Decisions taken at 39th GST Council meeting

Posted on 14-03-2020:

39th GST Council Decisions : 

Deferment of the new GST return system and e-invoicing

The implementation of the new GST return system has been postponed to 1st October 2020. Also, the implementation of e-invoicing and the QR code has been deferred to 1st October 2020.

The present return system (GSTR-1, GSTR-2A & GSTR-3B) will be continued until September 2020.

Changes in the GST rates

• GST on mobile phones and specified parts was increased from 12% to 18%. This decision was taken to avoid difficulties due to the inverted duty structure.
• All types of matches have been rationalised to a single GST rate of 12%. Till now, the handmade ones were taxed at 5% and the rest was taxed at 18%.
• GST on Maintenance, Repair and Overhaul (MRO) service in respect to aircraft was reduced from 18% to 5% with full ITC.
• All these rate changes will come into effect from 01 April 2020.

Interest on delayed payments

Now, the interest for delayed GST payment will be calculated on the net tax liability. This amendment will apply retrospectively from 1st July 2017.

Extension of GSTR-9 and 9C

The GSTR-9 & 9C deadline is extended to 30 June 2020 for FY 2018-19. Also, the turnover limit will be increased from Rs 2 crore to Rs 5 crore for mandatory annual return filing. Hence, filing GSTR-9C is optional for the taxpayers having the turnover less than Rs 5 crore.

The taxpayers with an aggregate annual turnover of less than Rs 2 crore in FY 2017-18 and FY 2018-19 will not pay any late fee for delayed filing of GSTR-9.

Know your supplier

A new scheme called ‘Know your Supplier’ has been introduced so that the taxpayers are informed about the basic details of the suppliers with whom they transact or propose to conduct business.

Waiver and extension of due dates

The GSTR-1 for 2019-20 will be waived for certain taxpayers who could not opt for the special composition scheme (notification No. 2/2019-Central Tax (Rate) dated 7th March 2019) by filing Form CMP-02.

The due date of Form GSTR-3B for July 2019 to January 2020 is extended till 24th March 2020 for taxpayers with a principal place of business in the Union Territory of Ladakh. Also, a similar extension is recommended for Form GSTR-1 and Form GSTR-7.

Amendment to revocation of cancellation

Taxpayers who have cancelled their GST registration till 14th March 2020 can file an application for revocation of cancellation of registration. The window to fill this application is available till 30th June 2020. The extension is a one-time measurement to facilitate those who want to continue conducting the business.

Other decisions

• Infosys Chairman, Mr Nandan Nilekani to present progress updates about the GST IT systems at the next three GST Council meetings.
• The time limit for finalisation of the e-Wallet scheme for consumers is extended till 31st March 2021.
• A special GST procedure was prescribed during the CIRP period for the GST registered corporates who are undergoing insolvency/resolution procedure under IBC Code, 2016.
• A transition plan is laid down till 31st May 2020 for the taxpayers belonging to Dadra and Nagar Haveli & Daman and Diu, due to the merger in January 2020.
• Refund claims will now be processed in bulk for the benefit of the exporters.
• Present IGST and cess exemptions on the imports made under the AA/EPCG/EOU schemes will continue up to 31st March 2021.

39th GST Council Decisions-Live Updates :

10:50 AM:

GST Council Hikes Tax Rate On Mobile Phones, Gives Some Relief To MSMEs

The 39th meeting of the Goods and Services Tax Council, headed by Finance Minister Nirmala Sitharaman, began at 11 a.m. A press conference will be held to announce the decisions made later in the day. 

The Council is expected to correct the inverted duty structure—which taxes inputs at a higher rate than output—that has resulted in blocked credits for manufacturers.

The GST rate on mobile phones is proposed to be increased from 12 percent to 18 percent, on a par with most of the inputs used for manufacturing phones, a government official told BloombergQuint on the condition of anonymity. The proposal will be discussed at the council’s meeting on March 14. 

Due to the inverted duty structure, input tax credit—or the credit of taxes paid on input—gets stuck as manufacturers pay higher taxes on raw materials, blocking their working capital.

The council would also consider increasing tax on fabric from 5 percent to 12 percent in sync with man-made filament/spun yarn. GST on footwear costing up to Rs 1,000 is proposed to be increased from 5 percent to 12 percent, the official cited earlier said. These proposals have been suggested by the fitment committee that’s tasked with making changes to GST rates.

05:59 PM:

Manish Sisodia Says GST On Mobiles Hiked

Delhi’s deputy chief minister Manish Sisodia, who also holds the finance portfolio, has said that the GST council has decided to raise tax on mobile phones to 18 percent from 12 percent earlier. 

