43rd GST Council Meeting: Highlights and Latest News Updates

The 43rd GST council meeting was held on 28th May 2021. The GST Council has met after more than six months. The meetings were chaired by Finance Minister Smt. Nirmala Sitharaman, Union Minister of State for Finance and Corporate Affairs Shri Anurag Thakur was also present at the meeting, besides the Finance Ministers of the states and union territories (UTs), and other senior officers of both, the Ministry of Finance and the States and UTs.

Also, the Council decided to conduct a special session to discuss how compensation cess will be collected beyond 2022 to be held in later months.

Highlights of the 43rd GST Council Meet

1. The Council decided to keep the GST rate of 5% as it is on COVID vaccines. Also, the Council ruled out the possibility of notifying COVID related relief materials as zero-rated goods.
2. GST exemption has been provided on import of all COVID relief materials and medicines (including free of cost) till 31st August 2021; Also, the medicine for Black fungus – Amphotericin B is included in the exemption list.
3. A Group of Ministers (GoM) to be formed by 29th May 2021 and submit a report by 8th June 2021 on the need for further reductions and decide on any new rates in exemptions.
4. A GST Amnesty scheme has been announced for small taxpayers who delayed GSTR-3B filing to reduce the late fee. Also, the maximum late fee for small taxpayers is reduced for GST Returns to be filed in future.
5. The due dates for IFF and GSTR-1 filing for May 2021 are extended by 15 days. Also, the due date for GSTR-4 for FY 2020-21 and ITC-04 for Jan-Mar 2021 is extended up to 31st July 2021 and 30th June 2021, respectively.
6. The late fee waiver and interest reduction have been announced for GSTR-3B or PMT-06 filing for March, April and May 2021 and CMP-08 submission for Jan-Mar 2021 for taxpayers.
7. Now, the taxpayers can cumulatively apply CGST Rule 36(4) for April, May and June 2021 while filing GSTR-3B of June 2021.
8. GST Annual Return (GSTR-9) filing is rationalised and continues to be optional for 2020-21 for small taxpayers with turnover up to Rs.2 crore. Also, GSTR-9C (Reconciliation statement) to be still applicable for taxpayers with an annual turnover of equal to or more than Rs.5 crore, allowing self-certification.
9. Companies can continue filing GST returns using EVC instead of digital signature till 31st August 2021.
10. The time limit for completing compliances and taking actions under the GST law which were due between 15th April 2021 to 29th June 2021, stands extended up to 30th June 2021.
11. The Quarterly Return Quarterly Payment (QRQP) scheme to be introduced based on the law committee’s suggestions and modalities worked out.
12. The Council discussed the GST Compensation cess at length, and it is decided to adopt the same formula as last year. The Centre will borrow Rs.1.58 lakh crore to meet the shortfall in GST Cess.
13. The Council did not pick up the GST rate revisions related to the Inverted tax structure for discussion.

