43rd GST Council Meeting Updates and Relaxations

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Customs duty and GST exemptions on relief materials:

Indian Customs duties comprise of Basic Customs Duties (BCD) and Customs duties equivalent to Integrated Goods and Services Tax applicable on local supplies of similar products (hereinafter referred to as ‘Import IGST’).  Import of oxygen concentrators, oxygen storage tanks, COVID-19 vaccines, and other relief items made up to specified periods enjoy an unconditional exemption from BCD. However, import IGST has been exempted only where the said goods are imported free of cost by the state or its agency and for free distribution.

The Council has now extended this exemption to August 31, 2021, and expanded the coverage of the exemption. Import IGST would now be exempted even if imported on a payment basis as long as the imports are for donating to the state government.

Revised GST due dates for March , April and May along with relaxation in interest rates:

NOTES:

Depending upon the turnover of a taxpayer, a waiver of late fees ranging from 15 to 60 days has been provided for the tax period March-May 2021

For March 2021, interest rate relaxation was available for 15 days from the due date. The benefit has now been extended to 45 days

The late fee amount is total GST which can be equally distributed to CGST and SGST

Aggregate Turnover

Tax Period

 

 

 

Original

 due dates

 

No late fees if filed upto

Interest Rate Relaxation from due date

CAT- I STATES

CAT-II STATES

For 1st 15 days

For next few days

More than Rs 5 crore

March, April

and May, 2021

20th April

20th May

20th June

5TH May

4TH June

5TH July

9%

18%

Upto Rs 5 crore

March, 2021

22nd/24th April

21st June

23rd June

Nil

9% for 45 days and 18% thereafter

April, 2021

22nd/24th May

6th July

8th July

 

9% for 30 days and 18% thereafter

May, 2021

    22nd/24th June

22nd July

    24th July

9% for 15 days and 18% thereafter

Upto Rs 5 crore – Quarterly filers

Jan-March

                                                           

 

 

 

 

 

 

 

 

 

 

 

 

22nd/24th April

 

 

 

 

 

 

 

 

 

 

 

 

 

21st June

 

 

 

 

 

 

 

 

 

 

 

 

 

23rd June

9% for 45 days and 18% thereafter

9% for 30 days and 18% thereafter

9% for 15 days and 18% thereafter

Rationalisation of Late Fees

Earlier, the late fee for non-furnishing of return was Rs 25 per day and Rs 10 in case of nil return, subject to a maximum amount of Rs 10,000 (Rs 5,000 each for CGST and SGST). This has now rationalised, as follows:

 

Measure

Scenario

Relief – Capping/ Reduction(per return)

Amnesty Scheme for non-furnishing of consolidated summary return accompanied by payment of tax (GSTR 3B) for tax period July 2017 to April 2021

NIL tax liability

Rs 500

Others

Rs 1,000

Late fee Rationalisation

NIL tax liability in consolidated summary return containing details of sales invoices (GSTR-1) and Summary Return accompanied by payment of tax (GSTR 3B)

Rs 500

Aggregate turnover in a preceding year up to Rs 1.5 crore

Rs 2,000

Aggregate turnover in a preceding year between Rs 1.5 crore to Rs 5 crore

Rs 5,000

Aggregate turnover in a preceding year above Rs 5 crore

Rs 10,000

Delay in the furnishing of GSTR-4 – Composition Dealers

NIL liability

Rs 500

Others

Rs 2,000

Delay in the furnishing of GSTR 7 – Tax Deducted at source

 

Late fee reduced to Rs 50 per day and capped at Rs 2,000

Annual Return (GSTR 9) & GST reconciliation (GSTR 9C) for FY 2020-21

GST compliance framework required furnishing of a statement reconciling the GST Annual returns with the company Financial statement duly certified by a Chartered or Cost Accountant.  While the Finance Act 2021 proposed to mandate taxpayers to self-certify this reconciliation statement – this change can only be made effective after all States make corresponding amendments in their respective GST legislations. This takes several months. It has now been clarified that the self-certification mandate would apply to FY 2021 compliances.

Rate change/ clarification – MRO Service

GST rate on MRO (Maintenance, repair and operation service providers) services in respect of ships/ vessels is being reduced from 18 percent to 5 percent. Further MRO Services relating to ships/vessels provide to foreign customers would be treated as export and therefore zero-rated. This was a long-standing demand and Domestic MROs should now enjoy a level playing field vis a vis foreign competitor.

Compensation Cess

State GST revenue growth at an annual compounded rate of 14 percent has been underwritten for the first five years of GST—i.e. up to June 2022.  A compensation cess imposed on items such as automobiles tobacco and others are collected and utilized for compensating the states for any shortfall vis a vis the assured revenue. Given that the overall revenue growth is far lower than the promised 14 percent CAGR—the state compensation amounts have bloated—estimated to be Rs 2.69 lakh crore for FY22—and now far exceed the budgeted compensation cess revenue of Rs 1.1 lakh crore.  The gap of Rs 1.58 lakh crore is to be met through state’s borrowing which would then be repaid from Cess collected in the future.

The states are now concerned about the revenues beyond five years when the revenue assurance ends. A special session will be scheduled to discuss the Cess conundrum.

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