GST GST Returns

Key Points of the 39th GST Council Meeting

The 39th GST (Goods and Service Tax) Council meeting was held on this Saturday, i.e. 14th March 2020 at the Vigyan Bhawan, New Delhi. The meeting was chaired by our Hon’ble Union Finance Minister Mrs. Nirmala Sitharaman. Further, this meeting was attended by the Minister of State for Finance and Corporate Affairs, Mr Anurag Thakur, various other Tax Practitioners, Finance Ministers of States and Union Territories and senior-level officers of Ministry of Finance. Also, Mr Nandan Nilekani on behalf of Infosys attended this meeting. This article describes the key Points of the 39th GST Council Meeting.

Further, both tax practitioners and taxpayers had high hopes from the 39^th GST Council meeting as this meeting had taken place in the middle of the economic recession caused because of COVID-19 outbreak.

Due to such situation, there were high expectations from the 39^th GST Council Meeting that it shall bring some favourable decisions to deal with the slumping economy by way of certain GST reforms. Moreover, the expectations were also high about giving a boost to the manufacturing sector. Lastly, in this blog, we will be dealing in details about the various recommendations and key decisions taken by the GST Council in its 39^th GST Council Meeting.

Interest to be charged on the Net Cash Liability with effect from 1^st July 2017

The Union Finance Minister, Mrs Nirmala Sitharaman in her budget speech had declared that the interest collection would be done on the Net GST Liability and Section 50 of the CGST (Central Goods and Service Tax) Act will also be amended. However, later as per the clarification issued by the CBDT^[1] (Central Board of Direct Taxes) cleared that interest collection will continue to be done on the Gross GST payment instead of Net GST Liability till any amendment is made with a prospective effect. Further, various concerns were raised by the taxpayers on this issue, on which the GST Council in its 39th meeting declared that Interest on the late GST liability would be charged on the net cash liability with effect from 1^st July 2017.

The New GST Return System has been deferred up to the end of July

The New GST Return system was scheduled to be executed from the 1st of April 2020. However, the implementation of the same has been delayed until the end of July, keeping in mind the technical inefficiencies.

GST Council GOM (Group of Ministers) Chairman on IT glitches, Mr Sushil Modi gave a comprehensive presentation on the current IT challenges faced by the Taxpayers. He has also highlighted the fact that taxpayers are still facing problem while filing their GST Returns. On this our Hon’ble Union Finance Minister Mrs. Nirmala Sitharaman asked GSTN (Goods and Service Tax Network) and Infosys to solve not only technical and compliance issues but also enhance its capacity to deal with high traffic. Further, the Finance Minister also directs the Revenue Department to revamp top management at GSTN.

Also, Mr Nandan Nilekani, Chairman of Infosys is asked by our Finance minister to be present in the next three GST Council meetings in order to update the council about the latest problems, development on the already identified glitches and the future roadmap.

On this Mr Nandan Nilekani assured that all the technical glitches and inefficiencies would be streamlined by January 2021. Further, he had also proposed the overhauling of the system with a specific step-wise roadmap. But, his proposal is subject to receiving hardware from China.

Late fees not be imposed for the late filing of GSTR 9 and GSTR-9C for the FY 2017-2018 and 2018-2019

The GST Council in its 39^th GST Council Meeting announced that no late fees would be levied for the late filing of GSTR 9 and GSTR 9C for Financial Year 2017-2018 and 2018-2019 for the taxpayers whose turnover is less than Rs 2 crore. This is a relief for the Tax papers as previously penalties were imposed for the delay.

Application for the Revocation of the Cancellation of Registration can be filed up to 30 June 2020

In the case where registrations have been cancelled till 14 March 2020, application for the revocation of the cancellation of registration can be filled up to 30 June 2020. Moreover, the extension of the period of application will serve as a one-time measure to assist those who want to conduct business.

Relaxation to the MSME sector from filing reconciliation statement for the FY 2018-2019

The Council has decided to provide relaxation to MSME (Micro Small Medium Enterprises) sector from filing the reconciliation statement for the Financial Year 2018-2019. Further, this benefit is provided to all those taxpayers who are having aggregate turnover below Rs 5 crore.

