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35th GST Council Meeting was held on 21 June 2019 at New Delhi, after a long gap of more than three months.
This was the first council meeting chaired by the re-elected government and India’s second woman Union Finance Minister, Mrs Nirmala Sitharaman. This GST Council meeting has been called at a time when the countdown to upcoming Union Budget 2019 is less than a month away. A lot of expectations piled up over months concerning various indirect tax issues will be addressed in this meeting.
The 35th GST Council meeting concluded with consensus on the following matters
1. GST annual return due date extended till 31 August 2019 for FY 2017-18
The due date for filing GSTR-9, GSTR-9A, and GSTR-9C for the FY 2017-18 has been extended by two months, till 31 August 2019. Official notification can be made anytime soon.
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2. Aadhaar-enabled GST Registration introduced:
In order to ease the current process of GST registration and reduce the paperwork involved, GST Council has given a go-ahead to a new system for verification of taxpayers registering themselves under GST. Aadhaar number shall be linked to the GSTIN while generation.
3. NAA tenure extended by two years
Tenure of National Anti-profiteering Authority (NAA) was due to end by 30 November 2019. GST Council has further extended this tenure by two years, to enable it to take up all the pending cases. Hence, the authority can take up new cases in future due to rate cut issues, indicating that the GST Council has plans for further rationalisation of GST rates.
4. 10% penalty to apply for any delay in depositing profiteered amount
GST Council has approved a levy of 10% penalty for delay in depositing the profiteered amount by more than 30 days. This is a fair measure that would encourage timely compliance by the taxpayer.
5. E-invoicing to start from January 2020
The new system for raising all the tax invoices on the GST portal has received in-principle approval for implementation from 1 January 2020. This applies to only B2B invoicing. By this system, no separate e-way bill will be required in case of e-invoice. Returns to be framed from these e-invoices. A phased implementation is being worked out.
Earlier, the government had fixed Rs 50 crore as the limit for the applicability of e-invoicing.
6. E-ticketing made mandatory for multiplexes
Among other major decisions, the GST Council approved the electronic ticketing system, for multiplexes, having multi-screens. This will help curb cases of tax evasion and the use of black tickets that have been prevalent.
7. Rate cut decision on electric vehicles, chargers & leasing thereof deferred; Committee to submit its report
The decision to cut GST rates for electric vehicles and electric chargers have been postponed to the next Council meeting. The matter has been referred to the Fitment Committee for checking the feasibility of the rate cut. At present, the GST rates for electric vehicles and electric chargers are 12% and 28% respectively.
Likewise, the valuation rules for goods and services pertaining to solar power generating systems and wind turbines will be placed before the next Fitment Committee. The suggestions made by this Committee will be placed before the next GST Council meeting.
8. Rate cut for lottery put on hold; Matter to be referred before an Attorney General
The previous council meet had not tabled the rate cut matter for lotteries. The 35th GST Council meeting discussed the matter at length and also brought to light two pending cases on this matter before the high court and supreme court respectively. Although the courts had referred the matter back to GST Council, the Council has decided to consult the Attorney General of India.
9. GSTAT to be GST Appellate Tribunal.
The GST council also definitively stated the Goods and Service Tax Appellate Tribunal will be the appellate authority and will adjudicate on appeals arising from central and state tax authorities’ in-house dispute resolution system. The states will decide the number of GSTAT required by them as a result of which there can be two tribunals in a single state.
10. Other Due date extensions
New due date
ITC-04 for July 2017- June 2019
31 August 2019
CMP-02 for opting into the composition scheme for service providers under Notification 2/2019-CT rate
31 July 2019
11. For non-filing of GST returns, E-way bills to be blocked
The law stated that where the GST returns in GSTR-3B/ GSTR-4 is not filed for two consecutive tax periods, e-way bill generation for such taxpayers would be disabled. This will be brought into effect from 21 August 2019, instead of the earlier notified date of 21st June 2019.
Below were the key things expected to be tabled at the upcoming council meeting:
1. Review status of GSTR-9 filings
While GSTR-9 appears to be a summary return, it requires a lot of information to be presented. Some of it has never been asked in the GSTR-1 and GSTR-3B returns. Preparation of GSTR-9 requires significant effort and therefore its filing must not be delayed. Taxpayers still have confusion about this form and the government must make efforts to make sure filings improve and taxpayers complete this very important tax compliance that belongs to the FY 2017-18.
2. New Simplified GST returns – clarity on the input tax credit
GST Council may include in its agenda, various issues that require clarity – one of them being the mechanism of claiming ITC in the proposed scheme of New GST Returns-popularly known as GST 2.0. ITC under the new system will be available automatically via the return forms ANX-1 and ANX-2. However, clarity on ITC claims in the intervening period i.e. when both GSTR-1 and GSTR-3B are being filed and ANX-1 is being tested needs to be clarified in detail.
3. Deciding the applicability of e-invoicing
E-invoicing has gained a lot of traction in the past month among businesses. Some say government plans to introduce the compulsory e-invoicing requirement for businesses with an annual turnover of over Rs 50 crores. This can help curb tax evasion. This system will also help to negate any gaps between GSTR-1 and GSTR-3B and ensures that the input tax credit does not get misused.
There are still gaps in understanding the impact of introducing e-invoicing. One of them being the availability of much more simplified returns for those subject to e-invoicing on GSTN since the sales details are already uploaded at the time of invoicing. It is to be seen how this move can impact those taxpayers who are interacting with such persons subject to e-invoicing.
4. To bring into effect geotagging through RFID
E-way bills can be checked through the RFID tagging mechanism. However, this system is yet to come into effect-to-date. This can help keep a check on unaccounted consignments moving across India.
5. Rationalisation of tax rates
There will be a discussion for revising the GST rate on electric vehicles from 12% to 5% to boost sales. Also, the rate for electric charger may be reduced from the current 28% to 18% is on the agenda. GST rate for Hybrid vehicles also will undergo a cut.
In its previous council meetings, GST Council has set up committees for addressing and studying the issues of taxation of lotteries and other items. A decision needs to be taken to rationalise the structure of taxing the state-run lotteries and private players.
Taxation of solar projects is another key area to look forward to in the agenda. To add to the list is the automobile sector which is keen to enjoy a GST rate cut from the maximum 28%. Currently, the sector is seeing a slow movement in sales and a rate cut will help it in recovery.
GST Council may consider levying GST on a few items that have for a long time been left with no GST rates.
ENA: One such highly anticipated item is ENA, also known as extra-neutral alcohol used as input in the manufacturing of whisky, gin, country liquor, and so on.
Natural Gas & Petroleum products: Upcoming GST Council meeting may hold the first round of discussions on the pros and cons of fixing GST rates on petroleum products and natural gas.
6. Proposal to extend the tenure of NAA & approve new setups for appellate tribunals
The two-year tenure of National Anti-profiteering Authority(NAA) that ends on 30 November 2019 may be extended by one more year till 30 November 2020. Nearly 60 plus cases remain pending before the authority, the authority needs more time for passing the orders. There are multiple proposals before the GST council for setting up more appellate tribunals across India.
GST Council has a proposal before it to introduce e-ticketing for cinemas.
Further, the GST Council will take a call on establishing GST Tribunal in States.
The decisions taken at the previous GST council meeting held in March 2019 was presented by Revenue Secretary – Ajay Bhushan Pandey. You can read further about the 34th GST Council meeting.
What is GST
GST is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017. Read to know more about GST