• Decisions taken to make GST compliance-friendly. 
• Interest will be now imposed on net liability on late payment of tax. 
• Infosys Chairman Nandan Nilekani also made a presentation at the council’s meeting. 
• Tax on maintenance, repair and overhaul of aviation cut from 18 percent to 5 percent.

06:04 PM:

Asked Infosys To Fix Technical Glitches: 

Finance Minister Nirmala Sitharaman said that the GST Council clearly told Infosys that there needs to be a sustainable solution to the series of technical glitches and reports of the Goods and Services Tax Network being unable to handle the load.

Infosys Chairman Nandan Nilekani made a presentation at the meeting after that. 

• The requirement of hardware due to supply chain disruption on account of coronavirus and enhancing capacity of the team was also discussed. 
• The GST Council will also demand more skilled manpower and better hardware capacity from Infosys.
• The GST Council has also demanded that there be better coordination between Infosys and Tech Mahindra. Tech Mahindra deals with receiving and handling complaints. Infosys manages software solutions. 
• For the next three GST Council meetings, Nandan Nilekani has been asked to be present. The first item on the meeting will be a presentation on progress made for these issues.

06:13 PM:

GST On Mobile Phones Hiked To Fix Inversion Problem

The GST on mobile phones and specified parts has been raised to 18 percent from 12 percent earlier. 

This was done to correct an inversion problem that the rate fitment committee was asked to look into. The issue was that the refunds being paid was more than the tax being collected on these items, Sitharaman said.

The finance minister said that from among the items mentioned where this problem exists the GST Council, today, only the rate on mobile phones was corrected. If the need arises, the GST Council will consider rationalising rates of other such items in subsequent meetings.

06:16 PM:

GST For Maintenance And Repair For Aircraft Reduced

All type of matchsticks, whether handmade and machine-made have been rationalised to 12 percent from 5 percent for handmade and 18 percent for machine-made earlier.

06:18 PM:

GST For Maintenance And Repair For Aircraft Reduced

The tax rate on maintenance, repair and overhaul of aviation was cut from 18 percent to 5 percent. This may assist in setting up of MRO services in India, Sitharaman said.

06:18 PM:

All Rate Changes To Be Effective For April 1.

All changes announced at today’s GST Council meeting will come into effect from April, 2020.

06:22 PM:

Procedural Changes Made By GST Council

The GST Council also decided that the interest for delay in payment of GST will now be charged on the net cash tax liability instead of gross with effect from July 1, 2017. The law will be amended for this retrospectively.

Other decisions:

• Relaxation to MSMEs from furnishing a reconciliation statement GSTR-9C for FY 2018-19 for all taxpayers having aggregate turnover below Rs 5 crore. 
• Due date for filing annual return and reconciliation statement for FY 2018-19 to be extended to June 30, 2020 for those with turnover less than Rs 5 crore.
• For those less than Rs 2 crore aggregate turnover in FY 2017-18 and FY 2018-19, there won’t be any late fee charged. 
• Know your supplier being introduced so that every business have information of suppliers they are in business with.

06:32 PM:

Small Businesses Get Some Relief

The GST Council has relaxed the deadline for GSTR-9C filing for small businesses. 

• For those with annual turnover below Rs 5 crore, the due date for filing annual return and reconciliation statement for FY19 was extended to June 30, 2020. 
• For those with annual turnover below Rs 2 crore in FY18 and FY19, no late fee will be charged.

06:33 PM:

Over Rs 1.2 Lakh Crore Released To State Till Now

Finance Minister said that Rs 78,000 crore has been collected as compensation cess. The total compensation released to states is over Rs 1.2 lakh crore, she said.

Higher Rate On Mobile Phones, Some Relief For MSMEs

The Goods and Services Tax on mobile phones and specified parts has been raised to 18 percent from 12 percent earlier, at the 39th meeting of the GST Council today. 

This was done to correct an inversion problem that the rate fitment committee was asked to look into, Finance Minister Nirmala Sitharaman said in a media conference after the meeting. The issue was that the refunds being paid were more than the tax being collected on these items, she said.

The finance minister said that there are other such items where this problem exists. Today, the council only corrected the rate on mobile phones. If the need arises, it will consider rationalising rates of other such items in subsequent meetings.

Other key decisions: 

• GST on matchsticks rationalised. 
• Retrospective change to GST law for interest charged on late payment. 
• GSTR-9C filing deadline for small businesses relaxed. 
• Due to date for filing annual return and reconciliation statement for FY 2018-19 extended.