The 35th GST Council Meeting took place in New Delhi on June 21, 2019. It was held almost 3 months from the previous 34th GST Council meeting. This was the first time that the GST Council met after BJP once again came to power post the general election. The meeting was led by Smt. Nirmala Sitharaman, the newly appointed Union Finance and Corporate Affairs Minister.
The meeting was set in motion by GST Council passing a resolution. This resolution recognized the outstanding contribution made by previous GST Council chairperson, Mr. Arun Jailtley. The Council further expressed gratitude to the outgoing Council members and greeted the new ones.
Furthermore, the Council was expected to address a number of indirect tax issues pending over the months in its 35th GST Meet. These ranged from extending the due date of filing annual return in GSTR 9 for 2017 – 18 to revising GST rates on items falling under the highest tax slab of 28%.
The decisions on these and other key issues were taken by the Council members in the meeting. The important decisions taken are as follows:
1. New GST Return System to be Introduced in a Phased Manner
The council has proposed to begin the test run of the new GST return filing system from July 2019. This is to make the taxpayers familiar with the new system. The full version of the new return filing system would, however, be implemented in a phased manner. It would be put into practice from October 2019.
Before jumping to the path laid down by the Council for its implementation, here’s a brief on the new GST return filing system. The council has tried to reduce the complexity and excessive documentation involved in the existing GST return filing process. The new system involves a single return and two annexures.
Form GST RET 01 is the form in which single tax return would be filed by the taxpayers. This form would contain information with regards to the supplies done by the taxpayer. This return would be filed on a monthly basis. However, small taxpayers with an annual turnover of up to Rs. 5 crores in the previous year would have the option to file return on a quarterly basis.
Annexure 1 is also known as annexure of outward supplies. This form would contain information concerning:
- outward supplies
- inward supplies inviting a reverse charge
- imports including both goods and services
Annexure 2 is also known as annexure for inward supplies. This annexure would contain details with regard to inward supplies. Annexure 2 would be auto populated once the supplier uploads the invoices. Thus, the new system would let suppliers upload invoices on a real time basis. This further would allow the buyers to view as well as take action at the same time in Annexure 2. The buyers can accept, reject, or keep the invoices pending in order to take action on a future date.
So, let’s have a look at the timelines set by the Council for the phased implementation of the new GST return filing system.
Schedule for Phased Implementation of New GST Return Filing System
From July 2019
The new system would be put into effect on a test basis from July 2019. This would enable the suppliers to upload invoices date wise in form GST Annexure 1. The recipients or buyers at the same time would be able to view, download and make changes in auto populated Annexure 2 of inward supplies.
Between July 2019 – September 2019
This is the period where the new GST return filing system would be implemented on a trial basis. It would however include form Annexure 1 and form Annexure 2 of the new system only. The idea is to acquaint the taxpayers with the new system. Furthermore, the taxpayers would continue to file GSTR 1 and GSTR 3B during this period.
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From October 2019
Form GST Annexure 1 Made Compulsory
The form GST Annexure 1 would be made compulsory starting October 2019. Large taxpayers would be required to file Form GST Annexure 1 on a monthly basis. These include taxpayers with an annual turnover of more than Rs. 5 crores in the previous year. on the other hand, Small taxpayers, will have to file first Form GST Annexure 1 for quarter October 2019 – December 2019 in January 2020. These include taxpayers whose annual turnover is up to Rs. 5 crores in the previous year.
GSTR 3B To Continue for Large Taxpayers
Large taxpayers would continue to file form GSTR 3B on a monthly basis for October and November 2019. Further, they will file their first GST RET 01 for December 2019 in January 2020.
Form GST Annexure 1 and Form GST Annexure 2 Can Be Used by Taxpayers
Both small and large taxpayers can upload invoices on a continuous basis in Form GST Annexure 1 for supplies from October 2019 onwards. Form GST annexure 2 for inward supplies can be viewed at the same time by the recipients during this time period. However, recipients would not be able to take any action on Form GST Annexure 2 as of now.
Small Taxpayers to Stop Filing GTR 3B
Small taxpayer would stop filing GSTR 3B from October 2019. They would instead be required to file form GST PMT 08. GST PMT 08 is a form used to make payment of self assessed tax by all taxpayers under the new GST return filing system. This form would be filed on a monthly basis. Further, it would be used to declare and pay self assessed tax liability and claim the requisite input tax credit (ITC). The small taxpayers will file their first Form GST RET 01 for quarter October 2019 – December 2019 in January 2020.
