GST Update: Recommendations made in the 43rd GST Council Meeting

"We rise by lifting others." Robert Ingersoll

With the second wave of COVID-19 at its peak, the GST Council for the benefit of taxpayers and professional took various decisions, relating to changes in GST rates on supply of goods and services and other changes related to GST law and procedure.

These measures are taken by the Government for relieving the taxpayers from tax payment on imperative items and compliances to some extent.

The press information bureau has issued press release on 28 May 2021 incorporating the recommendations made in the 43rd GST Council meeting.

Key recommendations made are summarized below for your kind perusal:

I. Changes in GST rates on supply of goods and services

Goods

• Exemption from IGST applicable on specified COVID-19 related goods such as medical oxygen, oxygen concentrators etc. for donating to the government or on recommendation of state authority to any relief agency till 31 August 2021
• Exemption from IGST applicable on Amphotericin B, in view of rising Black Fungus cases
• Reduction in GST rate applicable on Diethylcarbamazine (DEC) tablets from 12% to 5%
• Clarification regarding leviability of IGST on repair value of goods re-imported after repairs
• Clarification regarding GST rate of 12% to apply on parts of sprinklers/ drip irrigation systems falling under tariff heading 8424 (nozzle/laterals) to apply even if these goods are sold separately

Services

• GST on MRO services in respect of ships/vessels reduced from 18% to 5%. Also, it has been specified that place of supply of B2B supply of MRO Services in respect of ships/ vessels shall be deemed as location of recipient of service
• Clarification regarding supply of service by way of milling of wheat/ paddy into flour/ rice to Government/ local authority etc. for distribution of such flour or rice under PDS is exempt from GST, if the value of goods in such composite supply does not exceed 25%. Otherwise, such services would attract GST at the rate of 5%, if supplied to any person registered in GST
• Clarification regarding services supplied by Govt. to its undertaking/PSU by way of guaranteeing loans taken by such entity from banks and financial institutions is exempt from GST

II. Measures for Trade facilitation

• Amnesty Scheme to provide relief to taxpayers regarding late fee for pending returns for the tax periods from July 2017 to April 2021
• Rationalization of late fee: Late fee imposed for delay in furnishing Form GSTR-3B and Form GSTR-1, to be caped per return, for prospective tax periods
• Following relaxations to the taxpayers in addition to relief measures earlier provided vide notifications, in view of surge in COVID-19:
• For large taxpayers, having aggregate turnover more than INR 5 Crores, lower rate of interest @9% for first 15 days after the due date of filing return in Form GSTR-3B for the tax period May 2021
• For large taxpayers, waiver of late fee for delay in furnishing returns in Form GSTR-3B for the tax period May 2021 for 15 days from the due date
• Extension of due date of filing GSTR-1 for the month of May 2021 by 15 days
• Extension of due date of filing ITC-04 for quarter ending March 2021 to 30 June 2021
• Rule 36(4) condition for availing ITC to be applied cumulatively for tax periods April, May and June 2021 in the GSTR-3B for the tax period June 2021
• Companies to be allowed to file returns using Electronic Verification Code (EVC), instead of Digital Signature Certificate (DSC) till 31 August 2021
• Time limit for completion of various actions, by any authority or by any person, under the Act, which falls during the period from 15 April 2021 to 29 June 2021, to be extended up to 30 June 2021 subject to certain exceptions

III. Miscellaneous measures

• Amendment made in Section 35 and 44 of CGST Act through Finance Act, 2021 to be notified – No need of certification of GST reconciliation statement from auditors for FY 2020-21, self-certification would only be required
• The filing of annual return and reconciliation statement for FY 2020-21 to be made optional for certain taxpayers
• Retrospective amendment in Section 50 of the CGST Act with effect from 01.07.2017, providing for payment of interest on net cash basis, to be notified
• GST Council recommended amendments in certain provisions of the Act so as to make the present system of GSTR-1/3B return filing as the default return filing system in GST
• Please note that the aforementioned recommendations would become effective through issuance of relevant notifications/ circulars by the CBIC.
• Conclusion: The measures taken by the GST Council are in the right direction for the benefit of taxpayers. However still there are many anomalies in the GST law, which needs resolution from the end of GST Council/ CBIC. With a hope that the same will be resolved very soon by this progressive GST Council, this article is hereby concluded. Do comment your thoughts.

Source: Press Release issued by PIB on 28 May 2021.

The author is working in the field of Indirect taxes from past 4 years. He has written numerous articles on various topics of Indirect taxes. He can also be reached at lakshit.jindal.921@gmail.com.