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27th GST Council Outcomes and Issues Addressed

27th GST Council Outcomes and Issues Addressed

27th GST Council held by Mr. Arun Jaitley, Honorable Finance Minister, Government of India along with the ministerial panel headed by Bihar’s Deputy Chief Minister Sushil Kumar Modi. 27th Council meeting held through Video- Conference due to concerns over Jaitley’s health as recommended by Doctors has significant decisions to make. So far GST Regime has ended up collecting a total of Rs 7.41 lakh crore for the whole fiscal.

Critical Points addressed:

  • Government to acquire the current 51% of GSTN holding held by private Entities and to be shared equally between central and state. HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment Co and LIC Housing Finance Ltd are the private entities who held 51 per cent stake in GSTN
  • Single GST Return Filing to replace the multiple GST Return Filing system

    Proposed three Return Filing Processes:

    • Provisional credit should not be granted unless the taxpayers file returns and pay taxes.
    • Provisional credit could be granted to a taxpayer, but returns have to be filed within 3-4 months and taxes have to be paid or else the credit amount would be reversed.
    • Credit could be extended once the invoice uploaded by the supplier is verified by the purchaser on the GSTN portal.
  • Digital payments for retail transactions for GST are likely to be incentivized like cashbacks, discounts, etc.
  • New IT Model for tax payment, credit disbursement and compliance monitoring
  • IT system will produce monthly returns based on supply data uploaded and inward supplies accepted
  • Imposition of Sugar Cess to be reduced to approximately 2% – 5%
  • Include Real Estate/transfer of property into the GST regime

    Press Information Bureau Released

    GST Council today in its 27 meeting approved principles for filing of new return design based on the recommendations of the Group of Ministers on IT simplification. The key elements of the new return design are as follows

    One monthly Return: All taxpayers excluding a few exceptions like composition dealer shall file one monthly return. Return filing dates shall be staggered based on the turnover of the registered person to manage load on the IT system. Composition dealers and dealers having nil transaction shall have facility to file quarterly return.

    Unidirectional Flow of invoices: There shall be unidirectional flow of invoices uploaded by the seller on anytime basis during the month which would be the valid document to avail input tax credit by the buyer. Buyer would also be able to continuously see the uploaded invoices during the month. There shall not be any need to upload the purchase invoices also. Invoices for B2B transaction shall need to use HSN at four digit level or more to achieve uniformity in the reporting system.

    Simple Return design and easy IT interface: The B2B dealers will have to fill invoice wise details of the outward supply made by them, based on which the system will automatically calculate his tax liability. The input tax credit will be calculated automatically by the system based on invoices uploaded by his sellers. Taxpayer shall be also given user friendly IT interface and offline IT tool to upload the invoices.

    No automatic reversal of credit: There shall not be any automatic reversal of input tax credit from buyer on non-payment of tax by the seller. In case of default in payment of tax by the seller, recovery shall be made from the seller however reversal of credit from buyer shall also be an option available with the revenue authorities to address exceptional situations like missing dealer, closure of business by supplier or supplier not having adequate assets etc.

    Due process for recovery and reversal: Recovery of tax or reversal of input tax credit shall be through a due process of issuing notice and order. The process would be online and automated to reduce the human interface.

    Supplier side control: Unloading of invoices by the seller to pass input tax credit who has defaulted in payment of tax above a threshold amount shall be blocked to control misuse of input tax credit facility. Similar safeguards would be built with regard to newly registered dealers also. Analytical tools would be used to identify such transactions at the earliest and prevent loss of revenue.

    Transition: There will be a three stage transition to the new system. Stage I shall be the present system of filing of return GSTR 3B and GSTR 1. GSTR 2 and GSTR 3 shall continue to remain suspended. Stage I will continue for a period not exceeding 6 months by which time new return software would be ready. In stage 2, the new return will have facility for invoice-wise data upload and also facility for claiming input tax credit on self-declaration basis, as in case of GSTR 3B now.

    During this stage 2, the dealer will be constantly fed with information about gap between credit available to them as per invoices uploaded by their sellers and the provisional credit being claimed by them. After 6 months of this phase 2, the facility of provisional credit will get withdrawn and input tax credit will only be limited to the invoices uploaded by the sellers from whom the dealer has purchased goods.

    Content of the return and implementation: Return shall be simplified also by reducing the content/information required to be filled in the return. The details of the design of the return form, business process and legal changes would be worked out by the law committee based on these principles. Government is keen to introduce the simplified return design at the earliest to reduce the compliance burden on the trade in keeping with the philosophy of ease of doing business.

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    Press Information Bureau | Udyog Software (India) Ltd.