The 40th GST council was held on June 12, 2020 (Friday). Due to the risk possessed by the Covid-19 Coronavirus pandemic, the 40th GST meeting was held through video conferencing.
An array of decisions was made by the GST council on account of the Covid-19 crisis. This included late fee waiver, reduced interest rate, easy compliance burden of small tax payers, resolutions on raising funds to meet the states’ liabilities on account of compensation etc. were made by the honourable Finance Minister Mrs Nirmala Sitaraman.
The 40th GST council meet was the first meet that has occurred after the outbreak of the epidemic in India. The council said that GST compensation, inverted tax structure, possibility of rate rationalization will be announced in the next meeting. The Finance Minister said that a special meeting will be held in the month of July 2020 in order to discuss regarding GST compensation to states and how to fund the same.
1. Reduction or Waiver of Late Fee
Reduction on GST late fee for prior periods starting from July 1, 2017 to January 31, 2020 is:
2. Relaxation on interest & late fee waiver for Small Taxpayers
The council has announced relaxation on interest and late fee waiver for MSME/Small taxpayers whose aggregate turnover is up to Rs.5 Cr. The interest rate for late furnishing of GST returns for the period of February, March, April and beyond July 6 of 2020 has been reduced from 18% to 9% per annum for returns filed before September 30, 2020. The taxpayers may note that no interest charges shall be applied if the taxes for these months are paid before September 30, 2020 or whichever date is applicable as per the turnover. Late fee and interest shall be waived off for the months of May, June and July of 2020 if the returns are filed before September 30, 2020.
3. GST Registration Cancellation Time Limit
The time limit for seeking withdrawal of cancelled GST registrations has been extended till September 30, 2020 for all those registrations which were cancelled till June 12, 2020. Previously, the time limit was determined in accordance with the GST Act which is 30 days from the issue of the cancellation order. This is a onetime extension provided for those seeking revocation of cancellation of registration.
4. GST Compensation to States and Union Territories
In order to fund the compensation to states and Union Territories, the GST council is looking forward to borrow money for getting it done. During the last 2 months the F+GST collections have been at 45% compared to the normal levels. Like already mentioned, the discussions regarding GST compensation to States and UTs shall be taken during a special meeting expected to be held in the month of July 2020.
5. Rectification of Inverted Tax Structure
The Finance Minister informed that the granted excess refund imposes issues on accumulated ITC because of the inverted tax structure. This issue was sumptuously discussed in the context of the textile industry. Decisions are pending for other industries like footwear, fertilizer etc. and since the discussion could not arrive at a common conclusion, this has been postponed for further discussions in the future.
6. Rationalization of Goods
The decision on rate reduction of some goods was postponed after bringing it to the council’s attention. The goods which are the subject of this rate rationalization include brick kilns and pan masala kind of items. As promised by the Finance Minister all these matters shall be finalized in the next meeting.
The 40th GST meeting was the first of its kind that happened in the midst of a global pandemic. The GST reforms that are planning to be done in the future will have to be carefully carried out as the whole world is expected to go through economic crunches and slowdowns for quite some time even after the corona crisis is over.
The Goods and Service Tax (GST) is an indirect/consumption tax levied on the supply of goods. Currently, GST is divided into 5 tax slabs for collection of tax- 0%, 5%, 12%, 18% and 28%.The Goods & Service Tax came into effect on July 1, 2017 as per the 101st Amendment of the Constitution of India by the Indian Government.
The GST types are determined based on the province in which the goods and/or services are exchanged and transactions made. The types of GST include: • Central Goods & Services Tax (CGST) • State Goods & Services Tax (SGST) • Union Territory GST (UTGST) • Integrated GST (ITGST)