Recommendations of 39th GST Council Meeting

In order to the resolve the issues being faced by the stakeholders w.r.t. GST in their routine business dealings, the GST council conducted its 39th meeting in New Delhi on 14 March 2020. In the meeting, the council took various decisions for the benefit of its stakeholders such as government, taxpayers, professionals etc.

In this regard, the press information bureau has issued multiple press releases on 14 March 2020 incorporating the recommendations made in the meeting by the GST council.

The key recommendations made by the council are as follows:

I. Recommendations on Law and Procedure:

1. Interest on delayed payment - The interest on delay in payment of GST shall be charged on the net cash tax liability w.e.f. July 01, 2017 (law to be amended retrospectively to enable this aspect).

2. Annual Return and Reconciliation Statement - Certain relaxations have been recommended in respect of furnishing of the Annual Return and Reconciliation Statement in Form GSTR-9 & 9C respectively which are as under:

• Relaxation from furnishing of Form GSTR 9C for the FY 2018-19, for taxpayers having aggregate turnover below INR 5 crores;
• Due Date for filing the Form GSTR-9 & 9C for the FY 2018-19 to be extended till June 30, 2020 (earlier the due date was March 31, 2020);
• Late fee for delay in filing of the Form GSTR-9 & 9C to be waived for FY 2017-18 and FY 2018-19 for taxpayers having aggregate turnover less than INR 2 crores.

3. Deferment of E-invoice and QR code – The GST council has proposed an extension for the e-invoicing mechanism and has also sought to provide certain sector specific exemptions which are as under:

• The date for implementation of e-invoicing and generation of QR code to be extended to October 01, 2020 (earlier the e-invoicing mechanism was set to be introduced w.e.f. April 01, 2020)
• Certain class of registered persons (insurance company, banking Company, financial institutions, non-banking financial institutions, GTA, passenger transportation services etc.) to be exempted from issuing e-invoices or capturing dynamic QR code

4. Existing return system - The existing system of Form GSTR-1 and Form GSTR-3B to be continued till September, 2020. (earlier the simplified return system was to be introduced w.e.f. April 01, 2020)

5. Other recommendations:

E-wallet scheme - Extension of the time limit to finalize e-wallet scheme upto March 31, 2021

Imports- Present exemptions from payment of IGST and Compensation Cess on imports made under AA/EPCG/EOU scheme to be extended till March 31, 2021.

Issuance of clarifications in respect of:

• Apportionment of Input Tax Credit in cases of business reorganization under Section 18(3) of CGST Act
• filing of appeals during non-constitution of the Appellate Tribunal,
• refund related issues
• special procedure for GST registered persons who are corporate debtors under IBC, 2016 and are undergoing CIRP.

Proposed amendments in the CGST Rules:

• to lay down the procedure of reversal of Input Tax Credit in respect of capital goods party used for affecting taxable supplies and partly for exempt supplies under Rule 43(1)(c)
• fixation of upper ceiling for the value of export supply for the purpose of calculation of refund on zero rated supplies
• to allow for refund to be sanctioned in both cash and credit in case of excess payment of tax
• to provide for recovery of refund on export of goods where export proceeds are not realized within the time prescribed under FEMA etc

II. Recommendations on GSTN systems:

Earlier due to technical unpreparedness the GSTN had given away the idea of linking the Form GSTR-1 and Form GSTR-3B which leads to the problem of tax evasion and gaming of the system. To resolve this problem, it is finally proposed to link these two returns wherein

• The details of outward supplies in Form GSTR-1 will be linked with the liability declared in Form GSTR 3B and
• The amount of Input Tax Credit declared in Form GSTR 3B will be linked to the details of the supplies reflected in Form GSTR 2A.

The above suggestions are expected to be implemented by July 31, 2020.

Rate related changes:

• GST rate on Mobile Phones and specified parts increased from 12% to 18%
• GST Rate on Maintenance, Repair and Overhaul (MRO) services in respect of aircraft has been proposed to change from 18% to 5% with full ITC and to change the place of supply for B2B MRO services to the location of recipient.
• GST rate on all types of matches, whether Handmade or other than Handmade, is proposed to fix at 12%.

The rate related suggestions are expected to be notified on 01 April, 2020.

The author can also be reached out at lakshit.jindal.921@gmail.com.