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Sunday 12 August 2018

Key Highlights of 28th and 29th GST Council Meet

29th GST Council Meet
The Council recognised the concerns of MSMEs and SMEs and formed a committee to address specific concerns of this sector on compliance and rates. Here is a gist of outcome from the meeting;
All Provisional IDs to apply for GSTIN by 31st August 2018
Those with Provisional IDs must fill up GST REG-01 by 31st August 2018 and get GSTINs. Details of the taxpayer along with reason for not migrating in the system have to be provided. Once this process is complete, such taxpayers will be deemed to have been registered from 1st July 2017. Which means they must comply with all return filing as applicable.
Now cashback on GST portion
The next few months will be marked by a rise in household expenses, due to the festive season leading up to Diwali. This period is likely to see intense buying and selling activity and will lead to increase in GST collections. With this in mind - the GSTCouncil decided to launch a pilot on allowing cashback on 20% of GST (max Rs 100) on payments made via specified digital means. This will be piloted in states who choose to sign up. For now, this will be launched via BHIM and Rupay. While this has been implemented to help people join the formal economy and adopt digital means - it is not clear how this will impact return filing and reporting for the sellers.
No GST refund to foreigners
Via a response to an RTI query, the finance ministry has clarified that foreigners who come to India and make purchases will not get any GST refund. The relevant provisions in the Act have not yet been made applicable. This refund has been laid down under section 15 of the Act, but is not in force yet. Bringing in this provision is likely to boost tourism in India, without severely impacting collections for the government, so we hope this is implemented soon.  

28th GST Council Meet
Simplified GST Return for Quarterly filers:
Regular taxpayers with a turnover of up to Rs 5 crores can now file GST returns on a quarterly basis against the earlier limit of Rs. 1.5 crores, either in ‘SAHAJ’ or ‘SUGAM’ depending on supplies being ‘B2C’ or ‘B2B & B2C’ respectively. Regular taxpayers with turnover over Rs. 5 crores, have to file monthly returns under the new return filing system under a system of ‘UPLOAD->LOCK->PAY’.
Changes to Input Tax Credit Rules
·         Scope increased to include:
§  Activities or transactions specified in Schedule III
§  13-seater vehicles, vessels, aircraft, vehicles for transporting money and on maintenance or general insurance services for vehicles.
§  Goods or services provided to employees by employer by law
·         Reversal of ITC for Payment of Invoice beyond 180 days from Invoice date will no longer attract Interest.
·         Cross-utilisation of ITC is being rationalised. Awaiting updates.
·         Weavers & Textile Industry to benefit with council approving the Refund of ITC accumulated due to condition of Inverted duty structure prevalent for Fabric manufacturing.
GST Registration
·         Taxpayers may now opt for multiple registrations within a State/Union territory in respect of multiple places of business located within the same State/Union territory.
·         Mandatory registration is required for only those e-commerce operators who are required to collect tax at source.
Composition Scheme limit increased
·         Upper limit raised to Rs 1.5 crores from earlier limit of Rs. 1.0 crore.
·         Dealers providing services too can avail the scheme. But, upper limit restricted to Higher of Rs 5 lakhs or 10% of Turnover in preceding financial year.
Reverse charge mechanism further deferred
·         Decision taken to defer Sec. 9(4) of CGST Act till 30th Sept 2019 with the Council referring to a Committee for studying the Pros and Cons of the provision.
·         Purchase from unregistered dealers to attract RCM only in case of certain specified supplies. Awaiting the list.
New additions to Schedule III- i.e Not a Supply; In turn No tax payable
·         Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India;
·         Supply of warehoused goods to any person before clearance for home consumption; and
·         Supply of goods in case of high sea sales.
For those yet to complete Migration into GST:
·         Taxpayers who received provisional identification numbers but could not complete the migration can now do so till August 31.
·         Taxpayers who filed Part A of FORM GST REG-26, but not Part B of the said FORM can approach the jurisdictional Central Tax/State Tax nodal officers with the necessary details.
·         Also, the Council has decided to waive the late fee payable for delayed filing of return in these cases.
Tax Compliances made easy under GST
The compliance burden has been reduced for more than 93% taxpayers in the country, as the turnover limit for the quarterly returns has been hiked from 1.5 crores to 5 crores. Additionally, a Single Page Return form has been created for filing quarterly return filers. It’s to be seen how the proposal for a monthly tax payment plugs the gap of Reconciling ITC claims. Challenge can be where the supply takes place between the Quarterly return filer and Monthly return Filer.
Sanitary Napkins exempt from GST
In one clean swoop the government has made the lives of countless Indian women easy. Sanitary napkins now will be exempt from GST. This also means that the GST paid on the input raw material used cannot be available for credit due to exemption of the end product, that indirectly impacts the pricing of this product.
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