43rd GST Council Meeting Highlights and Recommendations

The much-awaited ‘43rd GST Council Meeting’ was held on the 28th of May 2021. Although the council meeting is required to meet once every quarter, the 43rd Council meeting has happened nearly after six months (the previous one, the 42nd GST Council meeting held in October last year). Finance Minister Nirmala Sitharaman chaired the GST Council Meeting from New Delhi via video conferencing. The meeting was attended by MOS Anurag Thakur along with Finance Ministers of States and UTs and Sr. Officers from Union Government and States. Following recommendations have been made in the meeting, however, the same would be given effect through relevant Circulars/Notifications which alone shall have the force of law.

1. GST Amnesty Scheme to grant relief to taxpayers by reducing late fee –

To provide relief to the taxpayers for not filing GSTR-3B, the late fee for the tax periods from July 2017 to April 2021 has been capped as follows (vide GST Notification 19/2021):

Return Type

Criteria

Maximum late fees per return

Nil return

If filed between 1st June to 31st August 2021

Rs. 500

(Rs. 250 each for CGST and SGST)

Having tax liability

If filed between 1st June to 31st August 2021

Rs. 1000

(Rs. 500 each for CGST and SGST)

2. Rationalization of late fees for all upcoming tax periods –

To reduce the burden of late fee on small taxpayers, the upper cap of late fee for all prospective tax periods is being rationalized to align late fee with tax liability/ turnover of the taxpayers, as follows (vide GST Notification 19/2021):

Return type	Criteria	Maximum late fees cap per return
GSTR 1 &3B	Nil Return	Rs. 500 (Rs. 250 each for CGST and SGST)
	AATO in preceding year > Rs 1.5 Cr	Rs. 2000 (Rs. 1000 each for CGST and SGST)
	AATO in preceding year from Rs 1.5 Cr – Rs. 5 Cr	Rs. 5000 (Rs. 2500 each for CGST and SGST)
	AATO in preceding year > Rs. 5 Cr	Rs. 10000 (Rs. 5000 each for CGST and SGST)
GSTR 4	Nil Return	Rs. 500 (Rs. 250 each for CGST and SGST)
GSTR 4	Other than nil Return	Rs. 2000 (Rs. 1000 each for CGST and SGST)
GSTR 7		Rs. 50 per day (Rs. 25 each for CGST and SGST) and to be capped to a maximum of Rs 2000/- (Rs. 1,000 CGST + Rs 1,000 SGST)

*AATO- Annual Aggregate Turnover

3. Simplification of Annual Return for Financial Year 2020-21 –

(Yet to be notified)

Following changes to apply for the filing of annual return GSTR 9 for the FY 20-21.

Optional GSTR 9 Filing for Micro Taxpayers – Filing of annual return in GSTR-9 / 9A for FY 2020-21 to be made optional for taxpayers having aggregate annual turnover up to Rs 2 Crore
The reconciliation statement in GSTR-9C for FY 2020-21 will be required to be filed by taxpayers with annual aggregate turnover above Rs 5 Crore
Taxpayers would be able to self-certify the reconciliation statement in GSTR 9C, instead of getting it certified by chartered accountants. This change will apply for Annual Return for FY 2020-21. Amendments in sections 35 and 44 of CGST Act made through Finance Act, 2021 to be notified soon. This would ease the compliance requirement in furnishing reconciliation statements in GSTR-9C.

4. COVID 19 Relief Measures for Taxpayers:

Since the pandemic hit the country last year in March 2020, the government has been trying to uplift the economy with several Covid 19 Relief Measures for Taxpayers. There have been rate reductions, due date extensions, and the introduction of several new schemes for businesses. The 43rd Council meeting was no less and several recommendations were made to effect the same.

4.1 Lower Interest Rate and waiver of Late Fees – (GST Notification 18/2021 and 19/2021)

In addition to the relief measures already provided to the taxpayers vide GST Notification 08/2021 and GST Notification 19/2021 issued on 01.05.2021, the following further relaxations are being provided to the taxpayers:

