New GST rates effective from 01 April 2020

The 39th GST Council meeting took place on Saturday, 14 March 2020, at Vigyan Bhawan, New Delhi. The Union Financial Minister Nirmala Sitharaman chaired this meeting and made decisions on specific crucial issues under GST.

This article covers the following topics:

1.Highlights of the 39th GST Council Meeting

2.Expectations of 39th GST Council Meeting

Highlights of the 39th GST Council Meeting


1.Postponement of the new GST return system and electronic invoicing

The accomplishment of the new GST return system has been postponed to 01 October 2020. And the execution of e-invoicing and the QR code has been deferred to 01 October 2020.The current GST return system GSTR-1, GSTR-2A & GSTR-3B will be sustained up to September 2020.


2.What are the changes in the GST rates?

The rate changes are valid from 1 April 2020


3.Interest on delayed payments

Now, the enthusiasm for deferred GST payment will be calculated on the net tax liability. This amendment will apply retrospectively from 01 July 2017.


4.Extension of deadline for GSTR-9 and GSTR-9C

The GSTR-9 and GSTR-9C limit is extended to 30 June 2020 for Financial Year 2018-19. Moreover, the business limit will increase from INR 2 crore to INR 5 crore for compulsory annual return filing. Hereafter, filing GSTR-9C is optional for the taxpayers having a turnover less than INR 5 crore.

The taxpayers with a cumulative annual turnover of less than INR 2 crore in Financial Year 2017-18 and Financial Year 2018-19 will not pay any late fee for delayed filing of GSTR-9.


5.A new scheme launched “Know your supplier.”

A new scheme is known as ‘Know your Supplier’ has been announced so that the taxpayers are informed about the essential particulars of the suppliers with whom the transaction or business is to be conducted.


6.Waiver and extension of the due date

The GSTR-1 for 2019-20 will be surrendered for individual taxpayers who could not opt for the unusual composition scheme (Notification No. 2/2019-Central Tax (Rate) Dated 07 March 2019) by filing up the Form CMP-02.

The due date for Form GSTR-3B for July 2019 to January 2020 is to be extended till 24 March 2020 for taxpayers with the primary place of business conducted in the Union Territory of Ladakh. Likewise, a similar extension is recommended for Form GSTR-1 and Form GSTR-7.


7.Amendment in the revocation of cancellation

Taxpayers who have canceled their GST registration till 14 March 2020 can apply for the discharge of the removal of registration. The web portal to fill this application is available until 30 June 2020. The allowance is a one-time measurement to facilitate those who want to continue their business activity.


8.Other relevant decisions are taken

  • Mr. Nandan Nilekani, Infosys chairmen, is to present a progress report stating the updates about the GST IT systems that will be used at the next three GST Council meetings.

  • The time limit for the finalization of the e-Wallet scheme for consumers is extended until 31 March 2021.

  • A particular GST procedure was prescribed during the CIRP period for the GST registered corporate who are undergoing insolvency/resolution procedures under IBC Code, 2016.

  • A transition plan is laid down till 31 May 2020 for the taxpayers of Dadra and Nagar Haveli and Daman and Diu, due to the merger held in January 2020.

  • A refund claim can now be handled in bulk for the advantage of the exporters.

  • Current IGST and cess exceptions on the imports made under the AA/EPCG/EOU schemes will continue up to 31 March 2021.


What were the expectations of the 39th GST Council Meeting?

The expectations were as follows-

  • The decision to submit the applicability of the electronic invoice system The GST Council will consider prolonging the date of executing the automated invoicing system by three months. It is also said that it may be made applicable from 01 July 2020 as against the earlier time of 01 April 2020.GSTN can also be able to provide improved solutions as well.

  • Progressing the new GST return system in April 2020 As per the latest development on 07 March 2020, taxpayers are facing many practical difficulties that are on the GST web portal. They have controlled the GSTN to provide Infosys a chance to fix the system. Provided that the government wants to fix the present GST return system sooner, it seems to be looking to stabilize the current system termination in March 2020. Furthermore, the annual GST returns filing facility will be on focus until 31 March 2020. On the last hand, the CBIC and tax officers are progressively concerned about the number of tax evasions and are looking into the means for its anticipation. All these have led to the theories that the new GST return system might be pushed further by a month or two.\

  • Interest charged on delayed GST payment The determination of interest charge is now on the net liability, as opposed to gross debt, but applies prospectively. Many tax specialists and small taxpayers are dissatisfied with the move, requesting the government to make this a retrospective change since July 2017.

  • Notices for FY 2017-18 and FY 2018-19 are Relaxed from the penal consequences. There have been various situations where the GST notices have been sent out for wrongful tax credit claims and non-payment of interest on delayed GST payment. In some cases, the stretched due dates in the previous periods have not been taken into consideration while sending out the notices. Bearing in mind that the first two years of GST were mostly not stable for taxpayers, giving them recreations will help them to accept less damage. Hence, any late fees reduction will help them prepare for improved compliance in future periods.

  • GST rate change in structure and hike in rate speculated It was guessed in the previous GST Council meeting that the five-year slab structure would be brought down to three slabs by carrying out a significant rate regime. The 5% tax rate will be climbed up to a maximum of 9-10%, and the 12% tax rate will be deleted. The GST Council has established a revenue monitoring committee to look into the achievable solutions for increasing the GST collections. In furtherance to these, certain items that were exempted or nil rated may be added back in the net calculation. The GST Council has begun correcting the cases of inverted tax structure prevalent for specific items and areas. In the 38th GST Council meeting, GST on knitted and non-knitted bags was increased from 12% to 18%. More details such as mobiles, textiles, solar modules, railway locomotives, fertilizers, steel utensils (whose output tax rate ranges between 5-12%) are expected to undergo the rate corrections. However, no significant rate changes can be expected in the current scenario.

  • Miscellaneous expected States will be pushing the center to resolve the compensation matter, who are most likely to demand full compensation for the fiscal year. Hence, lengthy discussions are predictable in the room. The GST Council will be discussing the measures to toughen and build a reliable GST system beside tax evasions. The previous GST Council meeting was settled on 18 December 2019, where a significant decision was made to defer GSTR-9 and 9C for the first two years of GST.

Conclusion

The GST Council will consider prolonging the date of executing the automated invoicing system by three months. It is also said that it may be made applicable from 01 July 2020 as against the earlier time of 01 April 2020.

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