The Goods and Services Tax (‘GST’) Council in its 35th GST council Meeting held on 21 June 2019 has taken several taxpayer friendly decisions. It is noteworthy that that is the first GST Council meeting chaired by the new Finance Minister Miss Nirmala Sitharamn after the formation of the government in May 2019.
The decisions of the 35th GST Council meeting are aimed at fostering growth in business, rationalising tax rates, addressing administrative issues being faced by taxpayers and paving the way for future-ready compliance mechanism.
The decisions of the 35th GST Council meeting are summarised below:
Table of Content
- 1. Tax Rate related changes
- 2 Policy and administration related changes
- 3. Law and Procedure related changes
- 4. Recommendations to undertake amendments in GST law
- 4.1 Generation of e-way bills restricted on non-filing of returns for two consecutive tax periods (Rule 138E of the CGST rules)
- 4.2 Extension of due date for filing intimation on opting for composition scheme
- 4.3 Penalty for failing to deposit amount pursuant to NAPA order
- 4.4 Linking of Aadhar with GSTIN
1.1 Concessional tax rate on Electric Vehicles
On the issues relating to GST concessions on electric vehicles, charger and hiring of electric vehicles, the GST Council recommended the same for examination by the Fitment Committee. The report should be placed before the GST Council in its next meeting.
1.2 Valuation mechanism for Solar Power Generating Systems and Wind Turbines
On the issue related to valuation of goods and services in a solar power generating system and wind turbine, the GST Council recommended the same for examination by the Fitment Committee, as per the order of the Hon’ble High Court of Delhi. The report should be placed before the GST Council in its next meeting
1.3 Taxation mechanism for lottery
The GST Council deliberated the report submitted by Group of Ministers on Lottery. The GST Council recommended to obtain a legal opinion of Learned Attorney General for various issues relating to the rates and destination principle of taxation.
2.1 Location of State and Area Benches for Goods and Services Tax Appellate Tribunal (GSTAT)
The GST Council took a decision regarding the location of GSTAT Benches in various States and Union Territories with legislature. A common State Bench would be established for the States of Sikkim, Nagaland, Manipur and Arunachal Pradesh.
2.2 Tenure of National Anti-Profiteering Authority (‘NAPA’) extended
The tenure of the NAPA was expiring on 20 November 2019. The GST Council recommended the extension of the tenure of NAPA by 2 years i.e., till 20 November 2021.
2.3 Introduction of electronic invoicing system in a phase-wise manner
The GST Council decided on introduction of electronic invoicing (e-invoicing) for all B2B transactions in a phased manner. Phase 1 is proposed to be voluntary with a roll out date of 1 January 2020.
The GST Council also observed that e-invoicing would not only help taxpayers in backward integration and automation of processes, but also help tax authorities in combating the menace of tax evasion.
3.1 New GST Return system to be introduced
A single monthly return system would be introduced to make GST compliance a hassle-free and taxpayer friendly process. In order to give ample opportunity to taxpayers and the eco system to adapt, the following transitionary provisions have been proposed:
- New return system to be introduced in a phased manner
- New return to be filed in Form GST RET – 01. The return has two annexures
- FORM GST ANX – 1: Annexure of outward supplies and inward supplies attracting reverse charge
- FORM GST ANX – 2: Annexure of inward supplies
- Filing for the period July 2019 to September 2019
- FORM GST ANX – 1 & FORM GST ANX – 2 to be available on trial basis for all taxpayers.
- Filing of FORM GSTR – 1 & FORM GSTR – 3B as currently existent, to continue.
- Filing for the period October 2019 and onwards for large taxpayers
- Aggregate turnover to exceed INR 5 crores in previous year
- Filing of FORM GST ANX – 1 to be made compulsory
- Monthly filing of returns
- For October and November 2019, FORM GSTR – 3B to be filed
- Return in new system FORM GST RET – 01 to be first filed for December 2019
- Filing for the period October 2019 and onwards for small taxpayers
- Aggregate turnover not to exceed INR 5 crores in previous year
- Quarterly of returns
- FORM GST PMT – 08 to be filled in place FORM GSTR – 3B
- Return in new system FORM GST RET – 01 to be first filed for the quarter October to December 2019
- FORM GSTR – 3B to be completely phased out from January 2020 onwards
- Invoices can be uploaded in FORM GST ANX – 1 on a continuous basis by all taxpayers from October 2019 onwards
- FORM GST ANX – 2 would be available for simultaneous viewing by taxpayers, but no action shall be allowed
3.2 Extension of due date for filing Annual Return for FY 2017-18
Taking into account various representations received from the industry as well as the taxpayers, the GST Council has extended the due date for furnishing the annual returns in FORM GSTR – 9, FORM GSTR – 9A and reconciliation statement in FORM GSTR – 9C from 30 June 2019 to 31 August 2019.
It may be noted that the taxpayers have encountered countless difficulties in filing the annual returns due to technical issues and delays in collation of data due to changes in the return format.
3.3 Extension of due date for filing information relating to job works
The due date for furnishing return in FORM GST ITC – 04 relating to job work for the period July 2017 to June 2019 has been extended till 31 August 2019. This would provide sufficient time to the trade and industry to collate necessary date and file the returns.
4. Recommendations to undertake amendments in GST law
The GST Council has recommended to make certain amendments in the GST laws to implement the decisions of the GST Council taken in earlier meetings:
4.1 Generation of e-way bills restricted on non-filing of returns for two consecutive tax periods (Rule 138E of the CGST rules)
TheGST Council recommended that the provisions pertaining to blocking of e-way bills on non-filing of GST returns for two consecutive tax periods should be brought into effect from 21 August 2019 instead of the earlier notified date of 21 June 2019.
4.2 Extension of due date for filing intimation on opting for composition scheme
The GST Council extended the due date for filing of intimation in FORM GST CMP – 02 from 30 April 2019 to 31 July 2019
4.3 Penalty for failing to deposit amount pursuant to NAPA order
The GST Council decided that any amount determined as profiteering by the NAPA shall be deposited within 30 days of the order by NAPA. In case any non-compliance by taxpayers in deposit the GST authorities may impose a penalty and also cancel the registration.
4.4 Linking of Aadhar with GSTIN
The GST Council decided to permit the use of Aadhar for registration under GST and also allow linking of Aadhar with GSTIN.
As part of its anti-tax evasion measures, the 35th GST Council meeting said that if businesses and merchants guilty of pocketing the benefits of tax cuts meant for consumers do not return the amount amassed illegally within 30 days, they will have to pay a 10% penalty of the profiteered amount. They have to return the entire amount to the consumer or deposit the money in the consumers’ welfare funds. Earlier, businesses had to pay a flat rate of ₹25,000 as penalty.
It may be noted that the above summary has been prepared based on the press release by the GST Council and the announcements made by the GST Council during the press meet. In order to implement the above decisions, relevant amendment to the GST law or notifications/ circulars would be issued by the Central Board of Indirect Taxes and Customs (‘CBIC’).
It may be possible that the aforementioned summary may undergo change/ need to be relooked at, once the relevant amendments or notifications/ circulars are issued. Taxpayer may take note of the same while considering the impact on their respective businesses.