40th GST Council Meet Completed With Relief For Small Taxpayers

40th GST Council Meet Completed With Relief For Small Taxpayers

40th Meet of the GST Council post the Covid-19 lockdown was held on Friday, 12th June 2020 at new Delhi via video conferencing. Smt. Nirmala Sitharaman the Union Finance Minister chaired this meeting. The council decided to ease the burden of Small taxpayers by providing relief on late fee and interest payable on late payments

Key Highlights of 40th council meet:

1.) Waiver in late fee: 

First Smt. Nirmala Sitharaman announced the relief in late fees for small taxpayers against non-furnishing of GST form 3B OR past pending filing returns which relate to period July 2017 to January 2020

  • For people who have no tax liability but used to fill return. There will no late fee if they have not filed their returns between July 2017 – January 2020

  • For people who have a tax liability, a maximum late fee has been capped to Rs 500/- for non-filing of GSTR-3B returns for period July 2017 – January 2020. (Reduced from 10000/- to 500/-) it means if small taxpayers who have tax liability can pay Rs. 500/- and complete filing between 1 July 2020 to 30 Sep 2020

2.) Reduction in the Interest rate on late filling: 

The second decision is further relief offer for small taxpayers during the COVID period of February, March and April 2020. 

  • If the turnover is below Rs. 5 crore the interest rate on late return filings by small taxpayers is reduced to 9% p.a. from 18% p.a., if returns of inward supplies are filed till September 30.

  • There will be no late fee and no interest for the months of May, June, and July, if returns are filed by September 30.

3.) Revocation of cancellation:

Taxpayers who have cancelled their GST registration till 12th June 2020 can file an application for the revocation of cancellation till 30th September 2020.

“Providing compliance relief, even beyond September if required, to all businesses is essential at the present stage where the primary focus has to be on business revival and working capital management,” said MS Mani, partner at Deloitte India.

Decisions Pending after 40th council meeting:

1.) Rate Rationalisation: 

Before every council meeting, states give their opinions and requirements on GST rate rationalization to the council to consider it for further discussion and conclusion. As we are aware that in the 39th GST council meeting the GST rate for mobiles was increased from 12% to 18 %. Some requests are also pending after 40th GST council meeting

  • Council discussed the inverted duty structure to the Textile but the decision is postponed on the above.

  • No decision was taken on the correction of inverted tax structure pertinent to the footwear and fertilizer sector also. (Council postponed the decision on rate rationalization of Textile, footwear and fertilizer because the duty rates need to be corrected as these products faced inverted duty structures.)

  • Uttar Pradesh raised an issue of GST rates on Brick Kilns and Pan masala shops but no conclusion was arrived at. Council Assured the UP minister that this matter will come for discussion in the next regular council meeting.

2.) Compensation Cess: 

While the state has asked the GST council for compensation cess which has to be given to the states. Smt. Nirmala Sitharaman said that it has to be discussed in July in a special council meeting.

3.) GST Collections: 

We all are aware that the taxpayers and the Government both faced with a tough balancing act. As on one hand, it needs robust GST collections to help meet its regular and extraordinary expenses during the pandemic, while on the other hand, businesses are looking for relief to help them recover loss of revenue and uncertainties.

The government is ensuring that present coronavirus pandemic is prevented from making a serious dent on the Indian economy and Businesses. It wants that Businesses should not be stopped and ensure that all small taxpayers are getting relief in tax liabilities and filing returns.