Finance Minister Nirmala Sitharaman on May 28 chaired the 43rd GST Council meeting via video conferencing. The GST Council meeting, attended by Minister of State for Finance Anurag Thakur and the finance ministers of states and Union Territories (UTs) along with senior officials of the Government of India, was convened for the first time in nearly eight months on May 28.
Here are the key highlights of the proposals made at the 43rd GST Council meet:
Adhoc exemptions granted for COVID-related equipment. GST Council decided to exempt the import of many such items. The exemption has been extended to August 31, 2021.
Exemptions will be granted to the import of relief items even if they have been purchased as long as they are meant for donations to state governments. Earlier, IGST exemption was granted only free of cost imports.
In view of rising Black Fungus cases, Amphotericin B has also been included in the exemptions.
Commenting on the decision, Abhishek Jain, Tax Partner, EY, said: “The 43rd GST Council meeting was much awaited by the Industry players seeking reliefs from the government in these tough times of pandemic. Considering this, the GST Council headed by the finance minister has extended the current exemptions for COVID relief goods up to August 2021 and proposed to set-up a GoM committee by tomorrow to look into further exemptions that can be provided on account of the COVID-19 relief measure. The businesses might be slightly disappointed having to further wait up to June 8 to get a final decision on the additional GST exemptions for Covid relief activities, when the GoM will submit its report.”
Group of Ministers will be quickly formed (preferably within two days) to submit a report within 10 days, i.e., on or before June 8, detailing whether any further reductions need to be done; the rates will be decided by them.
GST compensation cess: Same formula as last year will be adopted this year too. The rough estimate is that the Centre will have to borrow Rs 1.58 lakh crore, which will be passed on to states as back-to-back loans.
This was “expected”, said Abhishek Jain, adding, “it would be interesting to see the outcome of the special session that the Finance Minister said would be held to deliberate whether the compensation should be given to the states beyond the original period promised of five years”.
A special session will be held to discuss compensation cess alone as we are in the last of the five years of the 14 percent compensation-protected revenue arrangement. At the session, a decision will be taken on whether the compensation cess will be extended beyond July 1, 2022, how it will be collected, how much it will be, etc.
To ease the compliance burden, annual return filing will continue to be optional for FY 2020-21 for small taxpayers, having a turnover of less than Rs 2 crore.
Reconciliation statements for FY 2020-21 will only have to be furnished by taxpayers whose turnover is Rs 5 crore or more.
Additionally, to provide relief to small taxpayers, who constitute 89 percent of GST payers, an Amnesty Scheme has been recommended to reduce late fee payable.
The late fee have also been rationalised. The rationalised late fee and the decision to reduce the maximum amount of late fee for small taxpayers will come into effect for future tax periods. This will provide long-term relief to small taxpayers.
The GST Council also decided to allow taxpayers to file their pending returns and avail the benefits of this Amnesty scheme with reduced late fees.
Council has recommended amendments to the CGST Act to allow self-certification of reconciliation statements instead of getting them done by chartered accountants.
As for Quarterly Return filing, the modalities of the scheme need to be worked out and the law committee will be looking into it, the Union Finance Minister said.