27th GST Council Meeting

The 27th GST Council Meeting was held on May 4th, 2018 over video conferencing. In the 27th GST Council Meeting, the major agendas taken up by the Government and GSTIN are:

• Simplification of the GST return filing forms
• Change of ownership of the GST Network
• Imposition of cess on sugar to clear the dues of farmers.

Check out the major decision taken in the 26th GST Council Meeting.

Simplification of GST Return Filing

One of the major agendas taken up in the 27th GST Council is the simplification of GST Return Filing. Initially, a taxpayer was required to file GSTR1 return, GSTR2 return and GSTR3 return. However, as there was trouble with filing forms GSTR1, GSTR 2 and GSTR3, the Government introduced a simplified return called GSTR3B upto December 31, 2017. GSRT 3B return filing was further extended upto June 2018. GSTR 2 and GSTR 3 returns were not required to be filed until further notification from the Government.

Now, in the 27th GST Council Meeting, the Government has decided to simplify GST return filing as follows and make it one return for each month.

One Monthly Return

All persons registered under GST, excluding a few exceptions like composition dealer will only have to file one monthly return soon after implementation of new system proposed below. Until then the current filing of GSTR 3B and GSTR 1 return will continue as per schedule.

The proposed return filling date will be staggered and based on the turnover of the registered person to manage load on the GSTN. Composition dealers and dealers having nil transaction will have a facility to file quarterly NIL returns. The above change will simplify GST return filing for most taxpayers and make it easier to comply.

Currently, those having more than Rs.1.5 crores turnover have to file 2 monthly returns (GSTR3B and GSTR1), while those having less than Rs.1.5 crores turnover are having to file one monthly return (GSTR3B) and one quarterly return (GSTR1).

Continuous B2B Invoice Uploading and Validation

B2B invoice uploading and validation will be made unidirectional. Hence, the recipient would not have to accept invoices on the GST portal to claim GST input tax credit. Recipients would be able to continuously see the uploaded invoices during the month and suppliers can upload invoices continuously as well at anytime.

Automatic GST Liability & Credit Calculation

Based on details of invoices uploaded by B2B dealers, the GSTN system will automatically calculate GST tax liability. GST input credit will also be calculated by the GSTN system based on invoices uploaded by suppliers.

No Automatic Input Tax Credit Reversal

Input tax credit under the new system cannot be automatically reversed by the seller in case of non-payment. In case of default in payment of tax by the seller, recovery would be made from the seller and reversal of credit from buyer will also be an option available with the revenue authorities only to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets etc.

Recovery of tax or reversal of input tax credit will be handled through a due process of issuing notice and order. The process would be online and automated to reduce the human interface.

Finally, uploading of invoices by a seller who has defaulted in payment of GST will be blocked to control misuse of automatic input tax credit facility.

Transition to New GST Return Filing Procedure

GSTR 2 and GSTR 3 return filing will continue to remain suspended. The transition to new system of filing GST returns will be done in two stages as follows:

Stage 1

In stage 1, the current filing of GSTR 1 and GSTR 3B return will continue for a period of 6 months. During this time, the new system will be developed and tested.

Stage 2

In stage 2, the facility for invoice-wise data upload and also facility for claiming input tax credit on self declaration basis, will be introduced. In stage 2, the dealer will constantly upload invoices and the information about gap between credit available to them as per invoices uploaded by their sellers and the provisional credit being claimed by them will be calculated by the system. After 6 months of this phase 2, the facility of provisional credit will get withdrawn and input tax credit will only be limited to the invoices uploaded by the sellers from whom the dealer has purchased goods.

Changes to GSTN Ownership

Currently GSTN is owned by the Government (Central and State) along with five private financial institutions — HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment and LIC Housing Finance. GSTN is incorporated as a Section 8 Company.

Since, the data handled by GSTN is very sensitive, the ownership of GSTN will be fully transferred to the Central Government.

CESS on Sugar

The 27th GST Council Meeting also took up the issue of levying 5% GST Cess on sugar and decided to come up with a decision within 2 weeks from now. The proposed Cess levied on sugar will be used by the Government to finance the gap between the cane price mills pay to farmers in accordance with a revenue-sharing formula recommended by the Rangarajan Committee and the benchmark rate – fair and remunerative price (FRP) — fixed by the Central Government. The proposed Cess could be in the range of Rs.1 to R.1.50 per kg of sugar.

Incentive for Digital Payments

Keeping in view the need to move towards a less cash economy, the Council has discussed in detail the proposal of a concession of 2% in GST rate [where the GST rate is 3% or more, 1% each from applicable CGST and SGST rates] on 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 payment. This decision will also be taken before the next GST Council Meeting.