The GST Council met after a gap of seven months on 28th May, 2021 with five states being represented by new leaders (CM, DY CM or FMs). This 43rd meeting was held in the backdrop of worries on compensation cess, shortfall in e-way bills in second wave of COVID, likely contraction in tax revenue and recession in economy, particularly , services sector.
Some of the major decisions / recommendations include relief to taxpayers by way of amnesty scheme to reduce late fees payable on return filings, annual return(Form-9) to be optional for small assessee’s for the financial year 2020-21, relaxation in GST/ IGST rates for COVID related supplies till 31 August,2021, setting up of two groups of ministers to recommend GST rate reductions within 10 days, retrospective amendment in section 50 of CGST Act, 2017 wef 1.7.2017 to provide for payment of interest on net cash basis and so on .
The GST Council in its 43rd meeting took the following decisions relating to changes in GST rates on supply of goods and services and changes related to GST law and procedure.
1. To make present GSTR-1/3B system as default return filing system. This amendment is being brought because of challenge in several High courts regarding non-implementation of original return filing system (GSTR 1, GSTR-2, GSTR-3).
2. Section 50 of CGST Act , 2017 (payment of interest liability on net basis) to be notified with retrospective effect from 01.07.2017.
3. Time limit for completion for various actions, by any authority/person, which falls between 15.04.2021 to 29.06.2021 to be extended to 30.06.2021. In case where timeline extension given by Supreme Court applies, that shall prevail.
4. COVID Equipments
As a COVID-19 relief measure, 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 31.8.20201. It may be mentioned that these goods are already exempted from Basic Customs duty.
5. Real Estate
- Landowner 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.
- 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.
6. Amnesty scheme for pending returns
| Period of Amnesty scheme | July,2017 to April,2021 |
| Return | GSTR-3B |
| Returns to be filed between | 01.06.2021 to 31.08.2021 |
| Relaxation | |
| If NIL liability | Maximum of Rs. 500 (Rs 250-CGST, Rs. 250-SGST) per return |
| Other taxpayers | Maximum of Rs. 1000 (Rs 500-CGST, Rs. 500-SGST) per return |
7. Rationalization of late fees (for prospective tax periods)
| GSTR-1/3B | |
| If NIL liability / Nil outward supplies | Maximum Rs. 500 (Rs 250-CGST, Rs. 250-SGST) per return |
| Others | |
| Taxpayer with average annual turnover in preceding year upto 1.5 Crore. | Maximum of Rs. 2000 (Rs 1000-CGST, Rs. 1000-SGST) per return |
| Taxpayer with average annual turnover in preceding year between 1.5 Crore to 5 Crore.
|
Maximum of Rs. 5000 (Rs 2500-CGST, Rs. 2500-SGST) per return
|
| Taxpayer with average annual turnover in preceding year above Rs. 5 Crore | Maximum of Rs. 10000 (Rs 5000-CGST, Rs. 5000-SGST) per return |
| GSTR-4 | |
| If NIL liability | Maximum of Rs. 500 (Rs 250-CGST, Rs. 250-SGST) per return |
| Others | Maximum of Rs. 2000 (Rs 1000-CGST, Rs. 1000-SGST) per return |
| GSTR-7 | Rs. 50 per day (Rs 25-CGST + Rs. 25-SGST) to the extent of maximum of Rs. 2000 (Rs 1000-CGST, Rs. 1000-SGST) per return |
8. Relaxation in interest rates in filing of monthly return in form GSTR-3B
Concessional rate of interest in lieu of 18 % on delayed payment of tax in following cases:
| Particulars | Return period | Actual rate of interest | Interest reduced |
| For registered persons having aggregate turnover > 5 crores | March , April , May , 2021 | 18 % p.a. | First 15 days : 9% |
| For registered persons having aggregate turnover =< 5 crores (including QRMP scheme) | March , April , May , 2021 | 18% p.a. | First 15 days : NIL (for all months)
Next 45 days : 9% (for March / quarter ending march return) Next 30 days : 9% (for April return) Next 15 days : 9% (for May return) |
| Composition taxpayers | January to March , 2021 |
9. 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.
10. 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 using Electronic Verification Code (EVC), instead of Digital Signature Certificate (DSC) till 31.08.2021.
All the above are the recommendations of the GST Council and the same would be given effect through relevant Circulars/Notifications which alone shall have the force of law.
GST Council has today become a machinery for tweaking the tax rates, deciding on representations for tax exemptions or lowering of tax rates and state demands for more money and cess. Infact , it should act as a federal body looking into state economy vis-a-vis macro economics, fiscal issues and tax related policy issues rather than seekers- giver body for tax relaxations and tax revenues. The economic direction and tax revenue analysis should become integral part of GST Council agenda to ensure that all states and UTs contribute to economic growth of states and the country.
The amount of compensation cess for the FY 2019-20 has been met out by way of central borrowing , which can not be a permanent solution or a way out for each successive year. It comes with a cost and is a hit on citizen’s money meant otherwise for developmental activities and other uses in the interest of nation . Given the state of economic affairs, the quantum of borrowings may rise year by year meaning thereby that the state’s shortfall will be on the head of centre while such shortfall is unrealistic. The very basis of this shortfall, ie , guaranteed growth @ 14 percent is unsustainable and without any base, in today’s scenario. Even the national economy is not growing @ 14 percent or any where near this number. The centre has estimated a compensation cess payable to the states and union territories to be around ₹ w.70 lakh crore for the FY 2021-22 based on assumed growth of 7 percent , which can be paid by borrowings only .
Compensation cess is becoming a major issue and Infact, a hurdle in tax reforms. If it continues, as most of the states want in their political and fiscal interest, the desired benefits of GST will never be achieved and taxpayers as well as citizens will continue to suffer and bear the brunt. A 14 percent guaranteed growth in state tax revenues is not at all realistic and is like a magic wand in the hands of state governments. It has to go. GST Council and Parliament will have to take a tough stand on this. Political compulsions ca not rule for a long time and this so called mistake ought to be corrected now .
Author Bio
now on filing GSTR 4 maxinum late fee Is Rs1000-Ra1000=Rs 2000/- but now filing if Return showing penality Rs 5000/+Rs 5000= 10000 for the year 2019-20 why are so