GST Return Due date revisions, Late fee and Interest relief

Return/ Form	Filing Frequency	Taxpayer Type & Turnover	Type of Relaxation	Return period	Original Due Date	Due Date as per 1st May 2021 notification	Due Date as per the recommendation of GST Council
GSTR-1	Monthly	Regular	Due date extension	Apr’21	11th May 2021	26th May 2021	Remains same
				May’21	11th June 2021	NA	26th June 2021
IFF (Optional facility)	Monthly	Regular, but opted for the QRMP scheme	Due date extension	Apr’21	13th May 2021	28th May 2021	Remains same
				May’21	13th June 2021	NA	28th June 2021
PMT-06	First and Second month of quarter	Regular, but opted for the QRMP scheme	Interest rate reduction	Apr’21	25th May 2021	25th May 2021 (Nil up to 9th June, 9% between 10th and 24th June, 18% thereafter)	25th May 2021 (Nil up to 9th June, 9% between 10th and 9th July, 18% thereafter)
				May’21	25th June 2021	NA	25th June 2021 (Nil up to 10th July, 9% between 11th and 25th July, 18% thereafter)
GSTR-3B	Monthly	Regular, with turnover over Rs.5 crore	late filing fees have been waived if the returns are filed within 15 days post the due date and interest rate reduction	Mar’21	20th April 2021	20th April 2021 (Interest reduced to 9% until 5th May, and 18% thereafter)	Remains same
				Apr’21	20th May 2021	20th May 2021 (Interest reduced to 9% until 4th June, and 18% thereafter)	Remains same
				May’21	20th June 2021	NA	20th June 2021 (Interest reduced to 9% until 5th July, and 18% thereafter)
GSTR-3B	Monthly	Regular, with turnover up to Rs.5 crore	Interest rate reduction and late fee waiver	Mar’21	20th April 2021	20th April 2021 (Interest reduced to Nil until 5th May, 9% between 6th May and 20th May, and 18% thereafter) (late fee waived if the returns are filed on or before 30 days post the due date)	20th April 2021 (Interest reduced to Nil until 5th May, 9% between 6th May and 19th June, and 18% thereafter) (late fee waived if the returns are filed on or before 60 days post the due date)
				Apr’21	20th May 2021	20th May 2021 (Interest reduced to Nil until 4th June, 9% between 5th June and 19th June, and 18% thereafter) (late fee waived if the returns are filed on or before 30 days post the due date)	20th May 2021 (Interest reduced to Nil until 4th June, 9% between 5th June and 4th July, and 18% thereafter) (late fee waived if the returns are filed on or before 45 days post the due date)
				May’21	20th June 2021	NA	20th June 2021 (Interest reduced to Nil until 5th July, 9% between 6th July and 20th July, and 18% thereafter) (late fee waived if the returns are filed on or before 30 days post the due date)
GSTR-3B	Quarterly	Regular, with turnover up to Rs.5 crore who have opted for the QRMP scheme (Category X# states)	Interest rate reduction and late fee waiver	Jan-Mar’21	22nd April 2021	22nd April 2021 (Interest reduced to Nil until 7th May, 9% between 8th May and 22nd May, and 18% thereafter) (late fee waived if the returns are filed on or before 30 days post the due date)	22nd April 2021 (Interest reduced to Nil until 7th May, 9% between 8th May and 21st June, and 18% thereafter) (late fee waived if the returns are filed on or before 60 days post the due date)
GSTR-3B	Quarterly	Regular, with turnover up to Rs.5 crore who have opted for the QRMP scheme (Category Y## states)	Interest rate reduction and late fee waiver	Jan-Mar’21	24th April 2021	24th April 2021 (Interest reduced to Nil until 9th May, 9% between 10th May and 24th May, and 18% thereafter) (late fee waived if the returns are filed on or before 30 days post the due date)	22nd April 2021 (Interest reduced to Nil until 9th May, 9% between 10th May and 23rd June, and 18% thereafter) (late fee waived if the returns are filed on or before 60 days post the due date)
CMP-08	Quarterly	Composition	Interest rate reduction	Jan-Mar’21	18th April 2021	18th April 2021 (With Nil interest until 3rd May, 9% interest until 18th May, 18% thereafter)	18th April 2021 (With Nil interest until 3rd May, 9% interest until 17th June, 18% thereafter)
GSTR-4	Annual	Composition	Due date extension	FY 2020-21	30th April 2021	31st May 2021	31st July 2021
GSTR-5 GSTR-5A	Monthly	Non-resident taxpayers Taxpayers supplying OIDAR services	Due date extension	Mar’21	20th April 2021	31st May 2021	30th June 2021
				Apr’21	20th May 2021	31st May 2021
				May’21	20th June 2021	NA
GSTR-6	Monthly	Input Service Distributors (ISD)	Due date extension	Apr’21	13th May 2021	31st May 2021
				May’21	13th June 2021	NA
GSTR-7 GSTR-8	Monthly	Taxpayers required to deduct TDS Ecommerce operators required to collect TCS	Due date extension	Apr’21	10th May 2021	31st May 2021
				May’21	10th June 2021	NA
ITC-04	Quarterly	Goods sent or received to or from Job work	Due date extension	Jan-Mar’21	25th April 2021	31st May 2021

#Category X states: Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union Territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands and Lakshadweep.

