GST Council Decisions: Special Meeting In July To Discuss Compensation To States, Says Sitharaman

To facilitate taxpayers who could not get their cancelled GST registrations restored in time, an opportunity is being provided for filing of application for revocation of cancellation of registration up to Sept. 30, in all cases where registrations have been cancelled till June 12, the statement said.

• All states fully aware of GST collected by them.
• GST collections so far is not the correct picture of monthly revenues, as due dates have been extended.
• Will get a correct picture of the GST revenue collected in April, May and June only after the extended due dates are over.

• Inverted duty structure leading to higher amount of refunds.
• A decision to correct the duty structure in textiles sector could not be taken today.
• Certain clauses of the Finance Act, 2020 amending CGST Act 2017 and IGST Act, 2017 to be brought into force from June 30.

In July, there will be meeting held to exclusively discuss compensation to states, Sitharaman said.

The council will discuss borrowing to compensate states, and who will pay it back, she said.

For those taxpayers with nil liability will have to pay zero late fee for late filing of GSTR-3B for July 2017-Jan 2020, said Finance Minister Nirmala Sitharaman.

Maximum late fee has been capped at Rs 500 per return for those taxpayers who have a tax liability and have not filed GSTR-3B for July 2017-Jan 2020

• Taxpayer who have tax liability can file past returns between July 1 to Sep. 30.
• Small taxpayers with turnover up to Rs 5 crore will pay reduced rate of interest of 9% from 18% for returns filed for Feb-April 2020 post July 6, if filed by Sep. 30
• Small businesses with turnover up to Rs 5 crore, can file returns for May to July till Sep 2020
• No late fee will be charged till September 2020

Delhi: Union Minister for Finance & Corporate Affairs Nirmala Sitharaman holds 40th GST Council meeting through video conference. pic.twitter.com/odW1oWoskd

— ANI (@ANI) June 12, 2020

Rate rationalisation is unlikely as reducing rates isn’t expected to increase demand, and there isn’t any study that says so, the people cited earlier said. Consumers are curbing expenditure and saving, the people said, and slashing rates isn’t the solution as GST on basic necessities is already nil.

The GST Council will also discuss waiving off late filing fee for returns for July 2017 to January 2020, and this is likely to be approved, the officials said. The government has already waived late fee for filing GSTR-3B returns for February 2020-May 2020.

The GST Council meeting’s set agenda includes discussing waiving off the late fee for filing GSTR-3B returns from July 2017 to January 2020. The discussions around state compensation, however, are likely to dominate the minutes as their revenues drop amid the pandemic-induced lockdown.

States will raise the issue of compensation even as the central government released Rs 36,400 crore to them last week for December-February period, BloombergQuint had reported citing two officials with direct knowledge of the matter.

The central government compensates states bi-monthly after they lost powers to levy indirect taxes such as value added tax with the rollout of goods and services tax. The compensation is guaranteed for five years, and is calculated at a growth rate of 14% annually keeping 2015-16 as the base year.