16 March 2020

Decisions in the 39th GST Council meeting held on 14 March 2020‚Äč

E-invoicing and QR Code
  • The date of implementation of E-invoicing and Quick Response (QR) code has been deferred to 1 October 2020
  • Certain classes of registered persons (insurance, banking, financial institution, non-banking financial company, goods transport agency, passenger transportation, etc.) to be exempted from issuance of e-invoices or capturing QR code
Regular compliances
  • Existing system of filing return in FORM GSTR-1 and GSTR-3B to continue till September 2020. 
  • The new return system would be introduced in a phased manner. 
GST Annual return and GST Audit
S. no. Particulars Proposed amendment
1 Taxpayers with aggregate turnover less than INR 2 crores Late fees has been waived for delayed filing of GSTR-9 and GSTR-9C for FY 2017-2018 and FY 2018-2019. 
2 Taxpayers with aggregate turnover of INR 2 crore and above but less than INR 5 crores Relaxation for filing GSTR-9C (reconciliation statement) for FY 2018-2019. Annual return in GSTR-9 would be required to be filed as there is no relaxation provided.
3 Taxpayers with aggregate turnover more than INR 5 crores The due date to file GSTR-9 and GSTR-9C for FY 2018-2019 for all the taxpayers has been extended till 30 June 2020. 

‚ÄčAmendment in law / rules
  • Section 50 of CGST Act, 2017 to be amended retrospectively from 1 July 2017 to provide for payment of interest on delayed payment of GST only on net cash tax liability
  • It has been proposed to allow refund of excess payment of tax through both cash and credit
  • It has been proposed to prescribe a mechanism for reversal of ITC in case of capital goods party used for affecting taxable supplies and party for exempt supplies
Export related
  • It has been proposed to prescribe a ceiling on value of export supplies for the purpose of calculation of refund on zero rated supplies
  • Bunching of refund claims has been proposed to be allowed across financial years to facilitate exporters
  • Recovery provisions to be introduced where refund isgranted to the exporter and exports proceeds are not realized within the timelines prescribed under Foreign Exchange Management Act
  • Present exemptions from IGST and Cess on imports made under Advance Authorization scheme /Export Promotion Capital Goods scheme / by Export Oriented Unit has been extended upto 31 March 2021
Trade facilitation measures
  • As a one-time measure, an application for revocation of cancellation of registration can be filed till 30 June 2020 with respect to the registrations which have been cancelled till 14 March 2020
  • A new facility of ‘Know your supplier’ would be introduced to enable every registered person to have basic information about the suppliers with whom they conduct/propose to conduct business
Initiatives to curb frauds
  • In order to ensure smooth transition to new return system and also to plug the problem of tax evasion, the outward supplies’ liability as disclosed in GSTR-1 to be linked with GSTR-3B. Further, the ITC as availed in GSTR-3B to be linked with the ITC as appearing in GSTR-2A
  • Passing of ITC by newly registered taxpayers to be allowed after physical verification of premises and conduct of financial ‘Know Your Client’

Rationalization of GST rates (effective 1 April 2020) 
S. no. Particulars Old GST Rate New GST Rate Remarks
1 Mobile Phones and specified parts 12% 18%
2 Handmade matches 5% 12%
Rates made uniform to remove ambiguity in classification
3 Other matches 18% 12%
4 Maintenance, repair and Overhaul services (MRO) on aircraft 18% 5%
- 100% ITC to be available
- Place of supply has been changed from performance based to the location of recipient so that MRO services for overseas customer can qualify as export.

Circulars to be issued on following subject matters for clarifying – 
  • Apportionment of ITC in case of business re-organization
  • Appeals during non-constitution of Good and Services Tax Appellate Tribunal
  • Refund issues
  • Special procedure for registered persons who are corporate debtors under Insolvency and Bankruptcy Code, 2016 and for thoseundergoing corporate insolvency resolution process
Our Comments

The decision of the GST council to extend the due date for filing GSTR-9 and GSTR-9C for FY 2018-2019 is a welcome move, which will provide a breather for all the taxpayers. Further, the decision to defer the implementation of e-invoicing, QR code and new return system has been made keeping in mind the operational and IT readiness of both government and industry.  The decision to levy interest on net tax cash liability instead of gross tax liability has come as a huge relief to the industry and will help reduce the mounting litigations. In a nutshell, despite the dampener relating to increase in the GST rate of mobile phones, the decisions taken by the GST Council focus majorly on trade facilitation, curbing frauds, and removal of roadblocks for industry.

This alert is based on the press release issued by the GST Council. Relevant notifications are yet to be issued by the government.
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