38th GST Council Meeting Update
The Union finance minister along with the state finance ministers had taken certain vital decisions relating to the GST annual return filing, GSTR 1 penalty as well as missing invoices ITC in the 38th GST council meeting.
GST Council Meeting Update
• The date for filing of GSTR 9 and GSTR 9C for Financial Year 2017-18 has been extended till 31st January 2020.
• A taxpayer who had failed to file GSTR 1 since July 2017 shall not be penalized if they file GSTR 1 by 10th January 2020.
• The input tax credit has been restricted to 10% (presently 20%) relating to the invoices not been uploaded at the GST portal through the vendor.
• The due date extension relating to the GST returns for some North Eastern States (November 2019) has been extended till 31st December 2019.
• The GST Council had imposed a uniform rate of 18% from earlier 12% on bags belonging towards HSN code 3923/6305 from 1st January 2020 (woven as well as non-woven bags and sacks of polythene or polypropylene strips or similar, whether or not laminated, of a kind utilized for the packing of goods which includes FIBC). It effectually removes the inverted tax structure.
• The Minister of State for Finance Anurag Thakur along with finance ministers from other states and union territories had presented with Finance Minister Nirmala Sitharaman at the ongoing GST meeting.
• The GST Council can decide on measures to shore up the loss in tax revenue. Earlier in a meeting with senior tax officials, the Finance Ministry had stated a monthly GST revenue target of 1.1 lakh crore for the next 4 months. Out of these 4 months, one month requires a have tax collection amounting towards 1.24 lakh crore, which has been told to the tax officials by the revenue secretary Ajay Bhushan Pandey. However, depending on this development, the GST Council can take measures to make certain better compliance, simple return filing, and curbs to tax evasion.
The other main highlights are;
• Late fee waiver on GSTR-1 by means of amnesty scheme:
The waiver of late fee for GSTR-1 for tax periods amid July 17 and November 19, in case it has been filed by 10th January 2020. In case the taxpayer doesn’t file for more than two following tax periods, then e-way bills of such taxpayer shall be blocked from generation.
• Standard Operating Procedure (SOP) for non-filing of GSTR-3B defined for taxman:
The SOP shall be released for the benefit of tax officers relating to the actions taken for the non-filing of GSTR-3B. These would assist in blocking or reversal of fake ITC availed.
• The GST Council had decided to impose 28% tax on all lotteries
Opts for voting towards concluding the matter
Date of applicability is 1st March 2020
Prior, GST rates on lottery schemes were:
1. State-owned – 12%
2. State-authorized – 28%
• GST exemption for the industrial land developers:
Supply must be a long-term lease of industrial or monetary infrastructure plots. The Central or State Government holds 20% or above share in the developer’s capital from the earlier share of at least 50%. The exemption shall be applicable from 1st January 2020.
• Other Decisions:
Amendments towards the GST law shall be considered in the Union Budget 2020-21. Grievance Redressal Committees (GRC) shall also be constituted at the Zonal/State level in the direction of addressing grievances of the specific/general nature of individuals.
38th GST Council Meeting Expectations are stated below:
Simplification of the forthcoming New GST Returns system
The Finance Ministry had held discussions with many stakeholders recently relating to the feasibility and workability of the new return system. The Ministry also considered the developments which have been made towards building the new system on the GSTN portal. The most current one was the GST Feedback Diwas that was conducted on 7th December 2019 in order to receive nationwide feedback on the new GST returns.
There are some procedural difficulties foreseen in the new GST returns like frequent matching as well as tracking of invoices. It is been expected that the new return format, as well as the filing procedure, could be further modified for the benefit of taxpayers.
The review of GST compensation towards the States
The GST Council might also consider the revenue position on this 38th GST meeting. There is a constant fall in revenue for the last few months of the existing financial year. Furthermore, the unnecessary delay by the Central Government in order to pay off its states with the compensation cess over the past 4 months had been the most vital agenda in this upcoming GST Council meeting. Though numerous producing States are losing out revenue, and such states are proposing an alternative mechanism towards cess for compensation. Furthermore, many states like Chattisgarh had requested for the extension of the period of compensation from 2021-2022 to 2026-27.
Many problems arising because of the inverted tax structure that shall be discussed in the meeting
The GST Council is likely to correct the inverted tax structure on a long plan in the upcoming 38th ST Council meeting. It comprises fabric bags, solar modules, railway locomotives, fertilizers, steel utensils (output tax rate varying amid 5-12%) in whose cases the inputs are taxes generally at 18%.
Restructuring of the slabs of the GST tax rate
It has been speculated that there would be another major rearrangement to be done in GST rates in the forthcoming GST meeting. It is likely that the five slab structure would be brought down towards three slabs through a rise in rates, particularly from the 5% tax rate up to a maximum of 9-10% as well as the removal of a 12% tax rate. Furthermore, some items which have been exempted or nil rated might make a comeback under the restructured tax net.
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