Strategic Analysis of 38TH GST Council Meeting

 Strategic Analysis of 38TH GST Council Meeting

GST is a game-changing development for the Indian Economy as it brings standardization in the taxation arrangement. It is a consumption-based indirect tax charged on sale, manufacturing, and consumption of goods and services.

Recently, the GST Council conducted its 38th meeting on 18th December 2019 in New Delhi. It was chaired by our Hon’ble Union Finance Minister Ms. Nirmala Sitharaman. The meeting has been concluded with several noteworthy changes in the prevailing GST rates, provisions of Input Tax Credit, etc. Further, the council has also made the announcement relating to the formation of Grievance Redressal Committees, Late fee waiver on GSTR-1.

  1. On Revised GST rates

S.no

Particulars

Existing Arrangement

Revised Arrangement

Effective Date

1.

To exempt upfront amount payable for long term lease of industrial/ financial infrastructure plots.

Currently, this exemption is available to an entity having 50% or more ownership of the Central or State Government.

Ambit has been enhanced for the entity having 20% or more ownership of Central or State Government.

1 January 2020

2.

Lottery run by the State Government.

GST rate- 12%

GST rate- 28%

1 March 2020

3.

Lottery authorized by the State Government.

GST rate- 28%

GST rate- continued at 28% only

1 March 2020

4.

For the woven and non-woven Bags and sacks of polyethylene or polypropylene strips or the like, whether or not laminated, of a kind used for the packing of goods, including Flexible Intermediate Bulk Containers (FIBC).

GST rate- 12%

GST rate- 18%

1 January 2020

 

  1. On Formation of Grievance Redressal Committees (GRC).
  • GST council in its 38th meeting declared the constitution of the Grievance Redressal Committees (GRC) at the Zonal/State level with both CGST and SGST officers and including representatives of trade and industry and other GST stakeholders (GST practitioners and GSTN etc.). These committees will address the grievances of the specific/ general nature of taxpayers at the Zonal/ State level.
  1. On GST Returns.
  • GST council in its 38th meeting has announced the extended due dates of filing the Annual Return in FORM GSTR-9 and reconciliation statement in FORM GSTR-9C from 31.12.2019 to 31.01.2020. This extension has been provided for the Financial Year 2017-2018.
  • Further, in respect of few North Eastern States, the GST council has decided to extend the due date of GST filing for the month of November 2019 till 31.12.2019.
  • Lastly, the GST council will issue a Standard Operating Procedure for tax officers in respect of action to be taken in cases of non-filing of FORM GSTR 3B returns.
  1. On Waiver of Late Fees.
  • GST council has declared the waiver of late fees from July 2017 to November 2019 for all the taxpayers in regard of pending FORM GSTR-1, if the same is filed by 10.01.2020.
  • In case the taxpayer fails in filing FORM GSTR-1, his E-way Bill for two tax periods shall be blocked.
  1. On Input Tax Credit (ITC).
  • The council has decided to restrict the percentage of ITC claim availed on an interim basis from 20% to 10% where the invoices and debit notes are not reflected in GSTR- 2A.
  • The GST council has also declared to take suitable actions for blocking credits in case of a fraudulent claim of Input Tax Credit.

37th GST COUNCIL MEETING

GST Council conducted its 37th meeting on 20th September 2019 at Goa. It was chaired by our Hon’ble Union Finance Minister Ms. Nirmala Sitharaman. Several decisions were taken at the meeting, which comprises of new GST exemptions, rate revisions, relaxations in annual return filing, etc. The main aim behind several announcements was that it would hopefully lift the economy which at the moment seems to be in shambles.

Through this meeting GST Council announced

  • Major cuts in taxes of 27 items and a slight relief to small businesses.
  • Waiver from filing annual return in GSTR-9A for Composition Taxpayers for FY 2017-18& FY 18-19

· Filing of GSTR-9 is not compulsory for the small taxpayers having annual turnover up to Rs. 2 crores for the FY 2017-18&18-19

· The New GST returns system has been delayed until April 2020 so that the taxpayers can make a fresh start from the new financial years.

· The GST council in its meeting has decided to put restrictions on ITC claims in GSTR-3B to push the taxpayers toward timely filings of a statement of outward supplies.

  • GST council has also announced various GST exemptions on
  1. Supplies of goods or services to FIFA.
  2. Supply to Food and Agriculture Organization (FAO).
  3. Imports of defense goods that are not made indigenously (up to 2024).
  4. Import of silver/platinum by specified agencies, and the supply of silver/platinum by specific nominated agencies to exporters.
  5. Storage or Warehousing services for cereals, pulses, fruits, nuts, vegetables, jaggery, raw vegetable fibers such as cotton, flax, jute, etc., unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee, tea, etc.
  6. The BANGLA SHASYA BIMA (BSB) crop insurance scheme of the West Bengal Government.
  7. Group insurance schemes for Paramilitary Forces under the Ministry of Home Affairs.
  • Several changes in the GST rates like
  1. No GST would be applicable to hotel accommodation with a transaction value of Rs 1000 or less per day. But, transactions above Rs 7500 will attract 18% GST.
  2. Machine job works in the engineering industry will be levied at a lower tax rate of 12% less than the previous 18%.
  3. Taxability of fish meal: Exemption has been granted for all cases from 01.07.2017 to 30.09.2019, except in the case where tax is already collected.
  4. Tax rates on cut and polished semi-precious stones slashed to 0.25% from 3%.

 

CONCLUSION

The GST Council in its 37th Meeting, which was conducted on 20.09.2019 in Goa, came up with several considerable changes, which comprises of new GST exemptions, rate revisions, relaxations in annual return filing, etc. These changes were predictable to upgrade the condition of our economy, which presently seems to be in the middle of turmoil.

Further, the 38th GST Council Meeting happened on 18.12.2019 at New Delhi, also happened during the time when there is an immense pressure on the council to boost up revenues amidst a deficit. However, the council at this meeting decided not to alter any GST rates, as the increasing GST rates and removal of exemptions may lead to inflation and induce people to spend less.

Moreover, for the first time in the record of 38 meetings, the GST council decided to go away from its regular consent-based decision making and instead opted for voting to decide the GST rates on the lotteries run and authorized by the state government.

About Akash Kumar

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The author is Akash Kumar, working as Legal Associate with Enterslice Ites Private Limited, a Chartered Accountancy firm helping Startup & companies in setting up the business and complying with various tax laws applicable to Indian & foreign companies while establishing their business.

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