim of input tax credit; Relief is given to domestic service providers of maintenance
- GST on handmade, machine-made matchsticks has been updated to 12%
- GST on MRO (maintenance repair overhaul) services of aircraft has been decreased to 5% from 18%
5. Clarification on the interest collection on Gross GST Liability
- Interest for delay in payment of GST to be charged on the net cash tax liability w.e.f. 1st July 2017 (Law to be amended retrospectively).
- Where registrations have been cancelled till 14th March 2020, application for revocation of cancellation of registration can be filled up to 30th June 2020(extension of period of application as one-time measure to facilitate those who want to conduct business).
6. Curbing tax Evasion
- A facility termed ‘Know Your Supplier’ to be introduced that will enable every registered person to have some basic information about the suppliers with whom they conduct or propose to conduct business. This is right now available with IRIS Peridot where you can scan the GSTIN to know the GST filing history of suppliers and clients.
- To curb fake invoicing and fraudulent passing of ITC, restrictions to be imposed on passing of the ITC in case of new GST registrations, before physical verification of premises and Financial KYC of the registered person.
7. Modifications to the CGST Rules:
- Procedure for reversal of input tax credit in respect of capital goods partly used for affecting taxable supplies and partly for exempt supplies under rule 43 (1) (c)
- Ceiling to be fixed for the value of the export supply for the purpose of calculation of refund on zero rated supplies
- To allow for refund to be sanctioned in both cash and credit in case of excess payment of tax;
- to provide for recovery of refund on export of goods where export proceeds are not realized within the time prescribed under FEMA
- To operationalize Aadhaar authentication for new taxpayers
8. Decisions taken for Infosys to improve the GSTN IT system:
Finance Minister Nirmala Sitharaman addressed the media after the meeting. She stated that a better GSTN system should be ensured by Infosys by July 2020.
- In the 39th meeting of the GST Council,Shri Nandan Nilekani,Chairman of the IT giant – Infosys, made a presentation addressing the system related issues that are being faced by the taxpayers in the GST system. He suggested the solutions to the issues faced by taxpayers.
- He informed the Council that hardware procurement process has been initiated to enhance the capacity of the IT system to concurrently handle 3 lakh taxpayers from the present level of 1.5 lakh taxpayers. The process is slightly impacted by the Covid-19 pandemic.
The GST Council also made the following suggestions:
- Shri Nandan Nilekani would attend the next 3 meetings of the GST Council and update the council of the status of implementation of the decisions taken by the Council and assist the Council in taking appropriate decisions on technology related issues
- To support the timely implementation of various initiatives, the Council gave a go ahead for deployment of additional manpower (60 in number) on T&M basis and assured that both on procurement of additional hardware and hiring of manpower, expeditious approvals would be given however the return filing experience of the taxpayers and removal of technical glitches need to be carried out urgently.
- Shri Nandan Nilekani assured that he would personally monitor the progress of the GSTN project and also agreed to attend the IT-GoM for the next 6 months or till such time the initiatives are implemented.
- The GST Council anticipates these procedures and ideas to be implemented by the 31st of July, 2020.
To read our coverage on the previous Council Meet decisions, you may refer here:
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