Update on 39th GST Council Meeting – March 14, 2020

by | Mar 16, 2020 | Insight | 0 comments

Key decisions taken in 39th GST Council Meeting held on March 14, 2020. The important changes proposed by the Council, are as follows:

  1. Legal changes 
  • Interest on late payment of GST to be levied on net tax liability retrospectively from July 1, 2017.

NITYA Comments: An amendment was made in Section 50 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’) proposing to levy interest on net tax liability [after adjustment of Input Tax Credit (‘ITC’)] and not gross tax liability. The Government did not notify this amendment till date. The Government had also clarified that the amendment will apply prospectively and not retrospectively. 

Many taxpayers have been issued notices seeking interest on delayed payment of gross tax liability. This amendment having retrospective effect, will bring a major relief for such taxpayers.

  • The following dates would be extended:

Particulars

Present Due Date

Extended Date

Annual return and reconciliation statement for Financial Year (‘FY’) 2018-19

March 31, 2020

June 30, 2020

 

Reconciliation statement for FY 2018-19 for taxpayers having turnover less than Rs.5 crores

March 31, 2020

Not to be filed

 

New return formats

April 1, 2020

October 1, 2020

 

E-invoicing and QR code

 

(Certain sectors like Insurance, Banking and Non-Banking Finance Companies, Goods Transport Agencies (GTAs), Passenger Transportation Service etc. would be exempt from this requirement)

 

April 1, 2020

October 1, 2020

 

Exemption from IGST and Compensation Cess for imports under Advance Authorisation, EPCG and EOU schemes

 

March 31, 2020

March 31, 2021

Application for revocation of cancellation of registrations cancelled till March 14, 2020

30 days from date of service of cancellation order

 

June 30, 2020

Form GSTR-3B for July 2019 to January 2020 for taxpayers having principal place of business in Ladakh

(Similar extension also proposed for Form GSTR-1 and Form GSTR-7)

 

Relevant dates

March 24, 2020

 

  • Form GSTR-1 and Form GSTR-3B will be linked to avoid tax evasion. This will be followed up by linking Form GSTR-2A and Form GSTR-3B.

NITYA Comments: This linking will require taxpayers to be accurate while filing Form GSTR-1 as well as undertake monthly reconciliation of ITC before filing of Form GSTR-3B.

  • To tackle menace of fake invoices, passing of ITC by new taxpayers will be allowed once their physical verification of premises and financial KYC is done.

NITYA Comments: This change will create practical issues and operations of new taxpayers will suffer if there is delay at department’s end to undertake verification. It is likely that the portal will not reflect invoices in Form GSTR-2A of the recipient till the department undertakes this verification. 

  • Refund claims across financial years, would be allowed to be clubbed.

NITYA Comments: In Circular No. 125/44/19-GST dated November 18, 2019, the CBIC barred filing of single refund claim relating to different FYs. The Delhi High Court in the case of Pitambra Books Private Limited v. UOI, 2020-VIL-45-DEL held such restriction to be ultra-vires the law. This amendment has been made to correct this anomaly.

  • Banks would be mandated to file ‘Information Return’ under Section 150 of the CGST Act.
  • Special procedure will be introduced for taxpayers registered in Dadra and Nagar Haveli and Daman and Diu since these UTs have been merged. Their transition will be completed by May 31, 2020.
  1. Rate changes 
  • Rate of GST on mobile phones and specified parts will be increased from 12 percent to 18 percent effective April 1, 2020.
  1. Upcoming amendments and Circulars

The following amendments and Circulars would be made / issued

CGST Rules 

  • On excess payment of tax, refund will be sanctioned in cash or ITC basis mode of original payment.
  • Recovery for refund would be made where proceeds of export goods is not realised within FEMA timelines.
  • ITC reversal procedure for capital goods used partly for taxable and exempt supplies, would be changed.

Circulars

  • Apportionment of ITC in case of demerger.
  • Appeals during non-formation of GST Appellate Tribunal.
  • Refund related issues.
  • Procedure for registered persons undergoing corporate insolvency resolution process to facilitate GST compliances.

NITYA Comments: In several cases, NCLT has directed the GST department to continuer registration, allow generation of E-way bills and filing of returns for Companies undergoing insolvency proceedings. The CBIC would now define a proper procedure for the same.

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