Updates On The 42nd GST Council Meeting

Updates On The 42nd GST Council Meeting

The 42nd GST Council Meeting was held in New Delhi on 5th October 2020. The meeting was chaired by the Union Finance Minister Smt. Nirmala Sitharaman. The State Finance Ministers along with Shri Anurag Thakur, Minister of Finance for States were present for the meeting.

Highlights of the meeting includes:

GST Compensation Cess

The first agenda discussed during the meeting was the release of the pending GST Compensation Cess by Centre to State. The Centre announced an immediate release of Rs 20,000 crores to States. Subsequently, Rs. 25,000 crores would be released to make up for the shortfall of cess for FY 2017-18. Importantly, the GST Council extended the tenure of Compensation cess beyond 2022 for such a period as may be required to meet the gap between the cess paid and the cess due.

Enhancement Of Return Filing System

The current return system has been improvised with an aim to make the compliance experience smoother for taxpayers.

From 1 January 2021:

  • GSTR 3B to be auto-populated with the ITC details furnished by vendor’s GSTR 1, newly introduced GSTR 2B, and liability to be auto-populated from own GSTR 1.
  • All ITC available from domestic sources and imports to be visible to a taxpayer in the electronic credit ledger.
  • Taxpayers with annual turnover < 5 crores: Quarterly filing of returns with monthly payments; For the first two months of the quarter, an option to pay 35% of the net cash tax liability of the last quarter using an auto-generated challan available.
  • The due date for filing of quarterly GSTR 1 to be revised to the 13th of the subsequent month of the succeeding quarter.

From 1 April 2021:

  • GSTR 1 to be mandatorily filed before GSTR 3B.
  • Present return filing system to be suspended.
  • GST laws to be amended to make the GSTR 1/3B return filing system as the default return filing system.

HSN Disclosure Requirements

  • For taxpayers having annual turnover < 5 crores: HSN/SAC required at 4 digit level for B2B supplies of goods/services.
  • For taxpayers having annual turnover > 5 crores: HSN/SAC required at 6 digit level for B2B supplies of goods/services.
  • Specific supplies to have a requirement of 8 digits HSN/SAC: Government empowered to notify such supplies.

Other Announcements

  • GST Council recommended a necessary amendment to GST Rules and Forms;
  • Refund to be disbursed invalidated bank account (Pan, Aadhar linked) directly;
  • Exemption provided to satellite launch services supplied by ISRO, Antrix Corporation Ltd., and NSIL to boost the domestic launch of satellites.

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