a. GSTR 3B

Criteria	Tax period	Original due date	If filed until	Benefit available
Turnover is up to Rs. 5 Cr	Mar 21	20 Apr ‘21	5 May ‘21	Nil interest
			6 May – 19 Jun ‘21	Interest at a reduced rate of 9% No late fees till 19 June 2021
	Apr 21	20 May ‘21	4 Jun ‘21	Nil interest
			5 Jun to 4 Jul ‘21	Interest at a reduced rate of 9% No late fees till 4 July 2021
	May 21	20 Jun ‘21	5 Jul ‘21	Nil interest
			6 Jul to 20 Jul ‘21	Interest at a reduced rate of 9% No late fees till 20 July 2021
Turnover exceeds Rs. 5 Cr	May 21	20 Jun ‘21	5 July ‘21	Interest at a reduced rate of 9% No late fees till 5 July 2021
Quarterly filers in Category A states/ UT’s	Qtr Jan- Mar ‘21	22nd Apr ‘21	7 May 2021	Nil interest
			8 May ‘21 to 21st June ‘21	Interest at a reduced rate of 9% No late fees till 21st June 2021
Quarterly filers in Category B states/ UT’s	Qtr Jan – Mar ‘21	24 Apr ‘21	9 May 2021	Nil interest
			10 May ‘21 to 23rd Jun ‘21	Interest at a reduced rate of 9% No late fees till 20 July 2021

b. PMT-06 (for taxpayers opted for QRMP) and CMP 08 (Composite taxpayers)

Return type	Tax period	Original due date	Benefit available till	Benefit available
PMT 06	April ‘21	25 May ‘21	9 June ‘21	Nil interest
			10 June ‘21 – 9 July ‘21	Interest at a reduced rate of 9%
PMT 06	May ‘21	25 June ‘21	10 June ‘21	Nil interest
			11 June ‘21 – 25 July ‘21	Interest at a reduced rate of 9%
CMP 08	Qtr – Mar ‘21	18 Apr ‘21	3rd May ‘21	Nil interest
			4 May – 17 June ‘21	Interest at a reduced rate of 9% No late fees till 17 July ‘21

Refer article on Covid 19 Relief Measures for Taxpayers to know the combined effect of 43rd Council meeting and notifications released on 1st May ’21.

4.2 Extension of due dates of GST Returns –

GST notification 16/2021, 17/2021, 25/2021, 26/2021 and 27/2021

Several due dates were extended at the start of the month vide notifications issued on 1st May 2021. The council has recommended further extension on the previous notification. Also council had recommended fresh extensions for May 2021 period. Notifications were issued on 1st June 2021 to give effect to these recommendations. Following is a summary of all the extensions recommended:

Return type	Tax Period	Original due date	Extension as per 1st May notification	Recommended due date as per council meeting	Actual extension as per 1st June notification
GSTR 1*	Apr ‘21	11 May ‘21	26 May ‘21	No Change	No Change
GSTR 1*	May ‘21	11 June ‘21	NA	26 June ‘21	26 June ‘21
IFF*	Apr ‘21	13 May ‘21	28 May ‘21	No Change	No Change
IFF*	May ‘21	13 June ‘21	NA	28 June ‘21	28 June ‘21
GSTR 4	FY 20-21	30 Apr ‘21	31 May ‘21	31st July ‘21	31st July ‘21
GSTR 5 & 5A	Mar ‘21	20 Apr ‘21	31 May ‘21	30 June ‘21	30 June ‘21
	Apr ‘21	20 May ‘21	31 May ‘21	30 June ‘21	30 June ‘21
	May ‘21	20 June ‘21	NA	30 June ‘21	30 June ‘21
GSTR 6	Apr ‘21	13 May ‘21	31 May ‘21	30 June ‘21	30 June ‘21
GSTR 6	May ‘21	13 June ‘21	NA	30 June ‘21	30 June ‘21
GSTR 7 & 8	Apr ‘21	10 May ‘21	31 May ‘21	30 June ‘21	30 June ‘21
GSTR 7 & 8	May ‘21	10 June ‘21	NA	30 June ‘21	30 June ‘21
ITC 04	Qtr – Mar ‘21	25 Apr ‘21	31 May ‘21	30 June ‘21	30 June ‘21

*Due Date is extended by 15 days

[Wherever the timelines for actions have been extended by the Hon’ble Supreme Court, the same would apply]

4.3 Other Covid 19 related relief measures:

Several other Covid 19 related relief measures were announced in the council meeting:

Rule 36(4) of claiming provisional ITC is recommended to be applied cumulatively to April, May, and June 21. (Notification 27/2021)
Filing of returns by companies using Electronic Verification Code (EVC), instead of Digital Signature Certificate (DSC) was recommended to be allowed till 31st August 2021. – (Yet to be notified)
Relaxations u/s 168A of the CGST Act: Time limit for completion of various actions, by any authority or by any person, under the GST Act, which falls during the period from 15th April, 2021 to 29th June, 2021, recommended to be extended up to 30th June, 2021, subject to some exceptions. – (Notification 24/2021)
Others (Yet to be notified):
1. A number of 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. As regards individual items, it was decided to constitute a Group of Ministers (GoM) to go into the need for further relief to COVID-19 related individual items immediately. The GOM shall give its report by 08 June ’21.
2. COVID-19 related medical goods including Amphotericin B for free distribution given full exemption from IGST upto 31.08.2021. Custom duty exemption also given to Amphotericin B.

