Key decisions taken in 42nd GST Council Meeting

by | Oct 6, 2020 | Insight | 0 comments

While 42nd GST Council meeting witnessed Centre and States locking horns over issue of shortfall in GST compensation, GST Council also took several key decisions ranging from extension of levy of Compensation Cess beyond 5 years to compliance related changes. Some of the key decisions are discussed hereunder:

  1. Extension of levy of Compensation Cess beyond initial period of 5 years to such further period as required to meet revenue gap.
  1. Enhancement in return filing features:
  • Auto Population of Input Tax Credit (‘ITC’) containing all type of procurements domestic, imports and reverse charge.
  • Auto Population of liability in GSTR-3B upon filing of GSTR-1.
  • Implementation date of above changes is tabulated as under:

Description

Effective Date

Auto Population of liability in GSTR-3B

January 1, 2021

Auto Population of ITC through GSTR-2B:

–        Monthly filers

January 1, 2021

–        Quarterly filers

April 1, 2021

Notes:

1)       Taxpayers will be required to mandatorily file GSTR-1 before filing GSTR-3B from April 1, 2021.

2)       Current return filing system will be extended till March 31, 2021 and respective GST laws will be amended to make GSTR-1 and GSTR-3B as default return system.

NITYA Comments: These changes will bring altogether new landscape for undertaking GST compliances. This will necessitate taxpayers to undertake monthly reconciliation of GST liabilities and ITC matching.

  1. Requirement for declaring HSN / SAC for goods and services in invoices and GSTR-1:

Aggregate annual turnover of Taxpayer

HSN / SAC

Above Rs.5 crores

6 digits

Upto Rs.5 crores (only for B2B supply)

4 digits

Notes:

1)   This change will be effective from April 1, 2021.

2)   This change will not apply to taxpayers having turnover upto Rs.5 crores and who make B2C supplies.

3)   Government will be empowered to notify goods / class of supplies for which 8-digits HSN will be required.

 NITYA Comments: This is another substantial change for taxpayers as it makes imperative for them to determine classification for goods upto 6-digits or 8-digits. Further, the Government is empowered to bring mandatory 8-digits HSN on notified goods or supplies. Taxpayers can consider working on determining 8-digits HSN for their goods if not already done.

  1. Changes in return filing for small taxpayers:
  • Small taxpayers having turnover upto Rs.5 crores will have option to file quarterly return by 13th of month succeeding relevant quarter. This change will be applicable from January 1, 2021.
  • Such taxpayers will need to pay tax on monthly basis only. These taxpayers can pay 35% of net cash tax liability of last quarter for first two months using auto-generated challans.
  1. Refund will be paid in a bank account linked with PAN and Aadhaar of taxpayer from January 1, 2021. 

Trust you find this an informative read! In case of any clarifications, please feel free to contact. 

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