GST Council decides to extend Compensation Cess levy beyond five year
06 October 2020
The 42nd meeting of the GST Council, chaired by union minister of finance and corporate affairs Nirmala Sitharaman through video conferencing, decided to extend the time for levy of Compensation Cess beyond the transition period of five years, ie, beyond June 2022, for such period as may be required to meet the revenue gap.
The central government also on Monday released compensation of Rs20,000 crore to states towards loss of revenue during 2020-21 while an amount of about Rs25,000 crore towards IGST of 2017-18 will be released by next week.
The 39th meeting of the GST council held in March 2020 had recommended an incremental approach to incorporate features of the new return system in the present familiar GSTR-1/3B scheme. Various enhancements have since been made available on the GST Common Portal. With a view to further enhance Ease of Doing Business and improve the compliance experience, the Council has approved the future roadmap for return filing under GST.
The approved framework aims to simplify return filing and further reduce the taxpayer’s compliance burden in this regard significantly, such that the timely furnishing of details of outward supplies (GSTR-1) by a taxpayer and his suppliers would:– (i) allow him to view the ITC available in his electronic credit ledger from all sources, ie, domestic supplies, imports and payments on reverse charge etc prior to the due date for payment of tax, and (ii) enable the system to auto-populate return (GSTR-3B) through the data filed by the taxpayer and all his suppliers. In other words, the timely filing of GSTR-1 statement alone would be sufficient as the return in Form GSTR-3B would get auto prepared on the common portal. To this end the Council recommended / decided the following:
- Due date of furnishing quarterly GSTR-1 by quarterly taxpayers to be revised to 13th of the month succeeding the quarter effective 1 January 2021;
- Roadmap for auto-generation of GSTR-3B from GSTR-1s by Auto-population of liability from own GSTR-1 effective 1 January 2021; and
- Auto-population of input tax credit from suppliers’ GSTR-1s through the newly developed facility in Form GSTR-2B for monthly filers effective 1 January 2021 and for quarterly filers from 1 April 2021.
In order to ensure auto population of ITC and liability in GSTR 3B, Form GSTR 1would be mandatorily required to be filed before FORM GSTR 3B from 1 April 2021.
The present GSTR-1/3B return filing system will be extended till 31 March 2021 and the GST laws will be amended to make the GSTR-1/3B return filing system as the default return filing system.
As a further step towards reducing the compliance burden, particularly on the small taxpayers having aggregate annual turnover less than Rs5 crore, the Council’s earlier recommendation of allowing filing of returns on a quarterly basis with monthly payments by such taxpayers to be implemented from 1 January 2021. Such quarterly taxpayers would, for the first two months of the quarter, have an option to pay 35 per cent of the net cash tax liability of the last quarter using an auto generated challan.
Revised requirement of declaring HSN for goods and SAC for services in invoices and in Form GSTR-1 with effect from 1 April 2021 as under:
- HSN/SAC at 6 digits for supplies of both goods and services for taxpayers with aggregate annual turnover above Rs5 crore;
- HSN/SAC at 4 digits for B2B supplies of both goods and services for taxpayers with aggregate annual turnover up to Rs5 crore;
- Government to have power to notify 8 digit HSN on notified class of supplies by all taxpayers;
- The Council has recommended various amendments in the CGST Rules and Forms, which include provision for furnishing of Nil Form CMP-08 through SMS; and
- Refund to be paid/disbursed in a validated bank account linked with the PAN and Aadhaar of the registrant effective 1 January 2021.
- To encourage domestic launching of satellites, particularly by young start-ups, the satellite launch services supplied by Isro, Antrix Corporation Ltd and NSIL would be exempted.