GST

Key Highlights of the GST Council Meeting

The 43^rd GST Council meeting was held under the chairmanship of Union Finance Minister Nirmala Sitharaman on 28^th May 2021. The meeting was held via video conferencing in New Delhi, which was attended by finance ministers of states and union territories. In this article, we shall discuss various recommendations and decisions made in the meeting.

Last GST Council Meeting

It may be noted that the last such meet was held on 5^th October last year where it was decided to extend the levy of compensation cess beyond the transition period of 5 years for a period required to meet the revenue gap and also to raise the shortfall amount to 1.10 lakh crore rupees under the borrowing option.

43^rd GST Council Meeting- Key Highlights

The GST council made the following key decisions/recommendations:

• Covid-19 relief

The GST council has recommended for full exemption from IGST on a number of specified covid-19 related goods like oxygen concentrators, medical oxygen etc. This exemption will be valid till August 2021. Such exemption shall be granted to the import of covid-19 relief items even if they have been purchased for donation to state governments. Earlier, IGST exemption was granted only when these goods were imported free of cost for free distribution.  

With the increase in the case of Black Fungus, a specific medicine needed for the same has also been included in the list of exemption (for tax-free imports). It was also proposed to set up a group of ministers committee to know any further exemptions that can be provided.

• GST Amnesty Scheme

In a bid to provide relief to small taxpayers, an amnesty scheme has been recommended. It has been recommended for reducing late fees. Taxpayers can file return that is pending, avail benefits of the scheme with reduced late fee. It is expected that it will provide relief to small taxpayers who comprise of 89% of the GST payers. Late fee also has been rationalised. The maximum amount of late fees is reduced, and it shall come into effect from future tax periods. This would provide long term relief to small GST payers.

• GST Compensation Cess (States’ Dues)

The formula used in 2020 will be adopted this year as well. Approximately centre will have to borrow 1.58 lakh crore rupees which will be provided to states as back to back loans. There will be a special session of GST council to discuss extension of paying compensation to states beyond 2022.

• Advance payment to manufacturers of vaccine

An advance payment of 4500 crore rupees was paid to the vaccine manufacturers. India is engaging with suppliers and manufacturers from Japan and Europe for vaccines.

• Simplification of annual return filing

The annual return filing has been simplified for the financial year 2020-21. The GST council has recommended to amend the CGST Act 2017^[1] to permit self-certification of reconciliation statements, rather than getting them certified by the Chartered Accountants. This change shall apply for Annual Return for the financial year 2020-21.

The filing of the annual return in Form GSTR-9/9A for the financial year 2020-21 shall be optional for those taxpayers that have an aggregate annual turnover of up to 2 crore rupees. The reconciliation statement in the Form GSTR-9C for the financial year 2020-21 will have to be filed by taxpayers with annual aggregate turnover of more than 5 crore rupees.

• Retrospective amendment

A retrospective amendment in Section 50 of the CGST Act providing for the payment of interest in net cash basis shall be notified at the earliest.

• Other Measures

In the GST council meeting, the GST council recommended amendments in few provisions of the Act in order to make the current system of GSTR-1/3B return filing as the default return filing system in GST.

Ahead of the meeting of the top decision-making body, finance ministers of the eight states (non-BJP) had devised a joint strategy to press for a zero tax rate on Covid essentials. Presently, domestic supplies, as well as commercial imports of vaccines, attract a GST of 5%, whereas Covid drugs and oxygen concentrators attract a GST levy of 12%.

With regard to the issue of compensation to be paid to states, the Centre has estimated a shortfall of 2.69 lakh crore rupees. The Centre seeks to collect more than 1.11 lakh crore rupees through cess on luxury goods, demerit and sin goods which shall be provided to states to compensate them for the shortfall in the revenue due to the implementation of GST. The remaining 1.58 lakh crore rupees will have to be borrowed in order to meet the compensation promised.

Conclusion

The GST council meeting takes place at a time when the country is going through second wave of Covid-19 virus that has impacted the economic recovery. Although the GST council should meet once every quarter, the last meeting was held on 5^th October last year.

Read our article: Key Points of the 39th GST Council Meeting