GST Council Meet Highlights: No monthly returns for small taxpayers; refund claims get watertight with PAN, Aadhaar

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Updated: October 5, 2020 9:14:57 pm

GST Council Meeting Highlights: Taxpayers with annual turnover more than 5 crore will have to provide HSN code up to 6 digits from 1 April 2021.

GST Council Meeting live, nirmala sitharaman, states' compensation cess, low revenue, income loss, GST ratesOn the back of low revenue collection and disruptions caused by the coronavirus pandemic, the states are heading towards a GST revenue shortfall of Rs 2.35 lakh crore.

GST Council Meeting Highlights: After a day-long GST Council meeting held today, the Centre and the states could not draw consensus on the issue of borrowing to make up for compensation shortfall. Finance Minister Nirmala Sitharaman said that the next meeting will be on 12 October. However, there was various other decision taken in today’s meeting. As per the latest revision, instead of Rs 97,000 crore, Rs 1.1 lakh crore will be given in Option 1 for the states’ borrowings. Also, Rs 20,000 crore GST compensation collected this year will be disbursed by tonight. Further, from 1 January 2021, small taxpayers with annual turnover less than Rs 5 crore will not be required to file monthly returns, reducing their compliance burden from filing 24 returns to 8 returns. However, payments by those taxpayers will be made through challan every month. On the other hand, the compliance burden for large taxpayers has been increased as they will have to provide HSN code up to 6 digits while small taxpayers will have to provide HSN code up to 4 digits for B2B transactions from 1 April. Meanwhile, the refunds will be given only in bank account validated with PAN and Aadhaar details from 1 January 2021.

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Highlights

    19:56 (IST)05 Oct 2020
    More options other than two?

    States that do not opt for any of of the two options, will also be addressed: GST Council

    19:35 (IST)05 Oct 2020
    States may borrow more as GST Council revises borrowing limit

    Instead of Rs 97,000 crore, Rs 1.1 lakh crore will be given in Option 1 of the states' borrowings: FM Sitharaman

    19:33 (IST)05 Oct 2020
    Consensus could not be drawn between states and Centre

    FM Nirmala Sitharaman apprised that the consensus between the Centre and the states could not be drawn in today's meeting. Next meeting is scheduled on 12 October.

    19:31 (IST)05 Oct 2020
    GST compensation collected this year will be disbursed today

    FM Nirmala Sitharaman said that Rs 20,000 crore GST compensation will be disbursed by tonight. 

    19:28 (IST)05 Oct 2020
    Satellite launch will attract no GST

    In an effort to encourage domestic launching of satellites, 18 per cent of GST will be completely exempted: GST Council

    19:27 (IST)05 Oct 2020
    PAN, Aadhaar compulsory for claiming returns

    Refunds will be given only in bank account validated with PAN and Aadhaar details from 1 January 2021: GST Council

    19:26 (IST)05 Oct 2020
    HSN Code mandatory from April 1

    Taxpayers with annual turnover more than 5 crore will have to provide HSN code up to 6 digits and small taxpayers will have to provide HSN code up to 4 digits from April 1. 

    19:25 (IST)05 Oct 2020
    Calculation of input tax credit

    GSTR 2B will help taxpayers to calculate input tax credit: GST Council

    19:24 (IST)05 Oct 2020
    Relief for small taxpayers

    Small taxpayers will need to file 8 returns from 24 returns: GST Council

    19:23 (IST)05 Oct 2020
    Small taxpayers will not be required to file monthly returns from 1 January

    From 1 January onwards, small taxpayers with annual turnover less than Rs 5 crore will not be required to file monthly returns. However, payment will be made through challan every month: GST Council

    19:22 (IST)05 Oct 2020
    IGST dues resolved

    Rs 24,000 crore of IGST dues will be given to those states that were paid less earlier. Extra funds to other states will be retrieved later: FM Sitharaman

    19:17 (IST)05 Oct 2020
    FM Sitharaman begins addressing media

    FM Sitharaman starts addressing media on outcomes of 42nd GST council meeting. 

    19:08 (IST)05 Oct 2020
    No consensus drwan in today's GST Council meeting

    After a day-long GST Council meeting held today, the Centre and the states could not draw consensus on the issue of borrowing to make up for compensation shortfall. The next meeting will be on 12 October, CNBC TV18 said citing sources. 

