Goods & Service Tax Council Meeting was held through Video Conferencing at 11 am, on 28th May, 2021in New Delhi and was chaired by the Union Finance Minister Smt. Nirmala Sitharaman. The Council meeting was attended by Shri. Anurag Thakur, Union Minister of State for Finance & Corporate Affairs along with the Ministry of Finance & Senior officers of States & UTs. This was the 1st Goods & Service Tax Council Meeting held in this fiscal year, as the last Council meeting was held in October last year.
As it was expected that issues related to Goods & Service Tax on essential medical supplies, compensation to states, compliance related relief for small and medium enterprises will be the main agenda at the meeting. Further, reducing Goods & Service Tax for two-wheelers & bringing Natural Gas into the ambit of GST was also likely to be announced. In this blog we will discuss key outcomes of 43rd GST Council Meeting.
Topics covered –
GST Exemptions on few Covid Supplies
As a relief measures for Covid-19, certain Covid Management Equipment’s like Medical Grade Oxygen, Oxygen Generators or Concentrators, Pulse Oximeters, Covid Testing Kits & Covid-19 Vaccines, etc., have been fully exempted from IGST, even if it is imported on Payment basis, for donating to the Government or to any relief agency on recommendation of State Authority. Earlier, Integrated Goods & Service Tax exemptions was applicable only when Covid related foods were free of cost imported, for free distribution. The exemption on imports of Covid supplies shall be valid up to 31st August, 2021. It may be noted that the Covid related goods are already exempted from Basic Custom Duty (BCD).
Imports of medicine for Black Fungus will also be given IGST exemption. The Council decided to constitute a Group of Ministers (GoM) to check further, if reductions are to be given to the Covid related Individual items. Group of Ministers shall have to submit its reports within 10 days i.e. before 8th June. Below are the major GST Exemptions recommended in 43rd GST Council Meeting:
- Reduced GST Rate from 12% to 5% on supply of Diethylcarbamazine (DEC) tablets.
- Clarification to the Services supplied to the Govt. Entity by the way of Construction of rope-way which attracts GST at the rate 18%.
- Clarification to the Services supplied by government to its Public Sector Undertakings by way of guaranteeing loans taken by such entities is Exempt from GST
Launching Amnesty Scheme with reduced late fees will provide huge relief to small businesses &small Taxpayers amid the pandemic. It will benefit around 89% taxpayers of Goods & Service Tax. The taxpayers can avail benefits of the scheme with reduced late fees& can file pending returns. Amnesty scheme will provide relief to the taxpayers &will cover all the pending Form GSTR 3B, since the launch of GST i.e. from July 2017 till the month of April 2021. To provide relief under the scheme, late fee for non-furnishing of GSTR 3B for the tax period from July, 2017 to April 2021 has been reduced as under-
- Late fee restricted up to maximum of 500/- (Rs 250/- each for CGST & SGST) per return for taxpayers, having NIL Tax Liability for the said period.
- Late fee restricted up to maximum of 1000/- (Rs 500/- each for CGST & SGST) per return for other taxpayers.
Note: reduced late fee would apply only if GSTR 3B returns from July 2017 to April 2021 are furnished between 1st June 2021 to 31st August 2021.
Late Fee Rationalization Scheme
To lower the burden of Late fee from small taxpayers, rationalization of late fee is imposed under Section 47 of the CGST Act, which is as follows:
All the proposals below are to be applicable for Prospective Tax Periods
- Late fee for delay in furnishing of Form GSTR 3B & GSTR 1
- Taxpayers who do not have any tax liability in GSTR 3B or Nil Outward supplies in GSTR 1, Late fee restricted up to maximum of 500/- (Rs 250/- each for CGST & SGST)
- For other than above taxpayers
- For taxpayers having Annual Aggregate Turnover in previous year up to 1.5 Crore, late fee to be restricted up to Rs. 2000/- (Rs 1000/- each for CGST & SGST)
- For taxpayers having Annual Aggregate Turnover in previous year from 1.5 Crore to Rs. 5 Crore, late fee to be restricted up to Rs. 5000/- (Rs 2500/- each for CGST & SGST)
- For taxpayers having Annual Aggregate Turnover in previous year is above 5 Crore, late fee to be restricted up to Rs. 10000/- (Rs 5000/- each for CGST & SGST)
- Late fee restricted up to maximum of 500/- (Rs 250/- each for CGST & SGST) per return for taxpayers, having NIL Tax Liability
- For other than above taxpayers, late fee to be restricted up to 2000/- (Rs 1000/- each for CGST & SGST)
- Late fee for delay in furnishing of Form GSTR-7 (Tax Deducted at Source)is reduced to 50/- Per Day (Rs. 25/- each for CGST & SGST) & Maximum up to Rs. 2000 (1000/- each for CGST & SGST).
Covid Relief for Taxpayers
- The council meeting has announced relaxations in filing GSTR 3B for May 2021 for both small & Large Taxpayers on same parameters as provided for April 2021
- Due Date Extended for furnishing GSTR-1/ IFF for the month of May 2021 by 15 days.
- Due Date Extended for furnishing GSTR –4 for FY 2020-21 to 31.07.2021.
- Due Date Extended for filing ITC-04 for Quarter Ending March 2021 to 30.06.2021.
- Cumulative application of Rule 36(4) for availing Input Tax Credit for tax periods April, May and June, 2021 in the return for the period June, 2021.
- Allowing filing of returns by companies using Electronic Verification Code (EVC), instead of Digital Signature Certificate (DSC) till 31.08.2021.
- 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 up to 30th June, 2021, subject to some exceptions
Rationalization of Annual Return Form
- Amendments in Section 35 and 44 of CGST Act made through Finance Act, 2021 to be notified. This would ease the compliance requirement in furnishing reconciliation statement in FORM GSTR-9C, as taxpayers would be able to self-certify the reconciliation statement, instead of getting it certified by chartered accountants. This change will apply for Annual Return for FY 2020-21.
- The filing of annual return in FORM GSTR-9 / 9A for FY 2020-21 to be optional for taxpayers having aggregate annual turnover up to Rs 2 Crore;
- The reconciliation statement in FORM GSTR-9Cfor the FY 2020-21 will be required to be filed by taxpayers with annual aggregate turnover above Rs 5 Crore.
Goods & Service Tax Compensation Cess
A special Session on Goods & Service Tax Compensation Cess will be held before 22nd July 2021.
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Expectations from the 43rd GST Council Meeting