27th GST Council Meeting

The GST Council held the 27th GST Council Meeting on May 4th, 2018, over video conferencing. In the 27th GST Council Meeting, the Council discussed major agendas and various steps taken up by the Government and GSTIN. The following mentions the steps and agendas discussed:

Simplification of the GST return filing forms
Change of ownership of the GST Network
Imposition of cess on sugar to clear the dues of farmers.

Check out the major decision taken in the 26th GST Council Meeting.

Simplification of GST Return Filing

One of the major agendas taken up in the 27th GST Council is the simplification of GST Return Filing. Initially, a taxpayer was required to file GSTR1 return, GSTR2 return, and GSTR3 return. However, as there was trouble with filing forms GSTR1, GSTR 2, and GSTR3, the Government introduced a simplified return called GSTR3B upto December 31, 2017. GSRT 3B return filing was further extended upto June 2018. GSTR 2 and GSTR 3 returns were not required to be filed until further notification from the Government. Now, in the 27th GST Council Meeting, the Government has decided to simplify GST return filing as follows and make it one return for each month.

One Monthly Return

All persons registered under GST, excluding a few exceptions like composition dealers, will only have to file one monthly return soon after the implementation of the new system proposed below. Until then, the current filing of GSTR 3B and GSTR 1 return will continue as per schedule. The proposed return filling date will be staggered and based on the turnover of the registered person to manage the load on the GSTN. Composition dealers and dealers having nil transaction will have a facility to file quarterly NIL returns. The above change will simplify GST return filing for most taxpayers and make it easier to comply. Currently, those having more than Rs.1.5 crores turnover have to file two monthly returns (GSTR3B and GSTR1), while those having less than Rs.1.5 crores turnover are having to file one monthly return (GSTR3B) and one quarterly return (GSTR1).

Continuous B2B Invoice Uploading and Validation

B2B invoice uploading and validation will be made unidirectional. Hence, the recipient would not have to accept invoices on the GST portal to claim GST input tax credit. Recipients would be able to continuously see the uploaded invoices during the month, and suppliers can upload invoices continuously as well at any time.

Automatic GST Liability & Credit Calculation

Based on the details of invoices uploaded by B2B dealers, the GSTN system will automatically calculate GST tax liability. GST input credit will also be calculated by the GSTN system based on invoices uploaded by suppliers.

No Automatic Input Tax Credit Reversal

The seller cannot reverse the Input tax credit automatically, in the case of non-payment under the new system. In case of default in payment of tax by the seller, recovery would be made from the seller and reversal of credit from the buyer option shall also be made available with the revenue authorities only to address exceptional situations such as missing dealer, closure of business by supplier or supplier with inadequate assets and other related situations. Recovery of tax or reversal of input tax credit will be handled through a due process of issuing notice and order. The process would be online and automated to reduce the human interface. Finally, uploading of invoices by a seller who has defaulted in payment of GST will be blocked to control misuse of automatic input tax credit facility.

Transition to New GST Return Filing Procedure

GSTR 2 and GSTR 3 return filing will continue to remain suspended. The transition to the new system of filing GST returns contains two stages. The following mentions the two stages:

Stage 1

In stage 1, the current filing of GSTR 1 and GSTR 3B return will continue for a period of 6 months. During this time, the new system will be developed and tested.

Stage 2

In stage 2, the facility for invoice-wise data upload and also facility for claiming input tax credit on a self-declaration basis will be introduced. In stage 2, the dealer will constantly upload invoices, and the information about the gap between credit available to them as per invoices uploaded by their sellers and the GST system shall calculate the claim of the provisional credit. After 6 months of this phase 2, the facility of provisional credit will get withdrawn, and the input tax credit will only be limited to the invoices uploaded by the sellers from whom the dealer has purchased goods.

Changes to GSTN Ownership

Currently, the Government (Central and State) owns the GSTN along with five private financial institutions — HDFC, HDFC Bank, ICICI Bank, NSE Strategic Investment, and LIC Housing Finance. Hence GSTN is incorporated as a Section 8 Company. Since the GSTN handles very sensitive data, the Central Government shall acquire the ownership of GSTN till finalization.

CESS on Sugar

The 27th GST Council Meeting also took up the issue of levying 5% GST Cess on sugar and decided to come up with a decision within two weeks from now. Therefore the Government shall use the proposed Cess levied on sugar to finance the gap between the cane price mills pay to farmers in accordance with a revenue-sharing formula recommended by the Rangarajan Committee and the benchmark rate - fair and remunerative price (FRP) — fixed by the Central Government. As per the GST Council proposal, the proposed Cess range between Rs.1 to Rs.1.50 per kg of sugar.

Incentive for Digital Payments

Keeping in view the need to move towards a less-cash economy, the Council has discussed in detail the proposal of a concession of 2% in GST rate [where the GST rate is 3% or more, 1% each from applicable CGST and SGST rates] on B2C supplies, for which payment is made through cheque or digital mode, subject to a ceiling of Rs. 100 per transaction so as to incentivize the promotion of digital payment. GST Council may implement this decision before the next GST Council Meeting. Click here to register GST or GST Registration for Foreigners