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Key outcome in 43rd GST Council Met

The 43rd GST Council Meeting was held on 28-05-2021, Friday via video conferencing chaired by FM Nirmala Sitharaman, held at New Delhi. Finance Ministers of States & UTs and Senior officers from Union Government & States are also present in the meeting.

The GST Council has made the following recommendations relating to changes in GST rates on supply of goods and services and changes related to GST law and procedure:

COVID-19 RELIEF:

  • As a COVID-19 relief measure, 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, even if imported on payment basis, for donating to the government or on the recommendation of state authority to any relief agency. This exemption shall be valid up to 31.08.2021.
  • In view of rising Black Fungus cases, the above exemption from IGST has been extended to Amphotericin B.
  • 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 08.06.2021.

MEASURES FOR TRADE FACILITATION:

  • Amnesty Scheme to provide relief to taxpayers regarding late fee for pending returns: To provide relief to the taxpayers, a late fee for non-furnishing FORM GSTR-3B for the tax periods from July 2017 to April 2021 has been reduced/waived as under: -
    • Late fee capped to a maximum of Rs 500/- (Rs. 250/- each for CGST & SGST) per return for taxpayers, who did not have any tax liability for the said tax periods;
    • Late fee capped to a maximum of Rs 1000/- (Rs. 500/- each for CGST & SGST) per return for other taxpayers;

The reduced rate of late fee would apply if GSTR-3B returns for these tax periods are furnished between 01.06.2021 to 31.08.2021.

  • Rationalization of late fee imposed under section 47 of the CGST Act:

To reduce burden of late fee on smaller taxpayers, the upper cap of late fee is being rationalized to align late fee with tax liability/ turnover of the taxpayers, as follows.

All the below mentioned proposals to be made applicable for prospective tax periods:

The late fee for delay in furnishing of returns to be capped, per return, as below:

 

S. No.

Condition

GST Return

Capping of late fee

1.

Nil Tax Liability

GSTR-3B

INR 500 (INR 250 CGST + INR 250 SGST)

2.

Annual Aggregate Turnover Upto INR 1.5 crore

GSTR-3B

INR 2,000 (INR 1,000 CGST+ INR 1,000 SGST)

3.

Annual Aggregate Turnover Between INR 1.5 crore to INR 5 crore

GSTR-3B

INR 5,000 (INR 2,500 CGST+ INR 2,500 SGST)

4.

Annual Aggregate Turnover Above INR 5 crore

GSTR-3B

INR 10,000 (INR 5,000 CGST+ INR 5,000 SGST)

5.

Nil Tax Liability

GSTR-4

INR 500 (INR 250 CGST + INR 250 SGST)

6.

For other

GSTR-4

INR 2,000 (INR 1,000 CGST+ INR 1,000 SGST)

7.

In all cases

GSTR-7

INR 50/- per day (INR 25 CGST + INR 25 SGST) and to be capped to a maximum of INR 2000/- (INR 1,000 CGST + INR 1,000 SGST)

 

COVID-19 related relief measures for taxpayers:

In addition to the relief measures already provided to the taxpayers vide the notifications issued on 01.05.2021, the following further relaxations are being provided to the taxpayers:

A. For small taxpayers (aggregate turnover upto INR 5 crore)

March & April 2021 tax periods:

  1. NIL rate of interest for first 15 days from the due date of furnishing the return in FORM GSTR-3B or filing of PMT-06 Challan, reduced rate of 9% thereafter for further 45 days and 30 days for March,2021 and April, 2021 respectively.
  2. Waiver of late fee for delay in furnishing return in FORM GSTR-3B for the tax periods March / QE March, 2021 and April 2021 for 60 days and 45 days respectively, from the due date of furnishing FORM GSTR-3B.
  3. NIL rate of interest for first 15 days from the due date of furnishing the statement in CMP-08 by composition dealers for QE March 2021, and reduced rate of 9% thereafter for further 45 days.

For May 2021 tax period:

  1. NIL rate of interest for first 15 days from the due date of furnishing the return in FORM GSTR-3B or filing of PMT-06 Challan, and reduced rate of 9% thereafter for further 15 days.
  2. Waiver of late fee for delay in furnishing returns in FORM GSTR-3B for taxpayers filing monthly returns for 30 days from the due date of furnishing FORM GSTR-3B.

B. For large taxpayers (aggregate turnover more than Rs. 5 crore)

  1. A lower rate of interest @ 9% for first 15 days after the due date of filing return in FORM GSTR-3B for the tax period May, 2021.
  2. Waiver of late fee for delay in furnishing returns in FORM GSTR-3B for the tax period May, 2021 for 15 days from the due date of furnishing FORM GSTR-3B.

C. Certain other COVID-19 related relaxations to be provided, such as:

S. No.

Return

Period

Due Date Extension

1.

GSTR-1/ IFF

May-21

Extension by 15 days

2.

GSTR-4

FY 2020-21

31-07-2021

3.

ITC-04

Quarter Ending March 2021

30-06-2021

 

  • Cumulative application of rule 36(4) for availing ITC for tax periods April, May and June, 2021 in the return for the period June, 2021.
  • Allowing filing of returns by companies using Electronic Verification Code (EVC), instead of Digital Signature Certificate (DSC) till 31.08.2021.

D. Relaxations under section 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, to be extended upto 30th June, 2021, subject to some exceptions.

Simplification of Annual Return for Financial Year 2020-21:

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

OTHER RELIEFS ON GOODS:

  • To support the LympahticFilarisis (an endemic) elimination programme being conducted in collaboration with WHO, the GST rate on Diethylcarbamazine (DEC) tablets has been recommended for reduction to 5% (from 12%).
  • Leviability of IGST on repair value of goods re-imported after repairsGST 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.

SERVICES:

  • To clarify those services supplied to an educational institution including Anganwadi(which provide 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.
  • To clarify these 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.
  • GST on MRO services in respect of ships/vessels shall be reduced to 5% (from 18%).
  • To clarify that 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.
  • To clarify that GST is payable on annuity payments received as deferred payment for construction of road. Benefit of the exemption is for such annuities which are paid for the service by way of access to a road or a bridge.
  • To clarify those services supplied to a Government Entity by way of construction of a rope-way attract GST at the rate of 18%.

 

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