The GST Council in its 39th meeting held on 14 March 2020 has made the following recommendations:
Movement in Tax Rate
Goods
• Increase in GST rates on mobile phones and specified parts to 18% from 12%
• Handmade and other than handmade matches rates rationalised to 12 %, thereby solving the HSN classification issue:
− Increase in handmade matches from 5% to 12 %
− Decrease in other matches from 18% to 12%
Services
• Reduction in GST rates on maintenance, repair and Overhaul (MRO) services in respect of aircraft to 5% from 18%, with full Input tax credit. Further, the place of supply for B2B MRO services changed to the location of recipient, which was earlier performance based
The above amendments shall be effective vide notifications to be issued effective 1 April 2020
Changes in GST Law & Procedures
Interest on delayed payments
• Interest for delayed GST payment will be computed on the net cash tax liability. This amendment will apply retrospectively from 1st July 2017
Deferment of the new GST return system and e-invoicing
• Implementation of New GST return system postponed to 1 October 2020
• Implementation of e-invoicing and the QR code has been deferred to 1 October 2020
• Certain class of registered tax - payers (insurance, banking, financial institutions, non-banking financial institution, Goods Transport Agency, passenger transportation services etc exempted from issuing e- invoicing or capturing dynamic QR code
IGST and cess exemption on imports under Advance Authorisation/ EPCG / EOU Scheme extended till 31 March 2021
Amendment to revocation of cancellation
• GST registration cancelled till 14 March 2020 can file an application for revocation of cancellation of registration. The window to fill this application is available till 30 June 2020. The extension is a one-time measurement to facilitate those who wish to resume conducting the business.
Due date extended for filing GSTR-9 and 9C
• Due date for filing annual return in Form GSTR-9 and reconciliation statement in Form GSTR-9C for FY 2018-19 is extended till 30 June 2020
• MSME having a turnover less than INR 5 Crore for FY 18-19, has the option of filing reconciliation statement of GSTR-9C
• No late fees for delayed payment of filing annual return GSTR- 9 and the reconciliation statement GSTR-9C for FY 17-18 and 18-19 for taxpayers having aggregate turnover below INR 2 crores
Know your supplier
• A new scheme called ‘Know your Supplier’ is proposed to be introduced to provide information to taxpayers about the basic details of the suppliers with whom they transact or propose to conduct business
Waiver and extension of due dates
• The GSTR-1 for FY 19-20 will be waived for certain taxpayers who could not opt for the special composition scheme by filing Form CMP-02
• Due date of Form GSTR-3B, GSTR -1 and GSTR-7 for July 2019 to January 2020 is extended till 24 March 2020 for taxpayers with a principal place of business in the Union Territory of Ladakh
Other proposals
• Time limit for finalisation of the e-Wallet scheme for consumers is extended till 31 March 2021
• A special procedure proposed to be prescribed during the Corporate Insolvency Resolution process for the GST registered corporate debtors undergoing insolvency/resolution procedure under Insolvency and Bankruptcy Code, 2016, in order to comply with the provisions of GST laws
Amendments in CGST Rules
The Central Goods and Services Tax Rules, 2017, proposed to be amended to bring out the following changes:
• Procedure for reversal of input tax credit in respect of capital goods partly used for affecting taxable supplies and partly for exempt supplies
• Ceiling to be fixed for the value of the export supply for computing refund on zero rated supplies
• Refund to be sanctioned in both cash and credit in case of excess payment of tax
• Recovery of refund on export of goods where export proceeds are not realised within the time prescribed under Foreign Exchange Management Act, 1999
Circulars would be issued for providing clarity on the following issues:
• ITC apportionment in cases of business reorganisation
• Appeals during non-constitution of the Appellate Tribunal
• Special procedure for registered persons who are corporate debtors under the provisions of the Insolvency and Bankruptcy Code, 2016, undergoing the corporate insolvency resolution process
For additional information or queries, please feel free to reach out to our indirect tax partner: Ms. Shampa Bhattacharya at shampa.bhattacharya@kochhar.com
