Indirect Tax Alert - Recommendations of GST council 43rd Meeting
31 May 2021
IGST Exemption/rationalisation of GST rates on COVID 19 related imports/supplies
- COVID-19 related goods such as medical oxygen, oxygen concentrators and other oxygen storage and transportation equipment, certain diagnostic markers test kits and COVID-19 vaccines, etc., have been recommended for full exemption from IGST, even if imported on payment basis, for donating to the government or on recommendation of state authority to any relief agency. Hitherto, IGST exemption was applicable only when these goods were imported “free of cost” for free distribution. The above exemption from IGST has also been proposed to be extended to Amphotericin B used as a black fungus drug, upon which Basic Customs Duty is already exempted. The exemption from IGST for the above-mentioned goods would be available up to 31 August 2021.
- Further it has been decided that a Group of Ministers (GoM) will be formed to discuss and decide on the reduction in GST on covid related items. GoM will submit its report by 8 June 2021.
Other Reliefs on Goods
- The Council also decided to reduce GST from 12% to 5% on Diethylcarbamazine tablet used in a WHO programme for lympahtic filarisis elimination.
Clarifications/Clarification amendments- recommended in relation to GST rates
- Leviability of IGST on repair value of goods re-imported after repairs.
- GST rate of 12% to apply on parts of sprinklers/ drip irrigation systems falling under tariff heading 8424 (nozzle/laterals) to apply even if these goods are sold separately.
Rationalisation of GST rate on specified services
- Exemption of GST on food (including any mid-day meals scheme sponsored by Government), served to an educational institution including anganwadi (which provide pre-school education also), irrespective of funding from government grants or corporate donations for such supplies.
- Services provided by way of examination including entrance examination, where fee is charged for such examinations, by National Board of Examination (NBE), or similar Central or State Educational Boards, and input services relating thereto are exempt from GST.
- Appropriate changes decided to be made to clarify that landowner promoters can utilise credit of GST charged to them by developers with respect of apartments that are subsequently sold by the land promoter and on which GST is paid. The developer promotor shall be allowed to pay GST relating to such apartments any time before or at the time of issuance of completion certificate.
- The rates on Maintenance, Repair and Operations (MRO) of ships and vessels to be reduced to 5% from the existing 18%. The point of sale for the B2B supply of these MRO services for ships and vessels would be considered as the location of recipient of service.
- Any milling services of wheat, rice or paddy provided to governments for distribution of flour or rice under the Public Distribution Scheme (PDS) would be exempt from GST if the value of goods in composite supply does not exceed 25%. Otherwise, such services would attract GST at the rate of 5% if supplied to any person registered in GST, including a person registered for payment of TDS.
- GST will be levied on annuity payments that are received as deferred payment for the construction of roads. The benefit of the exemption is for such annuities which are paid for the service by way of access to a road or a bridge.
- GST rate of 18% to be levied on construction of ropeway to a Government Entity.
- GST is exempted on services by way of guarantee provided by the Government to its undertaking/PSU on loans taken by such entity from banks and financial institutions.
- Amnesty Scheme to provide relief to taxpayers by rationalising late fee for pending returns for period from July 2017 to April 2021 if furnished between 01 June 2021 to 31 August 2021, as under:
- Late fee capped to a maximum of INR 500/- (INR 250/- each for CGST & SGST) per return for taxpayers, who did not have any tax liability for period from July 2017 to April 2021.
- Late fee capped to a maximum of INR 1000/- (INR 500/- each for CGST & SGST) per return for other taxpayers.
- The late fee for delay in furnishing of FORM GSTR-3B and FORM GSTR-1 to be capped, per return, as below:
- For taxpayers having nil tax liability in GSTR-3B or nil outward supplies in GSTR-1, the late fee to be capped at INR 500 (INR 250 each for CGST & SGST).
- For taxpayers having Annual Aggregate Turnover (AATO) in preceding year up to INR 15mn, late fee to be capped to a maximum of INR 2,000 (INR 1000 each for CGST & SGST).
