Highlights of 40th GST Council Meeting
GST Council Recommendations on Policy & Procedure
The 40th Goods and Services Tax Council meeting was held on June 12, 2020, chaired by the Minister of Finance and Corporate Affairs, Nirmala Sitharaman. The Council proposed relief steps for MSMEs, extensions to postpone GST registration termination, and elimination of late fees for GSTR3B late filing among other announcements. Owing to the Covid-19 crisis, these decisions aimed to alleviate the pressure of companies facing challenges. Here are the GST Council Meet ‘s highlights.
Late fee waiver for past returns
The Council announced a reduction in GSTR3B ‘s late filing and payment fee for the tax period July 2017 to January 2020. This was announced to speed up pending GSTR3B return filing. Generally, the late GSTR3B filing fee is $100 per day per Act viz. Almost 100 a day for SGST and CGST and a maximum of 5,000 could be paid as a late fee, but the Council reduced the late fee to a maximum of 5,500. If the taxpayer submits a Nil return, a late fee will no longer apply. This reduced limit will only apply if the taxpayer files their GSTR3B return between July 1 , 2020 and September 30 2020.
More relief for small taxpayers for late filing February, March & April 2020
The Council approved a cut in interest rates for late returns for the month of February, March and April 2020 for taxpayers falling under the category of small taxpayers. Taxpayers whose total annual turnover for the preceding financial year amounted to 5 crores. The interest on late filing is typically 18 percent annually and is measured from the stated deadline to the date the returns are furnished. But in a move to reduce the burden on small taxpayers, the Council proposed a cut in interest rates from 18% to 9% for late furnishing of returns within defined dates (staggered to July 6, 2020). Nutshell, small taxpayers will not be paid interest until the informed relief dates and will instead be paid 9 percent interest on late filing of GST returns until September 30 2020.
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Post-tax relief for small taxpayers May, June & July 2020
The Council made further announcements to help fight small taxpayers stay alive during the COVID-19 pandemic and subsequent shutdown. The late fee and interest was waived for delayed filing of GSTR3B for May, June and July 2020 supplies, provided they are furnished by September 30 2020.
A one-time extension of time to request cancelation of registration
The Council approved a one-time extension for pursuing revocation of GST registration cancellation. As such, taxpayers who have been unable to restore or cancel their GST registration cancelation due to the lockdown or any other reason can file a request for cancelation of GST registration by September 30 2020. However, this extension only applies to registrations canceled by June 12, 2020. There are different provisions in the Finance Act, 2020 amending CGST Act 2017 and IGST Act 2017, which will be introduced from 30.06.2020.
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Summary
Relief measures for small taxpayers — From reducing the maximum late-furnishing fee for delayed returns and interest for delayed filing to extending the revocation period for restore cancelled registrations, this Council meeting focused on announcing relief measures for small taxpayers.
Compensation to States – In the months of December 2019 to February 2020, the GST Council announced a meeting in July to explore borrowing to compensate States after clearing up pending compensation worth some 15,340 crores.
Tax collection 45% lower than usual-Tax collections suffered as a result of the Coronavirus pandemic and consequent lockdown. The Finance Minister announced collections for April and May were 45% lower than usual.
Inverted duty structure could be corrected-The GST Council seeks to correct the inverted duty structure under which the tax levied on inputs is higher than the tax on finished products leading to higher refunds. It can be corrected, but must be done at the right moment, the Finance Minister said.
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