As the country witnesses a decline in the daily COVID-19 cases with a recovery rate of 90.80%1, it was time for the GST Council to provide some positive measures to the trade and industry that are striving to survive amidst the State-wide lockdowns. The GST Council, chaired by the Hon'ble Union Finance Minister Ms. Nirmala Sitharaman, met after a gap of seven months for its 43rd meeting on 28 May 2021 to consider some important aspects to tackle the pandemic situation.
The key decisions of the meeting have been captured in this alert.
The wider ambit of IGST exemption on import of key medical supplies
- Hitherto, IGST exemption was granted to 'free of cost' imports of essential medical items such as medical oxygen, oxygen concentrators, and other oxygen storage and transportation equipment, certain diagnostic markers test kits and COVID-19 vaccines, etc., for free distribution. This exemption has now been extended till 31 August 2021.
- It has been further decided to grant the IGST exemption on imports of these products even if made on a 'payment' basis up to 31 August 2021, provided such imports are for donating to the government or on the recommendation of state authority to any relief agency.
- The aforesaid IGST exemptions have also been extended to import
of Amphotericin B [a drug used in the treatment of Black
GST rate related changes
- Regarding individual items of COVID-19 relief, it has been decided to constitute a Group of Ministers (GoM) to delve into the need for further relief (particularly the GST rates). The GoM shall give its report by 8 June 2021.
- To support the Lymphatic Filarisis (an endemic) elimination program being conducted in collaboration with the World Health Organization (WHO), the GST rate on Diethylcarbamazine (DEC) tablets has been recommended for reduction to 5% (from 12%).
- GST on Maintenance, Repairs and Operations (MRO) services in
relation to ships/vessels shall be reduced to 5% (from 18%) to
provide level playing field vis-a-vis MRO units of the aviation
sector. Further, the place of supply for B2B supply of MRO Services
regarding ships/vessels would be the location of the recipient of
Recommendation of clarificatory amendments
The Council has also recommended certain clarificatory amendments to GST rates. The major ones are:
- Leviability of IGST on repair value of goods re-imported after repair;
- GST rate of 12% to apply on parts of sprinklers/drip irrigation systems falling under tariff heading 8424 (nozzle/laterals) even if these goods are sold separately;
- Landowner promoters can utilize the credit of GST charged to them by developer promoters regarding such apartments that are subsequently sold by the land promotor and on which GST is paid. The developer promotor shall be allowed to pay GST relating to such apartments before or at the time of issuance of the completion certificate. In this context, appropriate changes shall be made in the relevant notification for an explicit provision.
[The nuances of these amendments can be better understood only once they are notified.]
Amnesty scheme reducing the late fee for pending GST returns
Late fee for non-furnishing of GSTR-3B for the tax periods from July, 2017 to April, 2021 has been reduced/waived as under:
- Max. of INR 500 (INR 250 each for CGST & SGST) per return for taxpayers, who did not have any tax liability for the said tax periods;
- Max. of INR 1,000 (INR 500 each for CGST & SGST) per return for other taxpayers.
The reduced rate of a late fee will apply if GSTR-3B returns for these tax periods are furnished between 1 June 2021 to 31 August 2021.
