40th GST Council Meeting: Key Highlights and Outcomes

The 40th meeting of the Goods and Services Tax (GST) Council was conducted via video conferencing on June 12, 2020, under the Chairmanship of Finance Minister Nirmala Sitharaman. This significant session, the first post-COVID-19 meeting, aimed to address the impacts of the pandemic and subsequent lockdowns on GST collections and provide relief to businesses. Below, we explore the primary outcomes and decisions made during this pivotal meeting.

Significant Drop in GST Collection

During the meeting, the Finance Minister revealed a substantial drop of 45% in GST collections attributed to the COVID-19 pandemic. This decline has posed challenges regarding state compensations. The council decided to delve deeper into this issue in the next GST council meeting scheduled for July.

Reduction in Late Fees for Tax Filings

Despite the reduced GST revenue, the Government took a noteworthy step by reducing late fees for the tax period from July 2017 to January 2020, supporting taxpayers during these challenging times:

Particular	Tax period	Effective late fee
For taxpayers with no tax liability during July 2017 to January 2020	July 2017 to January 2020	NIL
For taxpayers with tax liability during July 2017 to January 2020	July 2017 to January 2020	Maximum late fee – INR 500 per return

This reduction is solely applicable to non-filing of GST returns in Form GSTR-3B, applicable from July 1, 2020, to September 30, 2020, and aims to encourage compliance. For more on this topic, refer to previous council meetings.

Targeted Reliefs for Small Taxpayers

The council introduced measures to ease the burden on small taxpayers, defined as those with a turnover of up to INR 5 Crores. The interest rate for late returns in February, March, and April 2020 is reduced from 18% to 9% per annum if filed by September 30, 2020. Additionally, late fees and interest for returns in May, June, and July 2020 are waived if submissions are made by the end of September. Learn more about similar initiatives: 31st GST Council Meeting.

One-Time Extension for Revocation of Registration

The Government has endorsed a one-time extension allowing taxpayers to apply for the revocation of GST registration cancellation until September 30, 2020, specifically for those whose registrations were cancelled before June 12, 2020. This decision aims to welcome taxpayers back into the tax compliance fold within the stipulated period. Check out related GST updates from earlier meetings.

For comprehensive understanding, explore the 45th GST Council Meeting highlights and see how these initiatives evolve.

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Frequently Asked Questions

Common questions about 40th GST Council Meeting.

The main agenda of the 40th GST Council Meeting was to provide relief measures to taxpayers and address concerns related to the drop in GST collection due to the COVID-19 pandemic and subsequent lockdowns.

According to the Finance Minister, the GST collection had dropped by a whopping 45% due to the COVID-19 pandemic and successive lockdowns.

The late fees for taxpayers with no tax liability between July 2017 and January 2020 were made nil. For taxpayers with tax liability during the same period, the maximum late fee was capped at INR 500 per return.

The reduced late fees are applicable only if the pending GST returns in Form GSTR-3B are furnished between July 1, 2020, and September 30, 2020.

For small taxpayers with a turnover of up to INR 5 crores, the interest rate on late furnishing of returns for February, March, and April 2020 was reduced from 18% per annum to 9% per annum.

For small taxpayers with a turnover of up to INR 5 crores, both late fees and interest were waived off for the period of May, June, and July 2020, provided they file their returns by September 30, 2020.

The government announced a one-time extension until September 30, 2020, for taxpayers seeking revocation of cancellation of registration, provided their registration was cancelled on or before June 12, 2020.

The issue of compensation to states due to the drop in GST collection will be discussed in the next GST Council Meeting scheduled for July 2020.

The relief measures, such as reduced late fees, lower interest rates, and extensions, were announced to provide financial assistance and encourage compliance among taxpayers affected by the COVID-19 pandemic and lockdowns.

Yes, most of the relief measures, such as reduced late fees, lower interest rates, and waiver of late fees and interest, have a deadline of September 30, 2020, by which taxpayers must file their pending returns to avail the benefits.