Please read COVID 19 Relief Measures for details.

5. Interest on delayed GST Payments to be calculated on Net Cash Basis (Retrospective Amendment):

Retrospective amendment in section 50 of the CGST Act with effect from 01.07.2017, providing for payment of interest on a net cash basis, to be notified at the earliest. Section 49 of The CGST Act suggests that interest on the delayed payment be charged on the cash portion only. However, the GST departments across the Country have been charging interest on even the ITC Credit portion available to the taxpayer and already paid to the Government. With the amendment announced, the issue will be now resolved.

Amendment vide notification 16/2021 to section 50 requires to charge interest only on net tax liability i.e.on the amount of the tax paid in cash. The said amendment has been notified to be effective from 1 June 2021 which was proposed to be effective from 1^st July 2017 in the council meeting

6. GST Rates –

(Yet to be notified)

Certain clarifications/clarificatory amendments have been recommended in relation to GST rates.

To support the LympahticFilarisis (an endemic) elimination program being conducted in collaboration with WHO, the GST rate on Diethylcarbamazine (DEC) tablets has been recommended for reduction to 5% (from 12%).
The livability of IGST on repair value of goods re-imported after repairs
GST rate of 12% to apply on parts of sprinklers/ drip irrigation systems falling under tariff heading 8424 (nozzle/laterals) to apply even if these goods are sold separately.

7. Recommendation around Services and other recommendations –

(Yet to be notified)

Services supplied to an educational institution including Anganwadi (which provides 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 the 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.
Supply of service by way of milling of wheat/paddy into flour (fortified with minerals etc. by millers or otherwise )/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, including a person registered for payment of TDS.

Appropriate changes to be made in the relevant notification for an explicit provision to make it clear that landowner promoters could utilize the 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 promoter shall be allowed to pay GST relating to such apartments any time before or at the time of issuance of the completion certificate.

Same dispensation as provided to MRO units of the aviation sector to be extended to MRO units of ships/vessels so as to provide level playing field to domestic shipping MROs vis a vis foreign MROs and accordingly. GST on MRO services in respect of ships/vessels shall be reduced to 5% (from 18%). PoS of B2B supply of MRO Services in respect of ships/ vessels would be the location of the recipient of service

GST is payable on annuity payments received as deferred payment for construction of the road. The benefit of the exemption is for such annuities which are paid for the service by way of access to a road or a bridge.

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 are exempt from GST.

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Expectations from 43rd GST Council Meeting (Published on 14th May 2021)

Union finance minister Nirmala Sitharaman chairs the 43rd GST Council meeting on 28th May, 2021 Friday, after a gap of seven months. This was the very first GST Council meeting of 2021; after the deadly second wave of COVID-19 hit the country.

There are multiple expectations from 43rd GST Council Meeting and experts presume that there will be several announcements related to GST Compensation Cess, waiver of taxes, and GST concessions on critical medical and health care equipments, vaccines, etc.

The last meeting i.e. the 42^nd GST Council Meeting, was held on October 5, 2020, to resolve the issue of compensating states for their revenue shortfall in 2020-21. That meeting was further extended to October 12, 2020, for finalizing a centralized borrowing mechanism to meet the revenue shortfall. The meeting concluded by discussing multiple issues, however, many still remain unaddressed. Now, the upcoming meeting is taking place after around 7 months. The states have been requesting their GST compensation and also require a few issues to be addressed.

Expectations and Assumptions from 43^rd GST Council Meeting:

Discussion and decisions regarding compensation to states
Waiver/ reduced GST rates on medical and health care products, COVID-19 related medicines, equipment, etc.
Waiver on GST on vaccines and health care services
There are requests to resolve other pressing issues such as Inverted Duty Structure

We will keep you updated regarding the latest developments in this regard. Also, we will promptly update this article with all the news and announcements on May 28th from the 43rd GST Council Meeting.

To read our coverage on the previous Council Meet decisions, you may refer here:

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