Change in GST Rates

Sl. No.	Recommendation	Previous Rate of GST	Changed Rate of GST	Effective date
1	Mobile phone and there specified parts	12%	18%	1April 2020
2	All type of Matches whether handmade or any type of other matches	Handmade – 5% Other Matches – 18%	12%	1 April 2020
3	The Rate for MRO (Maintenance, Repair and Overhaul ) services in respect of an aircraftChange in the place of supply for the B2B MRO services to the location of the recipient.Domestic MRO (Maintenance, Repair and Overhaul) will also get protection because of the 5% tax paid under section 3(7) of the Customs Tariff Act, 1975. Moreover, 5% is levied on most of the imported goods (sent abroad for repairs) as this tax is not available as a credit.	18 %	5% with full ITC	1 April 2020

Extension of GSTR 3B and GSTR 1

The GST Council in its 39^th GST Council Meeting had declared that the existing filing of GSTR-3B and GSTR-1 would continue till 30 September 2020. This happened because the implementation of the New GST Return forms was causing a lot of problems and the taxpayers were already facing difficulties in the existing GST Portal. Further, it is declared that New GST Returns system would be applicable from 1 October 2020 onwards.

Deferment of E-invoice and QR Code to 1 October 2020

Certain classes of the registered persons such as the insurance company, financial institution, banking company, non-banking financial institution, passenger transportation service, GTA, etc. are now exempted from the issuance e-invoices and capturing of dynamic QR code. Further, the dates for the implementation of e-invoicing and QR Code has further been extended to 1 October 2020

Issuance of Clarifications

Following are the clarifications issued by the GST Council in its 39^th GST Council Meeting –

1. Clarification regarding the apportionment of ITC (Income Tax Credit) in cases of business reorganization under section 18 (3) of the CGST (Central Goods and Service Tax) Act read with rule 41(1) of the CGST Rules; 
2. Appeals during the non-constitution of the Appellate Tribunal; 
3. Clarification on the refund-related issues; and 
4. Clarification regarding the special procedure for the registered persons who are termed as the corporate debtors under the provisions of the Insolvency and Bankruptcy Code, 2016, and are undergoing the corporate insolvency resolution process. 

Amendments made to the CGST Rules

Following are the Key Amendments made to the CGST Rules –

1. Procedure for the reversal of input tax credit (ITC) in respect of the capital goods partly used for affecting the taxable supplies and partly for the exempt supplies under rule 43 (1) (c)
2. Ceiling to be fixed for the value of export supply, as this will help in the calculation of refund on the zero-rated supplies
3. GST Council had decided to allow sanction of refund in both cash and credit, in case there is an excess payment of tax
4. To provide for the recovery of refund on the export of goods, in the case where the export proceeds are not realized within the time limit prescribed under the FEMA Act, 1999
5. To make Aadhaar authentication mandatory for new taxpayers. 

KYS Scheme

The GST Council had given approval for the “Know your Supplier” scheme. By way of this scheme, an MSME could easily get an overview concerning the Potential supplier, so that loss of the Input Tax credit (ITC) could be avoided.

Deferment of E-wallet Scheme

1. The time limit for the finalization of e-wallet scheme for the consumers has been further extended up to 31 March 2021.
2. Moreover, the present IGST (Inter-State Goods and Service Tax) and cess exemptions on the imports made under the AA/ EPCG/EOU schemes will further continue up to 31 March 2021.

Conclusion

In the 39th GST Council Meeting, GST Council took a variety of decisions, starting from an increase in the GST rates concerning mobile phones to the decision regarding the extension of due date for Income Tax Return filing in the form GSTR-9 and GSTR-9C for the FY 2018-19. In the same meeting where at one point GST Council has given approval for the Know Your Supplier Scheme, whereas, on the other hand, it has further extended the time limit for the finalization of the e-wallet scheme for the consumers. Moreover, the Council had also reviewed the functioning of GSTN and asked Infosys to solve all the technical glitches by July 2020.