40th GST COUNCIL MEETING AMID COVID-19

Amid the unlocking 1 of lockdown among the nation the GST Council concluded its 40th meeting on 12Jun 2020 under the chairmanship of the Union Finance Minister Mrs. Nirmala Sitharaman, and along with studying effects of the lockdown in India and certain significant decisions were made with a view to give relaxations to ease the compliance burden of the businesses and finding ways to increase collections and fulfilling prescribed compensation to the states.

It was also acknowledged that the GST collections were also gone down by up to 45% of the total collections further increasing the concern of compensating the States for which a separate meeting will be held in the month of July. Other than that, the following were the key decisions made in the GST council meeting-

1.    Relaxations in late fees on the late filing of GST Returns –

Consequently, it has been decided that the Government will give relaxations in the late fee payments to the assesses to the maximum limit of rs.500 only earlier which was higher to the amount of 10,000. Therefore, the following changes have been announced-

a.    Assesses having no tax liabilities between July 2017 and January 2020 but have not filed any GST returns will not be required to pay any late fee.

b.    For people who have certain tax liability between the prescribed time period, the maximum late fee for not filing GSTR-3B  returns has been set up to a maximum limit of Rs.500/-

c.    The companies who haven’t filed GST Returns since Jan 2017 but do not have any GST liability will not be charged any late fee for not filing the return.

d.     But, the companies who have a certain tax liability to pay off to the Government will now be required to pay a late fee of Rs.500 per month, per return which is quite lower than earlier which was  10,000. Now, the assesses will be required to submit GST Returns till Sept 30.

2.    Waiver in Interest Payments-

It was also pronounced by the Union FM that owing to the situations created by COVID-19 pandemic, there will be a reduction in interest rates from 18%(earlier) to the new rate 9% on the late return filings by small taxpayers having a turnover up to 5 crores if the returns of inward supplies are filed till September30th.

Further, such interest and fee payments will be waived for the months of May, June & July, where the returns are filed duly by September 30, 2020.

3.     Extension in Dates to Renew Registration-

The taxpayer assesses whose registration has been canceled due to any default will be able to file for renewal of GST registration up to the date of June 12, 2020, over the one- time extension being offered till September 30, 2020.

4.    Rate Rationalization- 

Taking care of the fact that any increase in the rate of any commodity or service may depress the economy further and decrease in rate may further the collections required to maintained in the Government coffers, it was decided to postpone the rate considerations at a later date. It was also recognized that there is a need to correct the inconsistency in the taxation policy related to textiles, footwear, and fertilizer and their raw materials but the final decision was left to be discussed later in the next meeting. Accordingly, we can expect changes happening in the taxation of which the fertilizers, footwear, and raw materials in the near future.

5.    Compensation Cess to States-

It was further admitted that severe shortfall (up to 45%) in the GST collections happened despite the fact that the Centre released Rs.36,400 Crores to states as compensation cess for the period of December to February 2019-20 while the states are facing a shortage of funds and have requested the GST council to raise money through market borrowings. 

For now, the total compensation prescribed to be given to the states is about 1.51 lakh Crores whereas funds amounting nearly 12,500 crores still are left to be allotted to the states for the month of March. However, a clearer picture will come after the final figures will come in the month of July.

Author:

eStartIndia Team