Summary of Key Decisions/Changes Made at 43rd GST Council Meeting

Summary of Key Decisions/Changes Made at 43rd GST Council Meeting held on 28th May 2021

GST Council has taken some necessary decisions in this 43^rd Meeting. Though nothing about inverted tax structure has been amended in this meeting, but a lot of representations from different trade associations has been considered.

The Key highlights of the meetings are summarized below:-

I – Amnesty Scheme for Filing Pending/Delayed Returns:

 Late fee for non-furnishing FORM GSTR-3B for the tax periods from July, 2017 to April, 2021 has been reduced/waived as under:

1. 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;

2. Late fee capped to a maximum of Rs 1000/- (Rs. 500/- each for CGST & SGST) per return for taxpayers other than (a) above;

Note – 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.

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

To reduce burden of late fee on small taxpayers, the upper limit of late fee is now being linked to tax liability/ turnover of the taxpayers, as follows (to take affect from prospective tax periods):

(i). Late fee for delayed filing of FORM GSTR-3B and FORM GSTR-1 has been capped as below:

	Taxpayer/Turnover Condition	Late Fees Max. Capped per return
(a)	Taxpayers having nil tax liability in GSTR-3B or nil outward supplies in GSTR-1	Rs 500 (Rs 250 CGST + Rs 250 SGST)
(b)	Taxpayers having Aggregate Annual Turnover (AATO) in preceding year upto Rs 1.5 crore	Rs 2000 (1000 CGST+1000 SGST)
(c)	Taxpayers having AATO in preceding year between Rs 1.5 crore to Rs 5 crore	Rs 5000 (2500 CGST+2500 SGST)
(d)	Taxpayers having AATO in preceding year above Rs 5 crores	Rs 10000 (5000 CGST + 5000 SGST)

(ii) Late fee for delay in furnishing of FORM GSTR-4 by composition taxpayers has been capped as below:

	Taxpayer/Turnover Condition	Late Fees Max. Capped per return
(a)	Taxpayers having nil Tax liability	Rs 500 (Rs 250 CGST + Rs 250 SGST)
(b)	Taxpayers having Tax Liability	Rs 2000 (Rs 1000 CGST + Rs 1000 SGST)

(iii) Late fee for delay in furnishing of FORM GSTR-7 by composition taxpayers has been capped as below:

	Condition	Late Fees Max. Capped per return
(a)	If the delay in filing of return is less than 40 days	Rs 50 (Rs 25 CGST + Rs 25 SGST) per day
(b)	If the delay in filing of return is more than 40 days	Capped to Max Rs 2000 (Rs 1000 CGST + Rs 1000 SGST).

III – 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:

• For small taxpayers (aggregate annual turnover upto Rs. 5 crore)

	Forms	Months	Condition	Relief
(a)	GSTR 3B / Challan PMT 06	March, April & May 2021	Filed within 15 days from the due date	Nil rate of interest
(b)	GSTR 3B / Challan PMT 06	March 2021	Filed within 60 days from the due date	Reduced Rate of Interest @ 9%
(c)	GSTR 3B / Challan PMT 06	April 2021	Filed within 45 days from the due date	Reduced Rate of Interest @ 9%
(d)	GSTR 3B / Challan PMT 06	May 2021	Filed within 30 days from the due date	Reduced Rate of Interest @ 9%
(e)	GSTR 3B	March, April & May 2021	Filed within 60/45/30 days respectively from the due date	Nil Late Fees
(f)	CMP-08 (For Composition Dealers)	QE March 2021	Filed within 15 days from the due date	Nil rate of interest
	CMP-08 (For Composition Dealers)	QE March 2021	Filed within 60 days from the due date	Reduced Rate of Interest @ 9%

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

	Forms	Months	Condition	Relief
(a)	GSTR 3B / Challan PMT 06	May 2021	Filed within 15 days from the due date	Nil Late Fees
(b)	GSTR 3B / Challan PMT 06	May 2021	Filed within 15 days from the due date	Reduced Rate of Interest @ 9%

•  Certain other COVID-19 related relaxations to be provided, such as

1	Extension of due date of filing GSTR-1/ IFF for the month of May 2021 by 15 days.
2	Extension of due date of filing GSTR-4 for FY 2020-21 to 31.07.2021.
3	Extension of due date of filing ITC-04 for QE March 2021 to 30.06.2021.
4	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.
5	Allowing filing of returns by companies also using Electronic Verification Code (EVC) till 31. 08.2021.

• 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 15^th April, 2021 to 29^th June, 2021, to be extended upto 30^th June, 2021, subject to some exceptions.

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

IV – Simplification of Annual Return for Financial Year 2020-21: 

• 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.
• The filing of annual return in FORM GSTR-9 / 9A for FY 2020-21 to be optional for taxpayers having aggregate annual turnover upto Rs 2 Crore.
• The reconciliation statement in FORM GSTR-9C for the FY 2020-21 will be required to be filed by taxpayers with annual aggregate turnover above Rs 5 Crore.

V – Amendments/Clarifications provided in relation to various Items (goods):

Covid Related Items

• 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 recommendation of state authority to any relief agency. This exemption shall be valid upto 31.08.2021. Hitherto, IGST exemption was applicable only when these goods were imported “free of cost” for free distribution. The same will also be extended till 31.8.2021. It is to be noted that these goods were already exempted from Basic Customs duty.
• Further in view of rising Black Fungus cases, the above exemption from IGST has been extended to Amphotericin B.
•  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 08.06.2021.

Other goods

• • To support the Lympahtic Filarisis(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%).
  • Certain clarifications/clarificatory amendments have been recommended in relation to GST rates. Major ones are –

1. Leviability of IGST on repair value of goods re-imported after repairs

2. 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.

VI – Clarifications provided in relation to the service provided by the Millers under PDS (Public Distribution System):

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.

It is worth noting that this was a much needed clarification and will give very much relief to the millers 

VII – Amendments/Clarifications provided in relation to various other 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 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.
• To make appropriate changes in the relevant notification for an explicit provision to make it clear that land owner promoters could utilize 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 promotor shall be allowed to pay GST relating to such apartments any time before or at the time of issuance of completion certificate.
• To extend the same dispensation as provided to MRO units of aviation sector to MRO units of ships/vessels so as to provide level playing field to domestic shipping MROs vis a vis foreign MROs and accordingly –

1. GST on MRO services in respect of ships/vessels shall be reduced to 5% (from 18%).

2. PoS of B2B supply of MRO Services in respect of ships/ vessels would be location of recipient of service

• 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%.
• To clarify that services supplied by Govt. to its undertaking/PSU by way of guaranteeing loans taken by such entity from banks and financial institutions is exempt from GST.

VIII – Other Measures

• GST Council recommended amendments in certain provisions of the Act so as to make the present system of GSTR-1/3Breturn filing as the default return filing system in GST.
• Retrospective amendment in section 50 of the CGST Act with effect from 01.07.2017, providing for payment of interest on net cash basis, to be notified at the earliest.

Note: The recommendations of the GST Council have been presented in this release in simple language for information of all stakeholders. The same would be given effect through relevant Circulars/Notifications which alone shall have the force of law.

The Press Release can be accessed at: https://taxguru.in/goods-and-service-tax/highlights-43rd-gst-council-meeting.html