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written by | October 11, 2021

Highlights of the 42nd GST Council Meeting

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Table of Content


What is GST Council?

GST council is a council that has been established by the President of India after 60 days of the beginning of the Goods and Service Tax Law in India.

The GST Council consists of the combined forum of the Centre and the States and it has the following members on the board:-

a) Union Finance Minister as the Chairperson

b) Other Members who comprise the Union Ministers of State from the respective Finance and Revenue Departments and other members/ministers who may be selected by respective State Governments. 

The major functions of the GST council comprise of making recommendations regarding important issues under GST like which all goods would be categorised under the exempt category, rules of Place of Supply, limits of thresholds, GST rates, special rates, etc.

Did You know? 

The Union Finance Minister of India heads all the GST council meetings.

42nd GST Council Meeting

Through video conferencing, the 42nd GST Council meeting was held on 05th and 12th October.

42nd GST Council Meeting Highlights

1. Regarding HSN Code

HSN codes of up to six digits must be mentioned by taxpayers with a turnover of more than ₹5 crores. For B2B supplies of goods and services with a turnover of fewer than ₹5 crores, an HSN code of up to four digits must be provided. Eight digits will be required for notified kinds of products and services.

2. Refund in Validated Bank Account

Refunds will be deposited into bank accounts that have been linked to PAN and Aadhaar. Aadhaar authentication (with OTP) is now permitted for refund applications, making it more difficult for taxpayers to take advantage of the system.

3. GST Exemptions

ISRO, Antrix Corporation, and New Space India Limited (NSIL) have all granted GST exemption to satellite launch services to promote space launch services in India.

4. Return Filings

Small taxpayers having revenue of fewer than ₹5 crores have been provided with the option to file quarterly GSTR-3B and GSTR-1 beginning from January 1, 2021. The due date for such quarterly submission of GSTR-1 will be the 13th of the month following the quarter. However, these taxpayers can upload invoices every month under this QRMP Scheme by filing GSTR 1 through IFF (Invoice Furnishing Facility). As a result, the number of returns has been cut from 24 to 8. Also, these quarterly taxpayers can pay 35% of their net cash tax liability from the previous quarter using an auto-generated challan for the first 2 months of the quarter.

Also Read: GST Council 33 Members Governing GST

5. Auto Generation of GSTR 3B

Another important decision taken at this meeting is regarding the auto-generated figures from the supplier's GSTR-1. The GSTR-1 must be filed before the filing of the GSTR-3B to accomplish this. Once GSTR 1 is filed by the taxpayer, their sales and tax amount will get auto-generated in GSTR 3B. Further, their ITC will also get auto-populated through the GSTR 1 filed by their respective suppliers. Thus, the taxpayer has just to check and confirm the figures.

6. Waiver of Blocking of E Way Bill During Period of COVID

During the COVID period from 20.03.2020 to 14.10.2020, the Blocking of E-way Bill will be waived. Blocking to be reinitiated with 15.10.2020 for turnover more than ₹5 crores.

7. Payment of GST

All taxpayers will continue to pay their GST obligations every month using a simple challan. An SMS will be able to be used to file a nil CMP-08. Further, The proposal to add UPI and IMPS as additional GST payment options to the existing ones was approved by the Council.

8. Annual Return/GST Reconciliation Statement

Form GSTR 9 and 9C of FY 2019-20 to be considered the same for 2018-19 except Table no. 8A  to 8D (ITC Data) and details regarding ITC of capital goods in GSTR 9 made mandatory. Further, it was proposed in the 43rd GST council meeting in May 2021 to make GSTR 9 optional for taxpayers with turnover up to ₹2 crores and GSTR 9C optional for turnover up to ₹5 crores.

Also Read: GST Council Meet: Tax concessions on Medicines, No Decision on Petrol and Diesel

9. Status Update on Conversion of GSTIN to 100% Government-Owned Entity

According to the GSTN's CEO, the GST Council decided at its 27th meeting on the 4th of May 2018 to convert the GSTN into a 100% government-owned entity by transferring 51% equity shares held by non-government organisations to the Centre and States equally. In a meeting held on September 26, 2018, the Union Cabinet approved the proposal and the current position of GSTN as a 100% government-owned entity. As of 16-09-2020, the Union Government and 24 States/UTs had paid the amounts, while payment from 7 states was remaining. He stated a strong desire to finish the procedure as soon as feasible. The GST Council took note of the agenda and urged that the affected states pay their share purchase payments to non-government entities as soon as possible.

10. Levy of Compensation Cess

The levy of compensation cess will continue beyond the period of 5 years. For 2020-21, the compensation cess shortage is estimated to be ₹2,35,000 crores. The GST rollout has resulted in a shortage of ₹97,000 crores. The remainder of the gap is attributed to COVID-19.

Finally, the states have been given the following two choices for covering the compensation cess gap.

Option I: The Central government will provide states ₹97,000 crores through a special window which is being established by the Reserve Bank of India (RBI).

This loan must be repaid at a reasonable interest rate after five years.

Option 2: The state governments have been given the option to borrow ₹2,35,000 crores directly from the RBI.

These announcements were made in the 41st GST council meeting in August 2020.

While just a few states have chosen one of the two possibilities, others, such as Delhi, Rajasthan, Punjab, Tamil Nadu, Chhattisgarh, Jharkhand, and Kerala Telangana, Puducherry, and West Bengal, have chosen neither.

Conclusion

We hope this article proved useful for you in knowing about the important decisions taken at the 42nd GST Council Meeting held in October 2020.

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FAQs

Q: Which states did not opt for either of the options of compensation cess?

Ans:

States like Delhi, Rajasthan Punjab, etc., did not opt for either of the options.

Q: How much tax liability do quarterly return filers have to disburse monthly?

Ans:

At least 35% of the tax liability must be disbursed monthly by quarterly return filers.

Q: How many digits of HSN were made mandatory for taxpayers with a turnover of more than ₹5 crores?

Ans:

Six digits of the HSN code were made mandatory for taxpayers with a turnover of more than ₹5 crores as per the decision taken at the 42nd GST council meeting.

Q: When was the 42nd GST council meeting held?

Ans:

42nd GST Council meeting was held on 05th October 2020 and 12th October 2020 through video conferencing.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.