The 42nd GST Council Meeting held under the chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman through video conferencing here today. The meeting was also attended by Union Minister of State for Finance & Corporate Affairs Shri Anurag Thakur besides Finance Ministers of States & UTs and senior officers of the Ministry of Finance & States/ UTs.

GST Coucnil has made the following recommendations: –

(1) Levy of Compensation Cess to be extended beyond 5 years

GST being a destination based consumption tax, the revenue of GST has been accruing to destination / consuming states [except section 13(8) of IGST Act]. Goods and Services Tax (Compensation to States) Act, 2017 was enacted to levy Compensation cess for providing compensation to the States for the loss of revenue arising on account of implementation of the goods and services tax with effect from the date from which the provisions of the Central Goods and Services Tax Act is brought into force (01/07/2017), for a period of five years or for such period as may be prescribed on the recommendations of the GST Council.

Thus, Levy of Compensation Cess to be extended beyond the transition period of five years i.e. beyond June, 2022, for such period as may be required to meet the revenue gap.

Highlights of 42nd GST Council Meet

(2) Centre to Release Compensation to States:

Centre is releasing compensation of 20,000 crore to States today towards loss of revenue during 2020-21 and an amount of about 25,000 crore towards IGST of 2017-18 by next week.

(3) Compliance related measures

With a view to further enhance Ease of Doing Business and improve the compliance experience, the Council has approved the future roadmap for return filing under GST.

The approved framework aims to simplify return filing and further reduce the taxpayer’s compliance burden in this regard significantly in below manner:

  • Due date of furnishing quarterly GSTR-1 by quarterly taxpayers to be revised to 13 of the month succeeding the quarter w.e.f. 01st January, 2021;
  • Auto-population of liability from own GSTR-1 e.f. 1st January, 2021;
  • Auto-population of input tax credit from suppliers GSTR-1s through the newly developed facility in FORM GSTR-2B for monthly filers w.e.f. 01st January, 2021 and for quarterly filers w.e.f. 01st April, 2021.
  • In order to ensure auto population of ITC and liability in GSTR 3B as detailed above, FORM GSTR 1 would be mandatorily required to be filed before FORM GSTR3B w.e.f. 1st April, 2021.
  • The present GSTR-1/3B return filing system to be extended till 31.03.2021 and the GST laws to be amended to make the GSTR-1/3B return filing system as the default return filing system.

(4) Reducing Burden of Small Taxpayers: –

The compliance burden particularly on the small taxpayers having aggregate annual turnover < Rs. 5 cr., the Council’s recommends to allow filing of returns on a quarterly basis with monthly payments by such taxpayers to be implemented w.e.f. 01st January, 2021.

Such quarterly taxpayers would, for the first two months of the quarter, have an option to pay 35% of the net cash tax liability of the last quarter using an auto generated challan.

(5) Revising the requirement to mention HSN / SAC on Tax Invoices

HSN & SAC are required particulars to be mentioned in Tax Invoice as per Rule 46(g) of CGST Rules.

The following table would illuminate the current requirement of HSN & SAC on invoice & its comparison with expected change recommended by GST Council

Current Position Recommended
Aggregate Turnover Digits Aggregate Turnover Digits
Upto Rs. 1.5 crores Not required Upto Rs. 5 crores 4 Digits (for B2B transaction)
More than Rs. 1.5 Cr but upto Rs. 5 Cr 2 Digits Above Rs. 5
6 Digits
More Than Rs. 5 Crores 4 Digits Imports & Exports of Goods 8 digits
Import Exports of Goods 8 digits Govt notified supplies 8 digits

(6) Various amendments in the CGST Rules and FORMS have been recommended which includes provision for furnishing of Nil FORM CMP-08 (applies to composition scheme taxpayer to pay tax) through SMS.

(7) Refund to sbe paid/ disbursed in a validated bank account linked with the PAN & Aadhaar of the registrant w.e.f. 01.01.2020

(8) To encourage domestic launching of satellites particularly by young start-ups, the satellite launch services supplied by ISRO, Antrix Corporation Ltd. and NSIL would be exempted.

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March 2021