35th GST Council Meeting

Union Finance Minister Nirmala Sitharaman held her first GST Council meeting on 21^st June 2019. Nirmala Sitharaman has been appointed as the new finance minister in this 2^nd term of the Modi Government and stepped into the shoes of the former Union Finance Minister Arun Jaitley who opted out of the ministerial position in a new government on health grounds. There were speculations that the Council in its 35^th meeting under the new Finance Minister would consider cutting Goods and Service Tax (GST) on electric vehicles to 5% from 12%. However, the Council didn’t reduce the tax rate and held the matter shall be forwarded to the fitment committee for additional consideration.

The other topics that were discussed in the GST Council meeting were tax evasion issue, an extension of the tenure of the National Anti-profiteering Authority, electronic invoices system, the revenue position of states, the new return filing system, setting up an appellate tribunal for north-eastern states and another one for all Union Territories (UTs)

The 35^th GST Council meeting on 21^st June extended the date for filing annual returns under the Goods and Services Tax (GST) regime through 2 months to 30^th August. The Council likewise decided to present a new one-form new GST return filing system, which shall be applicable from 1^st January 2020. The GST Council, which has been directed by the Union Finance Minister Nirmala Sitharaman, additionally approved an electronic invoicing system as well as e-ticketing in cinemas.

The GST Council likewise has made simple the registration procedure by allowing the utilization of Aadhaar by businesses for registering with GST-Network.

"One of the significant changes that the council has made is simplifying the GST registration. In the previous system, individuals needed to give various documents. Presently the GST Council have decided to utilize Aadhaar. Through using Aadhaar, many advantages shall take place to the business. The individual who is applying could go online, by utilizing his Aadhaar number through OTP authentication he could register himself on the GSTN portal as well as get GSTN registration number.

The highlights of the decisions announced by the GST Council on the 35^th meeting:

1. The due date for filing GSTR-9, GSTR-9A, as well as GSTR-9C for the Financial Year 2017-18,  was extended by two months, till 31^st August 2019.
2. Simplified the current procedure of GST registration and lessen the paperwork involved, GST Council has given directed towards a new system for verification of taxpayers registering themselves under GST. Aadhaar number would be linked towards the GSTIN while generation.
3. The Council also extended the tenure of the anti-profiteering authority by 2 years. The anti-profiteering authority manages the complaints by consumers against corporations for not passing on GST rate cut benefits. The tenure of the National Anti-profiteering Authority (NAA) was due towards the end by 30^th November 2019. GST Council thus extended this tenure by 2 years, for enabling it to take up the pending matters. Subsequently, the authority could take up new cases in future because of the rate cut issues, representing that the GST Council has plans for additional rationalization of GST rates.
4. It likewise approved the imposition of a penalty of up to 10% on entities not passing on advantages of GST rate cuts towards the consumers. GST Council has approved a levy of 10% penalty for delay in depositing the profiteered amount by above 30 days. This is a reasonable measure that shall support timely compliance by the taxpayers.
5. The proposal to lessen the GST rate on electric vehicles to 5% from the present 12% has been sent towards the fitment committee. The decision to cut GST rates for electric vehicles as well as electric chargers was postponed to the next Council meeting. The matter was referred to the Fitment Committee for checking the feasibility of the rate cut. Presently, the GST rates for electric vehicles, as well as electric chargers, are 12% and 28% respectively.
6. Moreover, the valuation rules for products and services relating to solar power generating systems as well as wind turbines shall be placed before the next Fitment Committee. The proposals made by this Committee shall be placed before the next GST Council meeting.
7. The earlier council meet had not scheduled the rate cut matter for lotteries. The 35^th GST Council meeting talked about the issue finally and furthermore brought light to two pending matters before the high court as well as Supreme Court respectively. Even though the courts had referred the issue back to GST Council, the Council has chosen to consult the Attorney General of India.
8. The new system for raising each tax invoices on the GST portal has received in-principle approval for execution from 1^st January 2020. This is applicable to only B2B invoicing. Through this system, no separate e-way bill shall be necessary in case of e-invoice. The returns shall be framed from these e-invoices. A phased execution is being worked out.
9. Previously, the government had fixed Rs 50 crore as the limitation for the applicability of e-invoicing.
10. Amongst other vital decisions, the GST Council has also approved the electronic ticketing system, for cinemas, having multi-screens. This shall help to curb cases of tax evasion as well as the utilization of black tickets that were prevalent.
11. The GST council additionally stated the Goods and Service Tax Appellate Tribunal shall be the appellate authority and would adjudicate on appeals emerging from central as well as state tax authorities’ in-house dispute resolution system. The States would choose the number of GSTAT requisite by them because of which there could be two tribunals in a single state.
12. ITC-04 for July 2017- June 2019 has been extended to 31 August 2019
13. CMP-02 for opting into the composition scheme for service providers under Notification 2/2019-CT rate has been extended to 31 July 2019
14. The law also stated that where the GST returns in GSTR-3B/ GSTR-4 is not filed for two consecutive tax periods, e-way bill generation for such taxpayers shall be disabled. This would be brought into effect from 21^st August 2019, in place of the previously notified date of 21^st June 2019.

