Recommendations of the 42nd GST Council Meeting

Under the Chairmanship of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman, the 42nd GST Council Meeting took place via video conferencing. Shri Anurag Thakur, Union Minister of State & Corporate Affairs also attended the meeting along with Finance Ministers of States & UTs and Senior Officers of the Ministry of Finance of State/UTs. 

The following recommendations were made:

1- Levy of Compensation Cess was to be extended beyond the change period of five years i.e. beyond June, 2022, for such period as may be deemed fit to meet the revenue gap.

2- Centre is releasing compensation of Rs. 20,000 crore to States towards loss of revenue during 2020-21. Compensation of Rs. 25,000 crore towards IGST Of 2017- 18 by next week.

3- Features of return filings were improved. The Council suggested after its 39th Meeting on March 2020 approached to integrate features of the new return system in the present familiar GSTR-1/3B Scheme. GST Common Portal was made available with various enhancements. The Council has permitted the future roadmap for return filing under GST to enhance Ease of Doing Business and conformity experience. It aims to simplify return filing and reduce the taxpayer’s compliance burden. The timely furnishing of details of outward supplies (GSTR-1) by a taxpayer and his suppliers would-

            • Allow him to view the ITC available in his electronic credit ledger from all sources i.e. domestic supplies, imports and payments on reverse charge etc. prior to the due date for payment of tax.

           • Timely filing of GSTR-1 statement alone would be sufficient as the return in FORM GSTR-3B would get auto prepared on the common portal. 

The Council recommended the following-

➢ Due date of furnishing quarterly GSTR-1 by quarterly taxpayers to be revised to 13th of the month succeeding the quarter w.e.f. 01.01.2021;

➢ Roadmap for auto-generation of GSTR-3B from GSTR-1s by:

            • Auto-population of liability from own GSTR-1 w.e.f. 01.01.2021;

           • Auto-population of input tax credit from suppliers GSTR-1s through the newly developed facility in FORM GSTR-2B for monthly filer w.e.f. 01.01.2021 and for quarterly filers w.e.f. 01.04.2021;

          • To ensure auto-population of ITC and liability in GSTR 3B as detailed above, FORM GSTR 1 would be mandatorily required to be filed before FORM GSTR 3B w.e.f. 01.04.2021;

          • GST laws were to be amended to make the GSTR-1/3B return filing system as the default return filing system and GSTR-1/3B can be filed upto 31.03.2021;

4. To reduce the compliance burden on small taxpayers having an annual turnover more than Rs. 5 crore. The Council earlier recommended of allowing filing of returns on a quarterly basis with monthly payments by such taxpayers to be implemented w.e.f. 01.01.2021. Quarterly taxpayers can pay for the first two months of the quarter having an option to pay 35% of the net cash tax liability of the last quarter using an auto generated challan.

5. Revised Requirement of declaring HSN for goods and SAC for services in invoices and in FORM GSTR-1 w.e.f. 01.04.2021 as under-

      • HSN/SAC at 6 digits for supplies of both goods and services for taxpayers with aggregate annual turnover above Rs. 5 crore;

      • HSN/SAC at 4 digits for B2B supplies of both goods and services for taxpayers with aggregate annual turnover upto Rs. 5 crore;

      • Government to have power to notify 8 digits HSN on notified class of supplies by all taxpayers. Amendments to CGST Rules and FORMS have been recommended. It includes provision for furnishing of Nil FORM CMP08 through SMS;

6. Refunds are required to be paid in a validated bank account which is linked with the PAN and Aadhaar of the registered person w.e.f. 01.01.2021.

7. The satellite launches service supplied by ISRO, Antrix Corporation Ltd and NSIL were to be exempted to encourage launching of satellites and promote the young start-ups.

Thus, the decisions of the GST Council will be given effect through Gazette notification or circulars which shall have force of law.