42nd GST Council Meeting Updates

42nd GST Council Meeting Updates
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42nd GST Council Meeting Updates

 

42nd GST Council Meeting was held on Monday,05th October 2020. The virtual meeting was held under the chairmanship of Finance Minister Nirmala Sitharaman. The last GST Council Meeting i.e 41st GST Council Meeting which was held on 27th August 2020. It was a one agenda meeting and there is still a deadlock on the issue of compensation which is to be paid to states by the Centre. It is likely that the issue will be again discussed on 12th October 2020.

In the meantime,

  • Centre has released the compensation of Rs 20,000 crores to States on 5th October 2020 for the loss of revenue during 2020-21.
  • Centre is also expected to release an amount of Rs 25,000 crores towards IGST which was incorrectly distributed earlier and it relates to 2017-18.
Meeting42nd GST Council Meeting
Date Monday, 05th October 2020
ChairpersonFinance Minister Nirmala Sitharaman
VenueNew Delhi via Video Conferencing
AttendeesFMs  & Senior Officers from all the States & UTs.

The GST Council Meeting through video conferencing was attended by Finance Minister Nirmala Sitharaman, Minister of State for Finance Anurag Thakur and Finance Ministers from all the States and Union Territories and Some Senior Officials from all the States and Union Territories.

GST Council comprises of Union Finance Ministers and State Finance Ministers which is the federal decision-making body for the matters of GST.

Major outcomes from 42nd GST Council Meeting
Taxpayers having annual aggregate turnover less than Rs 5 Crores

⊗ Form GSTR 1 needs to be furnished within the 13th of the month succeeding the quarter (Currently it is the 30th of the month succeeding the quarter).

Note: Quarterly GSTR 1 shall be mandatorily furnished before quarterly GSTR 3B. w.e.f. 1st January 2021. It is likely that the due date is revised so that liability and input tax credit can auto-populate in GSTR 3B. 

⊗ Form GSTR 3B will be furnished quarterly (Currently GSTR 3B needs to be furnished monthly along with payment of tax). The due date may be the same as other taxpayers as it is not mentioned in the press release. Tax liability will auto-populate in the quarterly GSTR 3B based on the quarterly GSTR 1 filed by the taxpayer. w.e.f. 1st January 2021.

Note: The return in Form GSTR 3B needs to be furnished quarterly but the tax payments would be done monthly only.

Note: Input tax credit will auto-populate in the quarterly GSTR 3B based on the GSTR 1 filed by the suppliers and GSTR 2B. w.e.f. 1st April 2021.

⊗ Auto-generated challan: Tax liability shall be discharged MONTHLY through an auto-generated challan. For the first two months of the quarter, taxpayers will have to pay at least 35% of the net cash tax liability of the previous quarter. And the remaining tax liability shall be settled while furnishing the quarterly return GSTR 3B.

Note:  In my opinion, this would not reduce the burden of compliance for small taxpayers but this will create more problems.  For e.g. Will the auto-generated challan be editable?  Late fees, interest on tax will be calculated from the payment date or return date? 

⊗ 4-digit HSN for goods & SAC for services needs to be declared in invoices and FORM GSTR 1 w.e.f 1st April 2021

Note: Currently, taxpayers having annual aggregate turnover up to Rs. 1.5 Crores are not required to declare HSN for goods & SAC for services. The same shall process shall continue up to 31st March 2021.

Note: Currently, taxpayers having an annual aggregate turnover of more than Rs. 1.5 Crores but up to Rs 5 Crores are required to declare a 2 digit HSN for goods & SAC for services. The same shall process shall continue up to 31st March 2021.

Note: It is mandatory to declare 8 digit HSN/SAC codes in case of exports and imports irrespective of the type of taxpayer. Government reserves the power to notify the class of supplies (goods or services) for which 8 digit HSN/SAC code should be mentioned in the invoice and GSTR 1.

Taxpayers having annual aggregate turnover more than Rs 5 Crores

Form GSTR 1 shall be mandatorily furnished before Form GSTR 3B. w.e.f. 1st January 2021.

Form GSTR 3B will have auto-populated tax liability based on the monthly GSTR 1 filed by the taxpayer & auto-populated input tax credit based on GSTR 1 filed by the suppliers and GSTR 2B. w.e.f. 1st January 2021

⊗ 6-digit HSN for goods & SAC for services needs to be declared in invoices and FORM GSTR 1 w.e.f 1st April 2021

Note: Currently, taxpayers having an annual aggregate turnover of more than Rs. 5 Crores are required to declare a 4-digit HSN for goods & SAC for services. The same shall process shall continue up to 31st March 2021.

Note: It is mandatory to declare 8 digit HSN/SAC codes in case of exports and imports irrespective of the type of taxpayer. Government reserves the power to notify the class of supplies (goods or services) for which 8 digit HSN/SAC code should be mentioned in the invoice and GSTR 1. 

Nil FORM CMP-08 through SMS

The facility to furnish Nil GSTR 1 and Nil GSTR 3B through SMS was extended to regular taxpayers earlier. To accommodate a similar request from composition taxpayers it is likely that amendment shall be made to the CGST Rules & Forms wherein provision for furnishing Nil GST CMP 08 through SMS can be included.

Note: Expected date of such an amendment is not mentioned in the press release.

Levy of Compensation Cess 

The transition period to meet the revenue gap is likely to be extended beyond June 2022. Initially, when GST was rolled out a five-year period was determined for levy of compensation cess.

Note: Extension in the period of levy of compensation cess would require amendment in the Constitution. Clarity on the period and other details are still to be worked out by the Government.

GST refund shall be disbursed only in the validated bank account which is linked with PAN and Aadhar of the registrant.

Satellite launch services supplied by ISRO, Antrix Corporation Ltd. & NSIL would be exempted to encourage the young start-ups to launch satellites.

Note: The recommendations/decisions of the GST Council shall be effective only when notifications/circulars are issued through the Official Gazette. 


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CA Ankita Khetan
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