    18:59 (IST)05 Oct 2020
    Centre may constitute GoM instead of committee of officers on compensation cess

    Centre can consider constituting a GoM instead of committee of officers on compensation cess issue to discuss extension of the cess levy, CNBC TV18 said citing sources. 

    18:41 (IST)05 Oct 2020
    Punjab says monthly compensation collections are improving

    Punjab pitched for central borrowings; says, revenues improving, monthly compensation collections are now above Rs 7,000 cr; compensation shortfall of not more than Rs 60,000cr will be needed, CNBC TV18 said citing sources.

    18:41 (IST)05 Oct 2020
    Goa presents proposal to hike cess on tobacco products

    GST Council again begins deliberations on compensation issue; Goa presented a proposal to hike cess on tobacco goods and reduce the borrowing under Option1, CNBC TV18 said citing sources.

    18:26 (IST)05 Oct 2020
    Press conference delayed as the meeting is in progress

    "As the GST Council meeting is still in progress, the press briefing is delayed. The briefing will commence after the GST Council meeting gets over," said the Ministry of Finance. 

    18:10 (IST)05 Oct 2020
    Non-BJP ruled states are in disagreement with Centre on the compensation issue

    States were given seven days' time to think and respond over the proposal. However, the non-BJP ruled states are in disagreement with the Centre on the compensation issue.

    17:38 (IST)05 Oct 2020
    FM Sitharaman to address media soon

    Finance Minister Nirmala Sitharaman will address the media soon on the outcomes of the GST Council meeting held today. 

    17:23 (IST)05 Oct 2020
    FinMin had said that cess collected will be transferred to states in subsequent year

    Finance Ministry accepted the audit observation and stated in February 2020 that the proceeds of cess collected and not transferred to Public Account would be transferred in the subsequent year, according to CAG.

    17:13 (IST)05 Oct 2020
    Reason for understatement of fiscal deficit

    The Centre used funds from compensation cess for other purposes which led to an overstatement of revenue receipts and understatement of fiscal deficit for the year: CAG

    17:05 (IST)05 Oct 2020
    Out of the Rs 62,612 crore GST Compensation Cess collected in 2017-18, Rs 56,146 crore was transferred to the non-lapsable fund

    In the audit report of government accounts, the Comptroller and Auditor General (CAG) flagged that the amount was to be credited to the non-lapsable GST Compensation Cess collection fund for payment to states for loss of revenue due to the implementation of GST since 2017, but the government did not do so, and thus violated the GST law. CAG said out of the Rs 62,612 crore GST Compensation Cess collected in 2017-18, Rs 56,146 crore was transferred to the non-lapsable fund. In the following year (2018-19), Rs 54,275 crore out of Rs 95,081 crore collected was transferred to the fund.

    17:02 (IST)05 Oct 2020
    Centre used GST compensation cess elsewhere, violated law: CAG

    The CAG has found that the Union government in the very first two years of the GST implementation wrongly retained Rs 47,272 crore of GST compensation cess that was meant to be used specifically to compensate states for loss of revenue

    16:58 (IST)05 Oct 2020
    Clash of ITR filing date for audit cases and new extended date for filing annual GST returns

    “With the extension of deadlines to file GSTR 9 & 9C, both the ITR filing date for audit cases and the annual GST returns will now fall due on the same dates. Taxpayers must start preparing well in time for both to meet the concurrent due dates,” Archit Gupta, Founder and CEO – ClearTax, told Financial Express Online.

    16:46 (IST)05 Oct 2020
    Interest-free borrowing limit for states

    With few states opposing the Centre's options, the Centre had proposed to increase the interest-free borrowing limit for states to around Rs 1.1 lakh crore through the special window of the Reserve Bank of India.

    16:28 (IST)05 Oct 2020
    Centre's calculation of state's revenue shortfall

    As per the Centre's calculation, the compensation requirement by the states in the current fiscal would be Rs 3 lakh crore, of which Rs 65,000 crore is expected to be met from the cess levied in the GST regime. Hence, the total shortfall is estimated at Rs 2.35 lakh crore.

