Note on Recommendations Made In 39th GST Council Meeting

Various recommendations have been made by the GST Council in its meeting held on 14.03.2020 which is likely to be notified soon. Relevant points are as follows:

1. Interest for delay in payment of GST to be charged on net cash tax liability w.e.f. 01.07.2017 instead of gross tax liability (Law to be amended retrospectively).

2. Where registrations have been cancelled till 14.03.2020,application for revocation of cancellation of registration can be filled up to 30.06.2020 (extension of period of application as one-time measure to facilitate those who want to conduct business)

3. Due date for filing the Annual return and the Reconciliation Statement for Financial Year 2018-19 to be extended to 30.06.2020

4. Relaxation to MSMEs from furnishing of Reconciliation Statement in FORM GSTR-9C, for the financial year 2018-19, for taxpayers having aggregate turnover below Rs. 5 crores.

5. Late fees not to be levied for delayed filing of the Annual return and the Reconciliation Statement for Financial Years 2017-18 and 2018-19 for taxpayers with aggregate turnover less than Rs. 2 crores.

6. Deferment of New Return and E-invoicing 

6.1 The proposed implementation of new return filing and E-invoicing has been extended till 1^st of October, 2020. Meanwhile, existing mechanism of filing return i.e. GSTR-3B and GSTR-1 shall continue till September, 2020.

6.2 Further, certain class of registered persons (insurance company, banking company, financial institution, non-banking financial institution, GTA, passenger transportation service etc.) to be exempted from issuing e-invoices or capturing dynamic QR code.

7. Extension of the time to finalize e-Wallet scheme up to 31.03.2021

8.  A special procedure is being prescribed for registered persons who are corporate debtors under the provisions of the Insolvency and Bankruptcy Code, 2016 and are undergoing the corporate insolvency resolution process, so as to enable them to comply with the provisions of GST Laws during the CIRP period.

9. Changes in relation to tax rates (propose to be implemented from 01.04.2020)

• To raise the GST rate on Mobile Phones and specified parts presently attracting 12% to 18%.
• GST rate on all types of matches (Handmade and other than Handmade) has been rationalised to 12% (from 5% on Handmade matches and 18% on other matches). This would address the classification issues. This issue was deliberated earlier in the 37^th meeting and was pending for decision.
• To reduce GST rate on Maintenance, Repair and Overhaul (MRO) services in respect of aircraft from 18% to 5% with full ITC and to change the place of supply for B2B MRO services to the location of recipient. This change is likely to assist in setting up of MRO services in India. Domestic MRO will also get protection due to 5% tax paid under section 3(7) of the Customs Tariff Act, 1975 on most imported goods (sent abroad for repairs) as this tax is not available as credit.

 10. Prevention of fake invoicing 

• A new facility called ‘Know Your Supplier’ to be introduced so as to enable every registered person to have some basic information about the suppliers with whom they conduct or propose to conduct business.
• To curb fake invoicing and fraudulent passing of ITC, restrictions to be imposed on passing of the ITC in case of new GST registrations, before physical verification of premises and financial KYC of the registered person

11. Other relevant points : 

• The requirement of furnishing FORM GSTR-1 for 2019-20 to be waived for taxpayers who could not opt for availing the option of special composition scheme under Notification No. 2/2019-Central Tax (Rate) dated 07.03.2019 by filing FORM CMP-02.
• A special procedure for registered persons in Dadra and Nagar Haveli & Daman and Diu during transition period, consequent to merger of the UTs w.e.f. 26.01.2020; transition to be completed by 31.05.2020.
• Extension of due dates for FORM GSTR-3B for the month of July, 2019 to January, 2020 till 24th March, 2020 for registered persons having principal place of business in the Union territory of Ladakh. Similar extension is also recommended for FORM GSTR-1 & FORM GSTR-7.
• Bunching of refund claims allowed across financial years to facilitate exporters
• Seeking information return from banks
• Extension of the present exemptions from IGST and Cess on the imports made under the AA/EPCG/EOU schemes up to 31.03.2021.

Copy of Press Release Notes issued by the Ministry of Finance can be viewed by clicking at the links provided below: