Dr. Sanjiv Agarwal, FCA, FCS

Sanjiv Agarwal Photo

It the 27th meeting held on 4th May, 2018, GST Council, the high powered Constitutional body to take decisions on levy and administration of Goods and Service Tax in India considered various issues and concerns and made recommendations. These recommendations are subject to detailed consideration by Group of Ministers or other bodies and shall be implemented in due course.

GST Council inter alia, made the following recommendations in its last meeting held on 04.05.2018:

♦ Towards Simplification of returns:

Government is keen to introduce the simplified return design at the earliest to reduce the compliance burden on the trade in keeping with the philosophy of ease of doing business. Returns shall be simplified also by reducing the content/information required to be filled in the return. The details of the design of the return form, business process and legal changes would be worked out by the law committee based on these principles. Government is keen to introduce the simplified return design at the earliest to reduce the compliance burden on the trade in keeping with the philosophy of ease of doing business.

Council approved the principles for filing of new return design. The key elements of new return design are as follows:

  • Returns shall be filed monthly by all taxpayers except composition dealer or dealers having NIL transaction and dates shall be based on turnover. Thus, Nil returns and composition returns shall be filed on quarterly basis.
  • For unidirectional flow of invoices, the seller may upload invoices anytime during the month and become eligible for claiming credit. The buyer could see these uploaded invoices.
  • There will be no need to upload purchase invoices.
  • There may be easy IT interface having the feature to calculate tax liability just by uploading of invoices in relation to outward supplies and calculating ITC automatically
  • There shall not be any automatic reversal of input tax credit from buyer on non-payment of tax by the seller.
  • Recovery of tax or reversal of input tax credit shall be through a due process of issuing notice and order. The process would be online and automated to reduce the human interface
  • There will be three stage Transition Model as follows:

√ Stage I: the present system of filing returns, which suppose to continue for period not exceeding 6 months.

√ Stage II: New invoice wise return facility and claiming of ITC on self declaration basis.

√ Stage III: After 6 month of phase II, the facility of claiming ITC on provisional basis will get withdrawn and input tax credit will only be limited to invoices uploaded by seller from whom dealer had purchased the goods.

  • GSTR-I and GSTR 3B returns will continue for 6 months more.

♦ Incentive to promote of Digital Transaction

  • With a view to promote less cash economy, Council discussed a proposal for concession of 2% in GST rates on B2C supplies for which payment is made through cheque or digital mode, subject to a ceiling of Rs. 100 per transaction. This may apply where GST rate is 3% or more, 1% each from applicable CGST and SGST rates
  • The Council recommended to set a new Group of Ministers to consider and provide recommendation before the next Council meeting.

♦ Imposition of Sugar Cess over and above 5% GST and reduction in GST rate on Ethanol:

The Council discussed the issue of imposition of sugar cess in view of record sugar production, consequent depressed sugar prices and buildup of sugar cane arrears, and reduction in GST rate on ethanol and recommended to set a new Group of Ministers from State Governments  to provide recommendations within two weeks. There is no levy of sugar cess for the time being.

♦ Change in the Shareholding Pattern of GSTN

The Goods and Services Tax Network – Special Purpose Vehicle (GSTN-SPV) was created as a private limited, not-for-profit company under Section 25 of the Companies Act, 1956 (Section 8 of the Companies Act, 2013) with an objective to provide shared IT infrastructure and services to Centre and States Governments, tax payers and other stakeholders for implementation of Goods and Services Tax (GST) in the country.

  • Presently, the Central Government and State Government are holding 24.5% equity shares respectively and the remaining 51% are held by non-Governmental institutions and through various mechanisms, GSTN is under strategic control of government.
  • GST Council decided as follows:

Acquisition of entire 51% of equity held by the Non-Governmental Institutions in GSTN amounting to Rs. 5.1 crore, equally by the Centre and the States governments and allow GSTN Board to initiate process for acquisition of equity held by the private Companies; and GSTN Board shall be allowed to continue the existing staff at existing terms and conditions for the a period upto five years, and shall have the flexibility of hiring people through contract on the terms and conditions similar to those used by GSTN till now while hiring regular employees.

  • However, the existing financial commitments given by Centre and States to GSTN to share the capital and O&M cost of the IT Systems shall continue.

As a caution, readers are advised that the above recommendations shall be implemented after final decision of the Council and Notification thereof.

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One response to “Major Recommendations of GST Council in 27th meeting”

  1. Suntosh says:

    When we import purchase,

    for example;-

    value of goods 100000/-

    custom duty 7500/-

    cessB B 10% 750/-
    _____________________

    total value 108250/-
    igst 18% 19485/-
    ______________________

    Now my question is :-

    Can we take input claim of rs. 19485/-

    or

    Input claim of rs. 18000/- only (only on value of imported goods)(18% of 100000/-)

    Pl. provide me rules and regulations regarding this concern.

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