The GST Council is expected to hold its 40th GST Council meeting on the 12th of June 2020. This will be the first Council Meet after the outbreak of COVID-19. This pandemic situation has not only impacted the common man but also the Government of India in terms of revenue generation and GST collections which is currently hovering at an all-time low. The main focus of the upcoming council meeting will be on simplifying the filing processes and at the same time to optimize GST collections.
Everyone has their eyes on the upcoming GST Council Meeting. On the one hand, where the taxpayers are expecting various relaxations from the government? The government is aiming to enhance the GST Collections amidst the pandemic. We asked some industry experts and tax practitioners on their expectations from the 40th GST Council Meeting. Here is what they had to say:
1. Waiver of Late Fees on GSTR-3B returns?
The late fees on GSTR-3B is something that the taxpayers have been demanding for a very long time. The GST Council even made a press release in this regard, stating that the Council will address the issue of late fees on GSTR-3B Returns in its next meeting. "For the benefit of the traders the government shall waive off the late fees on GSTR-3B pertaining to the period August 2017 to January 2020." said Tax Practitioner Sanchit Agarwal. However, CA Tanya Gupta has a different argument she says, " It will be an injustice to the honest taxpayers. Providing them with the refund of the said fees in their electronic cash ledger will only help them to offset their tax liability which is completely against the taxpayers who filed their returns on time and duly complied with the laws."
2. No Natural Calamity Cess
It was in the grapevine that the GST Council may consider levying a natural calamity cess as the government is already losing on its GST Collection due to coronavirus pandemic. When we inquired CA(CS) Ujjwal Jindal about whether or not the issue will be taken up in the 40th GST Council Meeting. He said, “ The GST Council can make recommendations to the Union and the State for any special rate for a specified period to raise additional resources during any natural calamity (as stated in the Constitution of India).
The State of Kerala also levied Kerala Flood Cess in the year 2018 to cover the loss caused by the floods.
However, at this juncture, considering the present pandemic situation, introducing a natural calamity cess would be inimical for one and all.
The calamity cess would make the prices of the goods and services higher and further impact the already depressed sales.
Considering the above, if the government is still under pressure to implement the cess, in wake of low GST revenue, collections or alike, the rate of such cess should be in the 1-2% range.”
3. Extension of due dates to claim GST Input Tax Credit:
The Council in the 40th GST Council meeting shall also consider, an extension of the due date for claiming GST Input Tax Credit (ITC) for the financial year 2019-20 to March 2021. As per CGST Act, 2017 the due date to avail ITC for supplier invoices is earlier of the two -
- Filing of return for September month, or
- Filing of annual return for the FY 2019-20
The due date for claiming such ITC for 2019-20 is 20th October 2020 ( due date for filing GSTR 3B return for Sept 20). But due to the outbreak of COVID-19 the suppliers may not file returns on time and it is likely that due to the non-filing of returns by suppliers the ITC availment may get affected which is a loss to the taxpayer, said GST Expert CA Rohit Kumar Singh, Founder Taxmarvel Consulting Services LLP.
4. Exemption from capping of Input Tax Credit:
The Capping of ITC to the lower of :
- Actual appearing in the books of accounts, or
- Additional 10% over and above appearing in GSTR 2A for a particular month
This should not be implemented for 2020-21 since the businesses have been severely affected by Covid-19 and cash flows have seen a fall. Such matching may be done during filing assessment proceedings added CA Rohit Kumar Singh.
Miscellaneous Expectations from 40TH GST Council Meeting:
Along with the above point that might be taken up in the 40th GST Council Meeting. The government might also consider the following points said CA(CS) Ujjwal Jindal:
• Facility to allow payment of tax in the Electronic credit ledger in installments without levying any interest which is being demanded till the date of final set off from cash ledger.
• Temporary waiver of the condition for reversal of input tax credit (ITC) on damaged goods, lost goods, stolen goods, etc. (under section 17(5) of the CGST Act) during the period March 2020 to June 2020. This would provide some relief to the taxpayers.
• Issuing clarity on the availability of input tax credit (ITC) on masks, hand gloves, sanitizers, & other medical facilities, etc. provided to the employees, workers and staff during the ongoing pandemic situation.
• No increase in GST rates on non-essential products/services.
• Reduction in GST rates on essential items/services such as packed food items, tea, coffee, etc. is anticipated.
Let us know what are your expectations from the 40th GST Council Meeting?