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Tax Alert: Recommendations of the 39th GST Council Meeting

17 March 2020

Proposed Legal Changes

Trade Facilitation

  • Interest for delay in payment of GST to be charged on the net liability (i.e. amount settled through cash after utilization of ITC) retrospectively w.e.f. 01 July 2017.
  • Where registrations have been cancelled till 14 March 2020, application for revocation of cancellation of registration can be filled-up up to 30 June 2020 (extension of period of application as one-time measure to facilitate those who want to conduct business).
  • Annual Return:
    • Waiver of requirement of filing FORM GSTR-9C for MSMEs for the F.Y. 2018-19, whose aggregate turnover is below INR 50 Mn.
    • Due date for filing FORM GSTR-9 & GSTR-9C for the F.Y. 2018-19 to be extended till 30 June 2020.
    • Waiver of the late fee on delayed filing of FORM GSTR-9 & GSTR-9C for the F.Y. 2017-18 & F.Y. 2018-19 for taxpayers with aggregate turnover less than INR 20 Mn.
  • A new facility called ‘Know Your Supplier’ to be introduced so as to enable every registered person to have some basic information about their suppliers.
  • Waiver of the requirement of furnishing FORM GSTR-1 for 2019-20 for taxpayers who could not opt for availing the option of special composition scheme (composition scheme for supplier of services with a tax rate of 6%) under notification no:2/2019-CT(R) dated 07 March 2019 by filing FORM CMP-02.
  • A special procedure is being prescribed for registered persons who are corporate debtors under the provisions of the Insolvency and Bankruptcy Code, 2016 and are undergoing the corporate insolvency resolution process, so as to enable them to comply with the provisions of GST laws during the Corporate Insolvency Resolution Process (CIRP) period.
  • Extension of due dates for FORM GSTR-3B for the month of July 2019 to January 2020 till 24 March 2020 for registered persons having principal place of business in the Union territory of Ladakh. Similar extension is also recommended for FORM GSTR-1 & FORM GSTR-7.
  • Bunching of refund claims allowed across financial years to facilitate exporters.

Deferment of E-invoice and QR Code

  • Certain class of registered persons (insurance company, banking company, financial institution, non-banking financial institution, GTA, passenger transportation service etc.) to be exempted from issuing e-invoices or capturing dynamic QR code.
  • The date for implementation of e-invoicing and QR Code to be extended to 01 October 2020.

Deferment of e-wallet Scheme

  • Extension of the time to finalize e-Wallet scheme up to 31 March 2021.
  • Extension of the exemptions from IGST and Compensation cess on the imports made under the Advance Authorisation/EPCG/EOU schemes up to 3 March 2021.
  • GSTR-1 & GSTR-3B to be continued till September 2020.

Other new initiatives

  • Seeking information return from Banks.
  • To curb fake invoices and fraudulent passing-on of ITC, restrictions to be imposed on passing of the ITC in case of new GST registrations, before physical verification of premises and financial KYC of the registered person.

Issuance of circulars

  • Clarification on apportionment of ITC in cases of business re-organization under section 18(3) of CGST Act, 2017 read with rule 41(1) of CGST Rules, 2017.
  • Appeals during non-constitution of the Appellate Tribunal.
  • Clarification on refund related issues.
  • Clarification on special procedure for registered persons who are corporate debtors under the provisions of the Insolvency and Bankruptcy Code, 2016.

Amendments to the CGST Rules

  • Reversal of ITC in respect of capital goods partly used for affecting taxable supplies and partly for exempt supplies under rule 43(1)(c).
  • Ceiling to be fixed for the value of the export supply for the purpose of calculation of refund on zero rated supplies.
  • Refund to be sanctioned in both cash and credit in case of excess payment of tax.
  • Provide for recovery of refund on export of goods where export proceeds are not realized within the time prescribed under FEMA.
  • Operationalize Aadhaar authentication for new taxpayers.

GST rate changes*

Sl. No. Goods or services Existing rate (%) * Proposed rate (%)
1 Mobile Phones and specified parts 12 18
2 Hand-made matches 5 12
3 Other than hand-made matches 18 12
4 Maintenance, Repair and Overhaul (MRO) services in respect of aircraft 18 5(with full ITC)


  • Council decided to deliberate the issue of calibrating the rate in other items (Footwear, Textiles and Fertilizers) for removing inversion in future meetings with further consultation and examination of issue.
  • Change the place of supply for B2B MRO services to the location of recipient. This change is likely to assist in setting-up of MRO services in India.
  • Domestic MRO will also get protection due to 5% tax paid under section 3(7) of the Customs Tariff Act, 1975 on most imported goods (sent abroad for repairs), as this tax is not available as credit.

*The changes will be effective from 01 April 2020.

IT Roadmap

  • In order to smoothen the rollout of the new return system, and to ensure a better uptake of the new return, the transition to the new return system may be made in an incremental manner.
  • The journey could start with linking of the details of the statement of outward supplies in FORM GSTR-1 to the liability in FORM GSTR-3B; followed by the linking of the ITC in FORM GSTR-3B to the details of the supplies reflected in the FORM GSTR-2A.
  • Increase the capacity of the IT system to concurrently handle 0.3 Mn taxpayers from the present level of 0.15 Mn.

[PIB - Press releases dated 14 March 2020]