From January 2020
Form GSTR 3B would be fully done away with starting January 2020.
2. Due Date For Filing GSTR 9, 9A and 9C for 2017 – 18 Extended
Taxpayers faced a lot of challenges for filing annual returns in:
- Form GSTR 9 (GST annual return filing form for normal taxpayers),
- GSTR 9A ( GST annual return filing form for composition scheme holders) and
- Reconciliation statement in form GSTR 9C (form containing reconciliation statement filed by taxpayers with an annual turnover of over 2 crores in the previous year)
Thus, Council has extended the due date for filing GST annual return for the year 2017 – 2018. This is done in order to enable the taxpayers to file returns conveniently and in time. Hence, the due date has been extended till August 31, 2019.
3. Due Date For Filing Form GST ITC – 04 Extended
Form GST ITC – 04 is filed by the principal manufacturer supplying raw materials or capital goods to a job worker for further processing. This a form that is filed quarterly and on or before the 25th of the month succeeding the quarter. The Council extended the due date for filing GST ITC – 04 for the period July 2017 to June 2019. Thus, the due date has been extended till August 31, 2019. This is done to provide adequate time to trade and industry to file declaration in GST ITC – 04.
4. Blocking of E – Way
The Council has extended the date of implementing rule 138E of CGST rules. This rule pertains to the blocking of E Way bills in case of non – filing of returns for two consecutive tax periods. It will now be implemented on August 21, 2019 instead of June 21, 2019.
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5. Due Date For Intimation Under GST CMP 02 Extended
GST CMP 02 is a form in which a person already registered under GST opts to switch for composition scheme. This is basically an intimation form that needs to be filed by the existing registered taxpayer under GST opting to pay taxes under Composition Scheme. The Council has extended the due date for filing intimation in GST CMP 02 for availing such an option for payment of tax dated March 7, 2019. The due date has been extended from April 30, 2019 to July 31, 2019.
6. GST Rate Related Changes
The Council suggested changes in GST rates with regards to the supply of the following goods and services.
The Council brought to table issues with regards to concessions on electric vehicle, charger and hiring of electric vehicle. It was suggested that the issue be properly scrutinized by the Fitment Committee and discussed further in the next meeting. The existing GST rate on Electric Vehicles is 12%. It was expected to be reduced to 5%. Similarly, the existing GST rate on chargers for electric vehicles is 18%. It was expected to be reduced to 12%.
Solar Power Generating Systems and Wind Turbines
It was suggested that the issue regarding valuation of goods and services in solar power generating system and turbine be put forth in the next Fitment Committee. Thus, the suggestions of the Fitment Committee would be tabled in the next GST Council Meeting.
A report by Group of Ministers (GOM) on lottery was presented to the Council. Various issues with regards to the rates of lottery were discussed. It was suggested that there are certain issues that would require the legal opinion of Learned Attorney General.
7. The Time Period for National Anti Profiteering Authority (NAA) Extended By 2 Years
National Anti Profiteering Authority (NAA) was set up by the GST Council . Its aim is to ensure that reduction in GST rates on various goods and services and resulting changes in ITC are passed on to the recipients. This needs to be done by reduction in prices by the suppliers. There are still a lot of complaints with regards to benefit not being passed to the recipients by the suppliers. Hence, the Council decided to extend the NAA mechanism by another two years till 2021 which was supposed to end on June 30, 2019.
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8. Suppliers to Pay Penalty on Delaying Payment of Profiteered Amount
The Council has imposed a penalty of 10% on the profiteered amount in case of delay. This would be charged in cases where the supplier fails to pay such an amount within 30 days as per the order of the authority.
9. E – Invoicing to be Rolled Out in a Phased Manner Starting January 202
The Council gave a go ahead for the implementation of first phase of raising invoices on GST portal from January 2020. This is however only for B2B invoicing. This would allow taxpayers to prepare returns from these e – invoices. Thus, e – invoicing would bring automation in process for return filing. Further, it will help the government in doing away with the problem of tax evasion.
10. E-Ticketing Made Compulsory For Multiplexes
This is another major decision taken by the GST Council. Multiplexes with multiple screens will now have to issue e – tickets compulsorily. This is done to overcome tax evasion and black ticketing which is common in the entertainment industry.