##Category Y states: Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand, Odisha, the Union Territories of Jammu and Kashmir, Ladakh, Chandigarh and New Delhi.

Expectations from the 43rd GST Council meeting

More relief measures due to the COVID-19 pandemic

The GST Council is expected to consider multiple requests made by the state governments to reduce GST rates on various medical essentials to curb COVID-19, including to treat the patients.

As far as GST on vaccines is concerned, the fitment committee of the GST Council has recommended not to exempt GST on COVID-19 vaccines from the present rate of 5%. The fitment panel has argued that since vaccines were almost entirely procured by the central and state governments and provided free of cost to the public, the GST would eventually accrue to the Centre and states.

However, the fitment committee recommended reducing the GST rate on pulse oximeters, medical-grade oxygen, and oxygen concentrators to 5% from 12% until the end of July 2021. However, the GST rate reduction on COVID-19 testing kits to 5% is recommended till the end of August 2021.

Despite the demands for lowering GST rates on COVID-19 related drugs and medicines, the committee has not recommended as the COVID-19 treatment protocol was being altered based on new learnings.

Coming to the GST on oxygen concentrators, the Delhi High Court recently said that imposing a 12% Integrated GST (IGST) on oxygen concentrators received for personal use or as gifts is “unconstitutional”. The court also quashed Notification No. 30/2021-Customs dated 1st May 2021 issued by the Finance Ministry, stating that a 12% IGST will be levied on oxygen concentrators imported for personal use or gift.

The Council may consider accepting the judgment and extend the benefit considering the enormity of the pandemic situation, a life-saving measure and insignificant revenue loss.

Also, there may be a further extension in the deadlines of various GST compliances due to the extension in the lockdown period in several States till the first week of June 2021.

GST Amnesty Scheme for Small Taxpayers

The Council is likely to announce an amnesty scheme on late fee in GST return filing to provide a huge relief to small taxpayers and MSME’s in the country given the pandemic. The scheme is likely to cover all the pending GSTR-3B returns from July 2017 till April 2021. Also, the validity of this amnesty scheme could be from 1st June 2021 till 31st August 2021.

GST Rate Rationalisation for Certain Items

The Council may discuss bringing down the GST rate on two-wheelers which is currently 28%. It is projected to boost revenues that were impacted by the pandemic. With a rise in rural demand, as evidenced by increased tractor sales, any rate reduction would aid two-wheeler manufacturers in increasing sales through competitive pricing.

The GST Council may also take up the matter of levying GST on natural gas.

Furthermore, sources told IANS that natural gas could be included in a three-tier GST system, with prices varying depending on consumption. As a result, while residential piped natural gas (PNG) may be taxed at a lower rate of 5%, commercial piped natural gas may be taxed at the median rate of 18%, and car fuel CNG may be taxed at the maximum rate of 28%.

Fixing the Issues caused by the Inverted Tax Structure

Inverted tax structure correction is needed, particularly in sectors such as fertiliser, steel utensils, solar panels, tractors, tyres, electrical transformers, pharma, textile, cloth, and railway locomotives.

The term “inverted tax” applies to tax rates on inputs and capital goods that are higher than those on finished goods. This leads to a rise in products’ input credit claims getting blocked, as well as leads to a slew of administrative and regulatory issues.

While the duty on imported tyres is currently 10%, the inputs, such as rubber, are subject to a 20% duty. Solar modules, on the other hand, are duty-free, although their components are taxed at a rate of 5-10%.

Rework compensation shortfall & borrowing needs

Several states had urged Nirmala Sitharaman, the Union Finance Minister, to call a GST Council meeting as soon as possible to rework the compensation shortfall and borrowing requirement.

As economic uncertainty persists, states also want to explore extending the GST compensation question beyond July 2022 in the Council.

Several states have accused the federal government of failing to meet with the GST Council at least once a quarter, as required by the Constitution.