GST Council meet: Simple return filing to digital pay incentive; highlights
The GST Council on Friday decided to roll out in six months a new, simpler process of filing monthly returns, as it deferred a decision on imposing a sugar cess and allowing an incentive for digital payments. In its 27th meeting, the GST Council also decided to take complete ownership of the goods and services tax network (GSTN) by acquiring the equity share held by non-government institutions.
However, deferring the decision on the imposition of a cess on sugar as well as a two per cent incentive for making payments digitally, the panel decided to set up two separate groups of five finance ministers of states to give recommendations on both issues.
After the meeting, Finance Minister Arun Jaitley said the new simplified return filing process approved by the GST Council will require all taxpayers, barring composition dealers and those with "nil transaction", to file only one GST return every month.
For composition dealers and dealers having "nil transaction", only one return will have to be filed every quarter.
The new system would be put in place within the next six months and another six months would be given to the taxpayers to make the complete transition, Jaitley said.
The facility of provisional input tax credit will be withdrawn only after the new system is completely implemented, which is expected to take around one year. After it comes fully into force, the input credit will be auto-generated for the buyers based on invoices uploaded by the sellers.
The GST Council also discussed the proposal to impose a cess on sugar over and above the five per cent GST considering the sugarcane farmers were in distress with the cost of producing sugar being significantly higher than its market price.
Arun Jaitley said the GST Council had decided to set up a group of five ministers within two days to make a recommendation on ways to meet such contingencies where the cost of a commodity is higher than its selling price.
The committee will submit its report within two weeks keeping in view the urgency of the matter, Jaitley said.
GSTN is handling large-scale invoice level data of millions of business entities, including data relating to exports and imports.
Here are the top 5 highlights of the 27th GST Council meeting:
1. Simplified, single GST return to roll out in 6 months: The GST Council on Friday approved the rollout of a new simplified process under which a taxpayer will have to file a maximum of one GST return every month.
For composition dealers and dealers with "nil transaction", only one return will have to be filed every quarter.
The new system would be put in place within the next six months and another six months would be given to the taxpayers to make the complete transition, Finance Minister Arun Jaitley announced after the 27th meeting of the GST Council in Delhi.
A three-phase transition to a simplified return regime -- a phased manner with GSTR1 and GSTR 3B continuing for six months, single return with the possibility of provisional credit for another six months and only a single return with credits of only invoices uploaded by supplier thereafter -- would enable adequate bandwidth for both businesses and the GSTN.
Apart from that, the return form will also be simplified by reducing the information required to be filled in, the government said.
How the new return filing process is simpler: What makes the new process much simpler is that unlike the system proposed earlier, the buyer will not have to upload any invoice and can simply view the invoices uploaded by the seller and confirm them.
"So there will only be a unidirectional flow of invoices unlike the to-and-fro movement in the earlier system. And there will be no need for invoice matching as input credit will be given only on invoices uploaded by the seller and confirmed by the buyer," Hasmukh Adhia said.
Apart from that, the return form will also be simplified by reducing the information required to be filled in. While B2B dealers will have to fill invoice-wise details of the outward supply made by them, B2C dealers will have to just declare their total turnover on different tax slabs.
"Based on the return filed, the system will automatically calculate the tax liability. The input tax credit will be calculated automatically as well based on invoices uploaded by the sellers," the Finance Secretary said.
2. GST Council rules out automatic reversal of input tax credit: The GST Council also ruled out the automatic reversal of input tax credit from the buyer on non-payment of tax by the seller.
"In case of default in payment of tax by the seller, recovery shall be made from the seller. However, reversal of credit from the buyer through due process of law shall also be an option available with the revenue authorities to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets," Adhia said.
3. GSTN to be converted to govt entity: After the GST Council meeting, Finance Minister Arun Jaitley, who had for months defended the equity structure of GSTN, said he had proposed to the panel for a change in the structure of GSTN which was accepted.
"Considering the nature of 'state' function performed by GSTN, the Council felt that GSTN be converted into fully-owned government company," an official statement said.
The central government currently holds 24.5 per cent stake in GSTN and state governments collectively hold an equivalent stake. The remaining 51 per cent is held by five financial institutions.
The 51 per cent equity will be acquired collectively by both Central and state governments following which they will hold 50-50 share in the private limited, not-for-profit company created to provide shared IT infrastructure and services for implementation of GST.
He said the collective share of state governments will be pro rata, divided among states in accordance with their GST ratios.
The Goods and Services Tax Network - Special Purpose Vehicle (GSTN-SPV) was created as a private limited, not-for-profit company under Section 25 of the Companies Act, 1956 (Section 8 of the Companies Act, 2013) on March 28, 2013, with an objective to provide shared IT infrastructure and services to Centre and States Governments, tax payers and other stakeholders for implementation of GST in the country.
4. GST Council on sugar cess: The GST Council on Friday decided to refer to a five-member committee of state finance ministers the proposal of levying cess on sugar as the Centre seeks to raise additional resources for providing production subsidy worth Rs 15.4 billion (Rs 1,540 crore) to sugarcane farmers.
The proposals of cess comes in the wake of huge losses suffered by mills as ex-factory prices have fallen to Rs 26-28 per kg as against the production cost of Rs 35 per kg plus.
Once the decision is taken by the GST Council, the government would come out with an ordinance to impose cess on sugar, Finance Secretary Hasmukh Adhia said.
Earlier this week, the Union Cabinet had approved a subsidy of Rs 5.5 per quintal of cane to address the distress situation. The subsidy would be directly transferred to cane farmers.
5. GST Council on digital payments: The council, at its 27th meeting, also referred the issue of incentivising digital payments to a group of state finance ministers after some states wanted a negative list.
Most member states on the panel were agreeable to the proposal of giving a concession of 2 per cent in GST rate (where the tax rate is 3 per cent or more) on business-to-consumer (B2C) supplies, for which payment is made through cheque or digital mode, subject to a ceiling of Rs 100 per transaction, so as to incentivise promotion of digital payments.
It was decided to constitute in two days a separate group of five ministers from states to recommend a two per cent concession, subject to a ceiling of Rs 100 per transaction, to consumers if they pay through digital modes. This report will be submitted before the next GST Council meeting.