Rationalization of late fee for delayed filing of GST returns
To reduce the burden of late fee on smaller taxpayers, the upper cap of late fees is being rationalized to align the late fee with the tax liability/turnover of the taxpayers on a prospective basis. Accordingly, the late fee for delay in furnishing of various returns has been capped as follows [per return basis, unless otherwise specified]:
|Returns||Category of Taxpayer||Max. Late fee|
|GSTR-3B and GSTR-1||Taxpayers having NIL liability in GSTR-3B or NIL outward supplies in GSTR-1||INR 500 (INR 250 each for CGST & SGST)|
|For other taxpayers having Annual Aggregate Turnover in preceding year -|
|- Up to INR 15 million||INR 2,000 (INR 1,000 each for CGST & SGST)|
|- Between INR 15 million to INR 50 million||INR 5,000 (INR 2,500 each for CGST & SGST)|
|- Above INR 50 million||INR 10,000 (INR 5,000 each for CGST & SGST)|
|GSTR-7||Taxpayers required to deduct tax at source||INR 50 per day (INR 25 each for CGST & SGST) per day with max. of INR 2,000/- (INR 1,000 each for CGST & SGST) per return|
Further extension in compliance due dates for taxpayers
In view of the COVID-19 pandemic, in addition to the extension in compliance due dates notified2 earlier, following further extensions have been granted to taxpayers:
|Interest applicable at||Late fee|
|Turnover > INR 50 million in the preceding FY (GSTR-3B)||May 2021||9% p.a. till 5 July 2021||Waived till 5 July 2021|
|Turnover < / = INR 50 million in the preceding FY (GSTR-3B)||March 2021||NIL till 5 May 2021||Waived till 19 June 2021|
|9% p.a. till 19 June 2021|
|April 2021||NIL till 4 June 2021||Waived till 4 July 2021|
|9% p.a. till 4 July 2021|
|May 2021||NIL till 5 July 2021||Waived till 20 July 2021|
|9% p.a. till 20 July 2021|
|Turnover < / = INR 50 million in the preceding FY and under QRMP||Quarter ending March
[Category 1 states]3
|NIL till 7 May 2021||Waived till 21 June 2021|
|9% p.a. till 21 June 2021|
|Quarter ending March
[Category 2 states]4
|NIL till 9 May 2021||Waived till 23 June 2021|
|9% p.a. till 23 June 2021|
|April 2021 (PMT-06)||NIL till 9 June 2021||Not applicable|
|9% p.a. till 9 July 2021|
|May 2021 (PMT-06)||NIL till 10 July 2021||Not applicable|
|9% p.a. till 25 July 2021|
Further, the due date for GSTR-1 (normal taxpayers) and Invoice Furnishing Facility (optional facility for QRMP taxpayers) for May 2021 has been extended as follows:
|Returns||Original due date||Extended due date|
|GSTR-1||11 June 2021||26 June 2021|
|Invoice Furnishing Facility (QRMP)||13 June 2021||28 June 2021|
Other key reliefs concerning compliance:
- Rule 36(4) for availing ITC for tax periods April, May and June 2021 will be applied cumulatively in the return for the period June 2021.
- The due date for filing GST ITC-04 for the quarter ending March 2021 extended to 30 June 2021.
- Companies will be allowed to file returns using Electronic Verification Code (EVC) instead of Digital Signature Certificate (DSC) till 31 August 2021.
- Time limit for completion of various actions by any authority
or by any person, under the GST Act, which falls from 15 April 2021
to 29 June 2021, is extended up to 30 June 2021 subject to some
exceptions. [Wherever the Hon'ble Supreme Court has
extended the timelines for actions, the same would
Announcements on GSTR-9 and GSTR-9C for FY 2020-21
- The filing of GSTR-9 (annual return) for FY 2020-21 to be optional for taxpayers having aggregate annual turnover up to INR 20 million;
- GSTR-9C (reconciliation statement) for FY 2020-21 will be
mandatory only for taxpayers with annual aggregate turnover above
INR 50 million. Further, the requirement to self-certify GSTR-9C
(instead of certification from a Chartered Accountant) would be
made applicable from FY 2020-21.
- Retrospective amendment to Section 50 of the CGST Act with effect from 1 July 2017, providing for payment of interest on the net cash basis, to be notified at the earliest.
- GST Council has recommended amendments in certain provisions of the CGST Act to make the present system of GSTR-1/3B return filing the default return filing system in GST.
2. Vide various Notifications issued on 1 May 2021
3. Category 1 states - Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh, the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands or Lakshadweep
4. Category 2 states - Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand or Odisha, the Union territories of Jammu and Kashmir, Ladakh, Chandigarh or Delhi.
The Amnesty Scheme, which is likely to benefit around 89% of the
taxpayers, ease in GST compliance burdens for March, April, and May
2021, and clarification on applicability of Annual Return (GSTR-9)
and Reconciliation Statement (GSTR-9C) for the FY 2020-21 are
welcome trade facilitation measures during this difficult phase of
the pandemic. The GST Council has also sought to provide
much-needed clarity on input tax credit utilization by landowner
promotors under Joint Development Agreements (JDAs) with
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