    16:12 (IST)05 Oct 2020
    Cess levied on luxury, sin and demerit goods are used to compensate states for any revenue loss

    Under the GST structure, taxes are levied under 5, 12, 18 and 28 per cent slabs. On top of the tax slabs, a cess is levied on luxury, sin and demerit goods and the same are used to compensate states for any revenue loss.

    15:40 (IST)05 Oct 2020
    Centre is not obliged under GST laws to compensate for revenue loss

    Attorney General of India K K Venugopal had earlier said that there is no obligation on the Centre under the GST laws to compensate for the loss of revenue. He had said that the GST Council has to find ways to meet any revenue shortfall arising out of GST implementation.

    15:12 (IST)05 Oct 2020
    GST Council agrees to raise borrowing limit

    GST Council agreed to hike the borrowing limit under Option 1 to Rs 1.10 lakh cr based on 7 per cent growth rate. Cess will be collected until interest and principal amount of borrowings are fully paid. -- Sources told CNBC TV18. 

    14:59 (IST)05 Oct 2020
    Compensation Cess is not charged on goods exported under bond

    Compensation Cess is not charged on goods exported by an exporter under bond and the exporter will be eligible for a refund of an input tax credit of Compensation Cess relating to goods exported. In case goods have been exported on the payment of Compensation Cess, the exporter is eligible for a refund of Compensation Cess paid on goods exported by him. 

    14:29 (IST)05 Oct 2020
    Finance Minister Nirmala Sitharaman's address at 5:45 pm today

    Finance Minister Nirmala Sitharaman will address media on the outcomes of the 42nd GST Council meeting at 5:45 pm today. 

    14:21 (IST)05 Oct 2020
    GST Council extends compensation cess levy beyond June 2022

    GST Council has decided to extend the compensation cess levy beyond June 2022, according to ET Now. 

    14:10 (IST)05 Oct 2020
    Govt’s investment proposals fall to 16-year low in second quarter; manufacturing attracts most funds

    Proposals for new investment in the second quarter of the current fiscal continued to remain as depressing as at the beginning of lockdown in March 2020. Investment proposals worth Rs 58,700 crore were made for the creation of new capacities during Q2 FY21, compared to around Rs 69,000 crore in the first quarter, and Rs 3.94 lakh crore in the quarter before that, according to CMIE. 

    13:50 (IST)05 Oct 2020
    Proposal to extend compensation cess levied on luxury, demerit and sin goods

    The Centre had proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing.

    13:12 (IST)05 Oct 2020
    Revenue from these two areas shoot up

    During September, the revenues from the import of goods were 102 per cent and the revenues from the domestic transaction were 105 per cent of the revenues from these sources during the same month last year. 

    13:12 (IST)05 Oct 2020
    GST collections in September rise to near pre-Covid levels

    GST collections in the month of September showed a strong sign of recovery after subdued collections in the previous months. The government collected Rs 95,480 crore as gross GST revenue in the month, according to the Ministry of Finance. The GST revenue for the month is 4 per cent higher than the same month last year. 

    12:54 (IST)05 Oct 2020
    Deadline for filing the annual return in GSTR-9 and GSTR-9C for 2018-19 is extended

    The government has extended the deadline for filing the annual return in GSTR-9 and GSTR-9C for 2018-19 from 30 September to 31 October 2020. After obtaining due clearances from the Election Commission in view of the Model Code of Conduct, the government has extended the due date for furnishing annual return in GSTR-9 and GSTR-9C.

    12:25 (IST)05 Oct 2020
    No consensus is expected in today's meet

    No consensus is expected and the opposition would push the council to frame dispute resolution mechanisms under the council framework and the matter be taken up under the same. An overall heated debate is expected considering the fact that all the opposition ruled states have done their homework by meeting once ahead of today’s meeting. -- Divakar Vijayasarathy, Founder and Managing Partner, DVS Advisors LLP.

    12:24 (IST)05 Oct 2020
    Opposition ruled states have not responded to Centre's two options

    “Today’s GST council meeting would discuss the compensation to states. The opposition ruled states have not responded to the Central Government’s two options of borrowing to compensate the shortfall in GST collections," said Divakar Vijayasarathy, Founder and Managing Partner – DVS Advisors LLP.

    12:12 (IST)05 Oct 2020
    Centre's promise for compensation cess

    The Centre had promised compensation to the States for shortfall in tax revenue due to GST implementation for a period of five years.

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