Clipped from: https://economictimes.indiatimes.com
The 40th GST Council meeting was held today under the chairmanship of Finance Minister Nirmala Sitharaman. This was the first meet of the Council post the Covid-19 lockdown.
The Goods and Services Tax Council on Friday decided to further ease compliance burden of businesses by providing relief on late free and interest payable on late payments.
It reduced late fee and interest for those with tax liabilities and waived off late fee completely for those with no tax liabilities.
Finance minister Nirmala Sitharaman said that GST collections had fallen to about 45%, aggravating the problem of compensation to states, even as states demanded they be funded through market borrowing. The Council will meet again in July to specifically discuss this issue.
“For all those who have no tax liabilities but have not filed their returns between July 2017 and January 2020 there will be zero late fees,” FM Nirmala Sitharaman said.
“For people who have tax liability, maximum late fee for non-filing of GSTR-3B returns for period July 2017 – January 2020 has been capped to Rs 500,” she added.
Companies having no tax liability will not be fined any late fee if they have not filed returns, since July 1, 2017. Those with tax liabilities will now be able to pay a late fee of Rs 500 per month, per return, far lower than Rs 10,000 per month.
During Covid period of February, March and April 2020, interest rate on late return filings by small taxpayers with turnover up to Rs 5 crore, will be reduced to 9% from 18%, if returns of inward supplies are filed till September 30.
The late fee and interest will be waived for the months of May, June and July, if returns are filed by September 30.
“Providing compliance relief, even beyond September if required, to all businesses is essential at the present stage where the primary focus has to be on business revival and working capital management,” said MS Mani, partner at Deloitte India.
Taxpayers can file for restoration of GST registrations that have been cancelled till June 12, 2020, through a one-time extension being offered till September 30.
The GST Council will meet again in July to discuss exclusively compensation cess which has to be given to the states. The fund shortfall remains an issue even with the Centre having released Rs 36,400 crore to states as compensation cess for December to February period, while states have asked the GST Council to raise money through market borrowings.
“If there has to be a borrowing, how and who’s going to pay for it… it will be discussed,” Sitharaman said.
The total outgo to states stands at Rs 1.51 lakh crore for FY 2019-20, with installment of March remaining. Between April and November 2019, the government had released Rs 1.15 lakh crore as funds to states. About Rs 12,500 crore more needs to be paid to states for the month of March.
The impact of coronavirus followed by the lockdown has hurt GST collections, with the April and May collections falling well short of targets of Rs 1 lakh crore per month.
“States understood what the collections are, they’re at 45% only,” Sitharaman said.
The Government is faced with a tough balancing act, as on one hand it needs robust GST collections to help meet its regular and extraordinary expenses during the pandemic, while on the other hand, businesses are looking for relief to help them tide the major disruptions, loss of revenue and uncertainties.
“Collections are done by states as well, and every state is fully aware of how much money they’re getting every month. Discussion is happening together, revenues we got are not final,” said revenue secretary Ajay Bhushan Pandey.
A complete picture will emerge after collections for April, May and June are taken into account, he added.
The Council however postponed rationalisation of GST rates for textiles, footwear and fertiliser, even though principally all members agreed that the duty rates need to be corrected as these products faced inverted duty structures.
“The minister for UP wanted to take call on brick-klins and pan masala. This meeting will be taken up in the next GST Council meeting,” Sitharaman said.