The GST Council met for the 43rd time on 28th May 2021 at New Delhi. The Council made certain key recommendations on changes in GST rates on supply of goods and services and changes related to GST law and procedure GST Law and procedures.
The changes are categorized in below major areas and summarized for ease of understanding –
1. Relief related to returns and GST Laws
2. Covid Related relief items
3. Clarifications on goods and services
1. Relief related to returns and GST Laws –
A. Introduction of Amnesty Scheme for pending Returns from July 2017 to April 2021 – Reduction / waiver of Late fee for non-furnishing FORM GSTR-3B for the tax period from July, 2017 to April, 2021 is recommended as under –
(i) In case of NIL Tax Liability – Maximum Rs 500 per return
(ii) In case of any tax liability – Maximum Rs 1000 per return
Note – this reduction/ waiver is available if all the pending GSTR 3B returns are furnished between 1st June, 2021 to 31st August, 2021.
B. Relief of late fees
i. Form GSTR 3B and GSTR 1 –NIL tax liability – 3B/1 Annual Aggregate Turnover (AATO) in previous FY Any turnover Upto Rs 1.5 Crores Between 1.5 Crs to 5 Crs Above Rs 5 Crs Late fees (Per Return) Rs 500 (Rs 250 each under CGST and SGST) Rs 1000 (Rs 500 each under CGST and SGST) Rs 5000 (Rs 2500 each under GST and SGST) Rs 10000 (Rs 5000 each under CGST and SGST)
Note – The relief is granted for taxpayers having turnover upto Rs 5 crores. There is no relief of late fees for any taxpayers who does not file NIL return and average annual turnover of Rs 5 crores in previous financial year.
ii. Form GSTR 4 – Return for Composition Taxpayers – GSTR 4 NIL tax liability Other than NIL Tax Liability
Late fees (Per Return) Rs 500 (Rs 250 each under CGST and SGST) Rs 2000 (Rs 1000 each under CGST and SGST)
iii. Form GSTR 7 – GSTR 7 Maximum late fees per return Late fees (Per Return) Rs 50 per day subject to Rs 2000 (Rs 1000 each under CGST and SGST)
C. COVID-19 related relief measures for taxpayers –
i. Table depicting summary of waiver of late fees and Interest for GSTR 1 and GSTR 3B – CBIC announced certain relief measures on 1st May, 2021 and the GST council proposed further relaxations in Form GSTR 1 and 3B –
A. Turnover Exceeding Rs 5 Crores in preceding FY (Monthly) – GSTR 3B Month Date without late fees 9% Interest 18% Interest May 2021 5th July 2021 If return is filed upto 5th July Return filed post 5th July
B. Turnover up to Rs 5 Crores in preceding FY (Monthly/Quarterly) – GSTR 3B Month Date without late fees NIL Interest 9% Interest 18% Interest March 2021 19th June, 2021 If filed till 5th May 6th May to 19th June Filed post 19th June April 2021 4th July, 2021 If filed till 4th June 5th June to 4th July Filed post 4th July May 2021 20th July, 2011 If filed till 5th July 6th July to 20th July Filed post 20th July
C. Extension of Due dates for below forms – Return Return Period Relaxation/ Extended due date GSTR 1/IFF May 2021 15 days QSTR 4 – FY 2020-21 31st July, 2021 ITC 04 Return Quarter ended Mar 21 30th June, 2021
ii. Other Covid 19 related relaxations –
a. 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. Hence, instead of monthly computing eligible ITC amount based on GSTR 2A/2B, said computation of eligible ITC is to be made cumulatively for the months April to June 2021.
b. Allowing filing of returns by companies using Electronic Verification Code (EVC), instead of Digital Signature Certificate (DSC) till 31.08.2021
D. 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 15th April, 2021 to 29th June, 2021, to be extended upto 30th June, 2021, subject to some exceptions.
Note – Wherever the timelines for actions have been extended by the Hon’ble Supreme Court, the same would apply
E. Simplification of Annual Return for Financial Year 2020-21
i. Amendments in section 35 and 44 of CGST Act made through Finance Act, 2021 shall be notified. This would ease the compliance requirement in furnishing reconciliation statement in FORM GSTR-9C for the FY 2020-21, as taxpayers would be able to self-certify the reconciliation statement.
ii. 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. This was optional even prior to FY 2020-21.
iii. 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.
F. Payment of Interest on net cash basis – 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
G. Recognising GSTR 1/3B as default return filing system – GST Council recommended amendments in certain provisions of the Act so as to make the present system of GSTR-1/3B return filing as the default return filing system in GST
2. Covid Related Relief Items –
a. IGST Relief on Covid Related Goods – 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.
It may be mentioned that these goods are 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
b. Constitution of Group of Ministers (GoM) – For exemptions to individual items, the Council decided to GoM to analyze the need for further relief to COVID-19. The GoM shall give its report by 08th June, 2021
c. Reduction of GST rate on DEC Tablets – To support the Lympahtic Filarisis elimination, the GST rate on Diethylcarbamazine (DEC) tablets has been recommended for reduction to 5% from 12%
3. Clarification related to rate of goods or Services –
A. Goods –
a. IGST is levied on repair value of goods re-imported after repairs
b. 12% GST on parts of sprinklers/ drip irrigation systems falling under tariff heading 8424 (nozzle/laterals) to apply even if these goods are sold separately
B. Services – Important changes are discussed –
a. Exemption of GST is provided to 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 irrespective of the funding of such supplies from government grants or corporate donations
b. Exemption provided services provided by way of examination – The 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
c. Reduction of GST rate to MRO units of Ships/Vessels – To extend the benefit 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, –
(i) Reduction of GST on MRO services in respect of ships/vessels from 18% to 5%.
(ii) PoS of B2B supply of MRO Services in respect of ships/ vessels would be location of recipient of service
d. Services supplied to a Government Entity for construction of a rope-way to attract GST at 18%.
e. 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.
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