Key Highlights of 42nd GST Council Meeting

nd GST Council Meeting was held on 5th October 2020 via video conferencing mode. The key recommendations made by the GST council, during the meeting, are highlighted in the present article.

Various amendments in GST return

With effect from 1st January 2021, it is recommended to revise the due date for filing of quarterly Form GSTR-1 return to 13th of the month succeeding the end of the quarter.
Auto-generation of Form GSTR-3B based on Form GSTR-1 as under-

Particulars	Basis of auto-generation	Effective date
Auto-generation of tax liability	Taxpayer’s own Form GSTR-1	1st January 2021
Auto-generation of Input Tax Credit	Supplier’s Form GSTR-1 via new facility developed in Form GSTR-2B	1st January 2021 (for monthly filers) 1st April 2021 (for quarterly filers)

It is recommended to continue present Form GSTR-1 and Form GSTR-3B till 31st March 2021.
Recommendation for taxpayer having aggregate annual turnover less than INR 5 Crores-
- With effect from 1st January 2021, it is recommended to allow such taxpayer (i.e. taxpayer whose annual turnover is less than INR 5 Crores) to file the return on a quarterly basis, however, tax to be discharged on monthly basis.
- Such taxpayer would have an option, for the first two months of the respective quarter, to pay 35% of the net cash tax liability of the last quarter by using an auto-generated challan.

Amendment in requirement of declaration of HSN and SAC in invoices and Form GSTR-1

Following table explains the amended requirement of declaration of HSN and SAC-

Number of digits of HSN/ SAC to be declared	Particulars
6 digits	A taxpayer having aggregate annual turnover above INR 5 Crores.
4 digits	In case of B2B supplies (for both goods and services) for taxpayer having aggregate annual turnover up to INR 5 Crores.
8 digits	Notified class of supplies by all the taxpayers.

Please note HSN code is applicable for supply of goods, whereas, SAC is applicable for supply of services.

The above amendment will be effective from 1st April 2021.

Compensation Cess

It is recommended to extended Compensation Cess beyond the transition period of five years. That means the Compensation Cess will remain applicable even after 1st June 2022. Such extension will be for the period as may be required to meet up the revenue gap.
Compensation Cess of INR 20,000 Crores will be released to the States on 5th October 2020 against revenue loss during the year 2020-2021.

Miscellaneous recommendations

Incorporation of the facility to furnish NIL Form CMP-08 return via SMS.
From 1st January 2021, a refund will be paid or disbursed in a validated bank account which linked with the PAN & Aadhaar of the registrant.
The satellite launching services supplied by ISRO, NSIL and Antrix Corporation would be exempted. The exemption aims to promote domestic satellite launching specifically by young start-ups.

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Frequently Asked Questions

Common questions about 42nd GST Council Meeting.

The GST Council recommended revising the due date for filing quarterly GSTR-1 return to the 13th of the succeeding month from January 1, 2021. Additionally, GSTR-3B will be auto-generated based on GSTR-1 data from January 1, 2021 for tax liability and from April 1, 2021 for input tax credit for quarterly filers.

From April 1, 2021, taxpayers with an annual turnover above Rs. 5 crores will need to declare 6-digit HSN/SAC codes. For B2B supplies, taxpayers with up to Rs. 5 crores turnover will need to declare 4-digit codes. All taxpayers will need to declare 8-digit codes for notified classes of supplies.

The GST Council recommended extending the Compensation Cess beyond the initial transition period of five years, i.e., beyond June 1, 2022, for as long as required to meet the revenue gap. Additionally, Rs. 20,000 crores will be released to states on October 5, 2020, against revenue loss in 2020-21.

The GST Council recommended incorporating a facility to furnish nil CMP-08 returns via SMS from January 1, 2021.

From January 1, 2021, refunds will be paid or disbursed only in a validated bank account linked with the PAN and Aadhaar of the registrant.

The GST Council recommended exempting satellite launching services supplied by ISRO, NSIL, and Antrix Corporation to promote domestic satellite launching, especially by young start-ups.

The GST Council recommended allowing taxpayers with an annual turnover below Rs. 5 crores to file returns quarterly from January 1, 2021, while discharging tax liability monthly. They can pay 35% of the previous quarter's net cash liability for the first two months using an auto-generated challan.

The GST Council recommended continuing with the present GSTR-1 and GSTR-3B returns till March 31, 2021.

Auto-generating GSTR-3B based on GSTR-1 data aims to simplify the return filing process by pre-populating taxpayers' liabilities and input tax credit based on their own and their suppliers' submitted data, respectively.

The Compensation Cess is being extended beyond the initial transition period to continue compensating states for the revenue gap arising due to the implementation of GST, until the gap is bridged.