The article covers the following topics:
Highlights of the 42nd GST Council Meet (Held on 12 October 2020)
1. The 43rd GST Council meeting ended with no unanimity on the borrowing issue. Hence, no conclusion was reached. The states may go ahead with borrowing funds as per the options previously given. 2. The levy of compensation cess will continue beyond the 5-year period, as was announced in the 42nd GST Council meeting. 3. The centre will not be able to borrow funds to meet the compensation cess shortfall as this will result in an increase in the yield on G-sec bonds. 4. The Finance Minister explained that the Centre has issued a borrowing calendar, and if it goes beyond it to borrow, the G-Sec deals used as a benchmark for every other borrowing will go up. This will increase the borrowing costs for states and the private sector as well. 5. It was also clarified in the press briefing that the cess collected July 2022 onwards will not be disbursed to the states and the same will be utilised solely for the purpose of repayment of interest and principal. Hence, there will be no burden on the states regarding repayment of the borrowings made.Highlights of the 42nd GST Council Meet (Held on 5 October 2020)
In the 42nd GST council meeting, GST council discusses the pressing compensation cess issue and other matters with regard to ease of return filing and GST rate reduction. Here is the list of highlights of the 42nd GST council meeting.- Effective 1st January 2021, small taxpayers with turnover less than Rs 5 crore, can file quarterly GSTR-3B and GSTR-1. The due date of furnishing quarterly GSTR-1 will be the 13th of the month succeeding the quarter; this is effective from 01.1.2021. However, taxpayers can upload invoices every month. Hence, the number of returns have been reduced to 8 from 24.
- 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 previous quarter, using an auto-generated challan.
- A roadmap has been prepared for the auto-generation of GSTR-3B, where the ITC will be auto-populated from the supplier’s GSTR-1, and the tax liability will be auto-populated from the business’ GSTR-1. To achieve this, the GSTR-1 should be filed mandatorily before filing GSTR-3B w.e.f.01.04.2021.
- All taxpayers will continue to pay GST dues monthly through a simple challan. A nil CMP-08 will be allowed to be filed through an SMS.
- Effective 1st April 2021 – Taxpayers with turnover exceeding Rs 5 crore, HSN code up to 6 digits must be mentioned. For turnover less than Rs 5 crore, HSN code up to 4 digits need to be mentioned for B2B supplies for both goods and services. For notified classes of goods and services, 8 digits will need to be mentioned.
- Refunds to be given into bank accounts where PAN and Aadhaar linking is done. Aadhaar authentication facility (with OTP) is now allowed for refund applications. This discourages taxpayers from misusing the system.
- GST exemption provided to satellite launch services by ISRO, Antrix Corporation and New Space India Limite (NSIL) to encourage the space launching services in India.
- Non-alcohol based sanitisers will continue to be taxed at an 18% GST rate.
- The compensation cess collected till now accounts to Rs.20,000 crore, and the same will be disbursed to the states by 05.10.2020.
- The amount of Rs.25,000 crore towards IGST of 2017-18 will also be disbursed to specific states by next week.
News and Updates on 42nd GST Council Meet
7.15 p.m The GST Council meeting concludes. Finance Secretary addressed the media.
7.00 p.m Sources: After an almost 8-hour long meeting, the Council fails to reach a consensus on the issue of borrowing to make up for compensation cess shortfall. Council will meet again on 12 October 2020.
6.10 p.m Sources: Council exempts GST on satellite launch services by ISRO, Antrix, and New Space India Limited (NSIL).
5.50 p.m Finance Ministry: The press briefing is delayed as the Council meeting is still in process. The briefing will start once the meeting is over.
4.40 p.m Sources: GST Council rejects the proposal to reduce GST rates on ayurvedic hand sanitizers from 18% to 12%.
3.00 p.m Sources: The GST compenastion cess will be collected until the interest & principle amount of borrowings made for shortfall are fully paid.
2.20 p.m Sources: Union Finance Minister Smt. Nirmala Sitharaman will hold a virtual media briefing on the outcomes of the 42nd GST Council meeting at 5:45 p.m. in New Delhi today.
1.25 p.m Sources: GST Council agrees to hike the borrowing limit under Option 1 to Rs 1.10 lakh crore based on 7% growth rate. Previously, the Council had proposed Rs 97,000 crore borrowing under Option 1 based on 10% revenue growth.
1.10 p.m Sources: West Bengal & Rajasthan also opposed the state borrowing option and demanded central borrowings. Few states shared preference towards Option 1.
12.40 p.m Sources: Centre rejects the idea of setting up a GST Dispute Settlement Authority and also says it is against the principles of the Constitution of India & GST Council. The Council also states that a similar proposal to set up a GST Dispute Settlement Authority was raised in 2011 and the same was rejected by the then Parliament Standing Committee.
12.30 p.m Sources: States are presenting their views on the borrowing options provided by the Centre. Chhattisgarh is opposing to borrow funds and demanding a parliamentary discussion on the GST compensation issue.
12.10 p.m Sources: The GST Council decided to extend GST compensation cess levy beyond 5 years, i.e., beyond June 2022. The extension timeline will be reviewed and decided from time to time.
11.20 a.m The 42nd GST Council meeting chaired by the Union Finance Minister Smt. Nirmala Sitharaman started via video conferencing.
10.30 a.m The GST Council meeting starts at 11 a.m today.