The few expectations from 35th GST Council Meeting

• GST Annual Return in form GSTR-9 - extension in filing

Preparation of GSTR-9 needs important effort and thus its filing should be simple. Taxpayers are still confused about this form and facing issues when filing GSTR-9. Thus it is expected that GST Council might extend due date of Filing GSTR-9 for Financial Year 2017-18.

• Suggestion for extending the tenure of NAA

The two-year tenure of National Anti-profiteering Authority (NAA) which was ending on 30^th November 2019 might be extended by one more year till 30^th November 2020.  Though, the final call would be taken by the GST Council.

• The applicability of e-invoicing

GST Council might put a turnover threshold for the organizations occupied in business-to-business (B2B) sales for curbing GST evasion. It is expected that GST Council meet might recommend Rs 50 crore turnover threshold for organizations to generate e-invoices for B2B sales on a centralized portal following which the organizations with a turnover of above Rs 50 crore will get a release from double of uploading invoices.

• E-way bills could be checked through the RFID tagging mechanism

In a move towards checking evasion, the Council will discuss on the suggestion of integration of e-way bill with NHAI’s FASTag mechanism from 1^st April 2020. Such integration shall help in finding the location of the vehicle and when and how often it has crossed NHAI’s toll plazas as well as limit transporters from doing multiple trips by generating a single e-way bill.

• Rate revision on the products falling under the highest tax slab of 28%

Furthermore, the GST Council might put forward a rate revision on the products falling under the highest tax slab of 28%, which is probably going to benefit retail clients. There is a probability of a rate revision is on automobile items which are at present taxed at 28% under the GST regime.

There shall be talks for revising the GST rate on electric vehicles from 12% to 5% for boosting sales. Likewise, the rate for electric charger might be decreased from the present 28% to 18% is on the agenda. GST rate for Hybrid vehicles also would experience a cut.

GST Council, in its previous council meetings, has set up committees for dealing with the concerns of taxation of lotteries and other items. A decision requires to be taken to rationalize the taxing the state-run lotteries as well as private players.

Taxation of solar projects is one more major area to look forward towards in the agenda. The automobile sector which is eager to be benefited from a GST rate cut from the maximum 28%. Presently, this sector is having a slow movement in sales and a rate cut shall assist it in recovery.

GST Council might also consider levying GST on a few products which was been left with no GST rates. One such highly expected item is ENA, also recognized as extra-neutral alcohol utilized as input in the manufacturing of whiskey, gin, country liquor, etc.

Also, the upcoming GST Council meeting might hold the discussions on fixing GST rates on petroleum products and natural gas.

GST Council has a suggestion for introducing e-ticketing for cinemas. Furthermore, the GST Council shall decide on setting up GST Tribunal in States.

Conclusion

GST Council has a lot of work to do which includes simplification of GST Rules, rationalization of GST rates and bringing more products in the range of GST amongst others.

Author:

eStartIndia Team