Key Takeaways from the 40th GST Council Meeting

The much awaited 40th meeting of the GST Council, headed by Finance Minister Nirmala Sitharaman and comprising state counterparts, was held today via video conferencing. This was the first meeting of the GST Council since India went into COVID-19 induced lockdown.

After lenghty deliberation,that led to a delay of more than two and half hours in the virtual media briefing by the FM, the GST Council today announced various measures for trade facilitation. It is also decided that certain clauses of the Finance Act, 2020 , amending CGST Act, 2017 and IGST Act, 2017 will be brought into force from 30.06.2020.

As expected the GST Council didn’t recommended any rate tweaks considering that any increase in the tax rate can hamper the economic recovery and decrease in the tax rate can be a deterrent to much needed fund in the govts’ coffers.

Further the FM intimated that a special one agenda meeting will be held exclusively to discuss the compensation cess shortfall issue in the month of July, 2020. It is pertinent to mention here that in the previous council meeting on March 14, 2020, FM had said that the Centre will look into the legality of GST Council borrowing from market to meet the compensation requirements as States had raised the issue of shortfall in compensation kitty.

Key Takeaways from the GST Council Meeting

Measures for Trade Facilitation

1) Waiver / reduction of late fee for filing of GSTR- 3B for period July, 2017 to January, 2020

The waiver of late fee for old period viz August 2017 to January 2020, was much expected by the tax payers from this GST Council meeting, since the Press Release of Ministry of Finance, dated 01.06.2020, wherein it was informed that the issue of late fee would be taken up for discussion in the next GST Council Meeting.

Needless to mention here that for helping the small businesses having turnover less than Rs 5 crore in the current situation arising out of COVID-19 the extension of GST returns of February, March, April and May 2020 till June 2020 had already been made and no late fee will be charged for this period.

As per Section 47(1) of the CGST Act, 2017 the late fee for filing of any return was Rs 100/- per day ( each for CGST and SGST) subject to maximum of Rs 5000/-(each for CGST and SGST).

The per day late fee was later reduced in regard to filing of GSTR-3B vide vide Notification No. 76/2018-Central Tax, dated 31.12.2018 , to Rs 10 per day (each for CGST and SGST Act) for NIL tax return , and others Rs 25 per day (each for CGST and SGST) subject to maximum of Rs 5000/-(each for CGST and SGST). It may be noted that there is no seperate late fee under the IGST Act.

The late fee was fully waived off in past, if returns were filed during a specfied time window. However such late fee is applicable on tax payers who have not yet filed their GSTR-3B returns.

As a measure to clean up pendency in return filing, the GST Council has decided waiver / reduction in late fees for not furnishing Form GSTR-3B for the tax period from July, 2017 to Jan, 2020 as under:-

• For Tax payers with NIL tax liability: Full waiver of late fee.

• For tax payers having aggregate turnover with tax liability: Capping of late fee to Rs 500/- per return as against maximum of Rs 5000/- (each for CGST & SGST) i.e. total of Rs 10,000/-.

The reduced rate of late fee would apply for all GSTR-3B returns furnished between 01.07.2020 to 30.09.2020.

2) Relief to small tax payers for late filing of GSTR-3B for period Feb, Mar and April, 2020

Small tax payers having aggregate turnover upto Rs 5 cr can file their returns for Feb to April, 2020 upto speciified dates (stagerred upto 6th July, 2020) without any interest. Beyond these dates reduced rate of interest @ 9% interest p.a. (instead of 18% p.a.) will be charged till 30.09.2020.

3) No levy of interest and late fee on GSTR-3B of small tax payers for subsequent tax periods (May, June and July,2020)

Small tax payers having aggregate turnover upto Rs 5 cr can file GSTR-3B returns for the tax periods May, June and July, 2020 can be furnished by September, 2020 (stagerred dates to be notified) without levy of late fee and interest.

4) One time extension in period for seeking revocation of cancellation of registration .

As per Section 30(1) of the CGST Act, 2017 , any registered person whose registration has been cancelled may apply for revocation of cancellation of the registration within 30 days from the date of service of the cancellation order.

In order to facilitate tax payers who could not get their cancelled GST registrations restored in time, an opportunity is being provided for filing of application for revocation of calcellation of registration upto 30.09.2020, in all cases where registrations have been cancelled upto 12.06.2020.

For ready reference the press release in regard to decisions taken in the GST Council meeting held today is as under:-

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TW Editorial Team

TW Editorial Team comprises of team of experienced Chartered Accountants and Advocates devoted to spread the knowledge of GST amongst the various stakeholders.