- For taxpayers having AATO in preceding year between INR 15m. to INR 50mn, late fee to be capped to a maximum of INR 5,000 (INR 2,500 each for CGST & SGST).
- For taxpayers having AATO in preceding year above INR 50mn., late fee to be capped to a maximum of INR 10,000 (INR 5,000 each for CGST & SGST).
- Further, late fee for delay in furnishing of FORM GSTR-4 by composition taxpayers to be capped to INR 500 (INR 250 each for CGST & SGST) per return, if tax liability is nil in the return, and INR 2,000 (INR 1,000 each for CGST & SGST) per return for others.
- Also, late fee payable for delayed furnishing of FORM GSTR-7 to be reduced to INR 50/- per day (INR 25 each for CGST & SGST) and to be capped to a maximum of INR 2,000/- (INR 1,000 each for CGST & SGST) per return.
*All the above proposals to be made applicable for prospective tax periods.
Compliance relief measures for taxpayers, on account of COVID 19
1. This is in addition to the relief measures already provided to the taxpayers vide the notifications issued on 01 May 2021:
For small taxpayers (aggregate turnover up to INR 50mn)
March & April 2021 tax periods:
- NIL rate of interest for first 15 days from the due date of furnishing the return in FORM GSTR-3B or filing of PMT-06 Challan, reduced rate of 9% thereafter for further 45 days and 30 days for March 2021 and April 2021, respectively.
- Waiver of late fee for delay in furnishing return in FORM GSTR-3B for the tax periods March / QE March 2021 and April 2021 for 60 days and 45 days respectively, from the due date of furnishing FORM GSTR-3B.
- NIL rate of interest for first 15 days from the due date of furnishing the statement in CMP-08 by composition dealers for QE March 2021, and reduced rate of 9% thereafter for further 45 days.
May 2021 tax period:
- NIL rate of interest for first 15 days from the due date of furnishing the return in FORM GSTR-3B or filing of PMT-06 Challan, and reduced rate of 9% thereafter for further 15 days.
- Waiver of late fee for delay in furnishing returns in FORM GSTR-3B for taxpayers filing monthly returns for 30 days from the due date of furnishing FORM GSTR-3B.
For large taxpayers (aggregate turnover more than INR 50mn)
- A lower rate of interest @ 9% for first 15 days after the due date of filing return in FORM GSTR-3B for the tax period May 2021.
- Waiver of late fee for delay in furnishing returns in FORM GSTR-3B for the tax period May 2021 for 15 days from the due date of furnishing FORM GSTR-3B.
Certain other COVID-19 related relaxations to be provided, such as:
- Extension of due date of filing GSTR-1/ IFF for the month of May 2021 by 15 days.
- Extension of due date of filing GSTR-4 for FY 2020-21 to 31 July 2021.
- Extension of due date of filing ITC-04 for QE March 2021 to 30 June 2021.
- Cumulative application of rule 36(4) for availing ITC for tax periods April, May, and June 2021 in the return for the period June 2021.
- Allowing filing of returns by companies using Electronic Verification Code (EVC), instead of Digital Signature Certificate (DSC) till 31 August 2021.
- Relaxations under section 168A of the CGST Act: Time limit for completion of various actions, by any authority or by any person, under the GST Act, which falls during the period from 15 April 2021 to 29 June 2021, to be extended up to 30 June 2021, subject to some exceptions.
Simplification of Annual Return
- Taxpayers would be able to self-certify FORM GSTR-9C, the reconciliation statement for FY 2020-21, instead of getting it certified by chartered accountants.
- The filing of annual return in FORM GSTR-9 / 9A for FY 2020-21 to be optional for taxpayers having aggregate annual turnover up to INR 20mn.
- The reconciliation statement in FORM GSTR-9C for the FY 2020-21 will be required to be filed by taxpayers with annual aggregate turnover above INR 50mn.
- GST Council recommended amendments in certain provisions of the Act to make the present system of GSTR-1/3B return filing as the default return filing system in GST.
- Retrospective amendment in section 50 of the CGST Act with effect from 01 July 2017, providing for payment of interest on net cash basis, to be notified at the earliest.
[PIB - Press releases dated 28 May 2021]