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The 38th GST Council Meeting – The Summed up Highlights

by Abhimanyu Dhamija

The implementation of GST in the country has brought about significant changes across several industries. It put an end to different indirect taxes and brought about one tax in the country. The 38th GST Council meeting was held on 18th of December 2019 and was chaired by Union FM Nirmala Sitharaman. Here are a few highlights of the meeting.

Extension of due dates for GSTR-9 and GSTR-9C

The due date of GSTR-9 and GSTR-9C has been extended until 31st January 2020 from the earlier date of 31st December 2019. The decision was taken to allow more time for the taxpayers to use the offline tool of GSTR-9C which is made available from the 21st December 2019. The department is also working on simplification of GST return forms by making some fields optional in the same. It will help make the GST return filing process simple and a bit more convenient for the taxpayers who have GST registration.

Restrictions on provisional ITC claim in GSTR-3B

The amount of ITC availed on a provisional basis is now restricted to 10% as compared to the previous 20%, where the debit notes or invoices are not reflected in GSTR-2A. Invoice matching should be done and vendor communication becomes challenging.

Late fee waiver on GSTR-1 through the amnesty scheme

The GST council meeting allowed for the waiver of late fee for GSTR-1 for the tax period between 17th July and 19th November, if it is filed by 10th Jan 2020. In case the taxpayer does not file for more than two consecutive tax periods, then the e-way bills of the taxpayer will be blocked from generation.

Standard Operating Procedure in case of non-filing of GSTR-3B defined

The SOP will be released for the benefit of tax officers about actions taken for non-filing of GSTR-3B. It will help in blocking or reversal of fake ITC availed.

Extension of due date for GST returns for certain category of taxpayers

There is an extension of the due date for GST returns for the North Eastern States. It was to be extended until 31st December 2019.

28% tax levy on all lotteries

The GST council meeting decided to levy 28% tax on lotteries. Its date of applicability is 1st March 2020. It was earlier taxed at 12% for State-owned lotteries and 28% for State authorized lotteries.

Rationalization of GST rate to remove inverted tax structure

The council imposes a uniform rate of 18% instead of 12% on bags that belong to HSN code 3923/6305. The new rate will be applicable from 1st January 2020. It removes the inverted tax structure. The rate is applicable to woven as well as non-woven bags and sacks of polythene or polypropylene strips or the like, and bags used for packaging of goods including FIBC.

GST exemption to industrial land developers

There is a GST exemption to industrial land developers but the supply should be long term lease of financial or industrial infrastructure plots. The Central or State Government holds 20% or more shares in the developer’s capital from the previous share of at least 50%. It is applicable from 1st January 2020.

Blocking input tax credit fraudulently

The council proposed to take action for blocking fraudulently availed ITC to check the menace of fake invoices. The CBIC inserted Rule 86A known as ‘Conditions of use of amount available in electronic credit ledger’. According to the rule, the tax department will not allow fraudulently availed ITC standing in the electronic credit ledger to be used for the payment of GST liability or refunded. It will apply to a point where ITC has been availed by the recipient where the registered individual who issues debit notes or invoices that are found to be non-existent, or the individual does not conduct business from the place of business registration.

Additionally, the credit will not be provided if goods or services are not received and the supplier does not pay tax to the government or if the recipient is found to be non-existent. If the invoice on which ITC is availed is not in possession of the Registered person, input tax credit will not be provided. The restriction shall be applicable for one year from the date of imposing the restriction.

Improved filing of GSTR-1

In the GST council meeting, some measures were considered to improve the filing of GSTR-1 by the taxpayers. It was proposed to waive the late fee on all taxpayers who did not file form GSTR-1 from July 1 2017 to November 2019. However, the taxpayers should have filed their GSTR-1 by 10th January 2020. The waiver will come through the Amnesty Scheme for GST.

This scheme is for non-filers who did not file the returns and nil tax filers who filed their returns with tax liability as NIL. The date of the GST Amnesty Scheme will be extended till 15th January 2020. The genuine non filers will be able to cancel their GST registration by deregistering themselves from the GST scheme. It provides for a total waiver of penalty, interest and fines in all cases. It will allow the non-filers to complete their backlog of non-compliances without any pressure.

Blocking of GST E-Way Bill

Further, the E-way Bill Generation facility will be blocked for taxpayers who did not file their returns in GSTR-3B. It is for the taxpayers who did not file their GSTR-3B for the past two or more consecutive quarters or months. They will not be able to receive or dispatch goods and will not be able to generate e-way bills.

When the taxpayer files GSTR-3B, the e-bills get unblocked immediately. In the GST council meeting, the Council came up with a measure to improve the filing of GSTR-1 by proposing that the E-Way bills will be blocked for the taxpayers who have not filed their forms for two consecutive tax periods.
Grievance Redressal Committees to be set up to address taxpayer grievance
Several grievance redressal committees will be set up at the state and zonal level in order to address the grievances of taxpayers. The committees will include offices from the State and Central revenue authorities.

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