The 42nd GST Council meeting finally took place in New Delhi on 5th October 2020. The meeting chaired the finance minister Nirmala sitharaman and the Minister of State (MoS) for Finance Anurag Thakur along with finance minister of all the states.
The 42 GST council meeting has taken some major decision based on the GSTR 1 and 3B quarterly filing. Also, the meeting took concern on the revenue compensation and has said that it will announce decision on the upcoming 12th October on this issue. Other issues such as refund, HSN and facilities on the portal were stated.
However, the main focus of the 42nd GST Council meeting was not very clear but members had taken several GST return and compensation related decisions.
All Updates and Hightlights of the 42nd GST Council Meeting
- GSTR1 and GSTR3B which is to be filed quarterly by the taxpayer whose turnover is less than Rs 5 crores from 1st January 2021, although challan is the medium by which payment is to be made.
- The facility of only upload outer supply of invoices will be given for the assessee for filing the quarterly returns as mentioned above.
- The assessee whose average turnover of higher than Rs. 5 Crores, HSN code needs to be written at a 6-digit level while HSN code to be mentioned at a 4-digit level for those whose average turnover is less than Rs. 5 Crores executing B2B supplies.
- Moreover, 8 digits are required to be mentioned for classes of supplies.
- From 1st January 2021, a refund will be given to those whose bank account validate with PAN and Aadhar. However, the application for refund can be signed via OTP of Aadar verification.
- Satellite launch services are to be released to support start-ups building satellites.
- On 12th October 2020, another meeting will be ruled out for the consideration to states with the shortfall of revenue to reach on a decision.
- The centre can acknowledge developing a GoM rather that a council of administrators on the subject of compensation cess to address the extension of the cess levy, CNBC TV18 as taken from cited sources.
- The state Punjab is asking to borrow from the centre they told that collection of tax is enhancing with monthly compensation of Rs 7000 crore but from the source, there is no requirement for the compensation shortfall of more than Rs 60,000 crore.
Download 42nd GST Council Meeting Press Release
Expectation of 42th GST Council Meeting
- The GST council’s 42nd meeting which was going to be conducted on September 19 is now postponed to the 1st week of October. The postponement comes to the surface in between the ongoing rift between the center and the states regarding the matter of delayed compensation.
The ministry also refused to borrow from the Center as suggested by some states, In this particular matter source said that Under the GST Act, the compensation cess is a tax under the ownership of the states and Article 292 of the Constitution. The Center can borrow on its own taxes and protection of resources which is the Consolidated Fund of India. The Ministry said that “It cannot borrow against the tax which it does not own”. In addition, it said that any borrowing by the Center would squeeze out the resources required for private professionals and it will also raise rates on government papers which actually is a benchmark in the market.
The ministry estimated that there will be a compensation requirement of Rs 3 trillion for the states and the compensation cess for the current financial year will be around Rs 65,000 crore, thus there is a difference of Rs 2.35 trillion. Of this difference, Rs 97,000 crore is due to the GST structure and the rest is due to the lockdown imposed to prevent the spread of the Covid-19 epidemic.
A finance ministry source said that “It has never been the stand of Union finance minister (Nirmala Sitharaman) that the loss of revenue due to Covid-19 would not be compensated. The Central government has, time and again, committed that the entitlement of the States would always be for full compensation,” He also added that the entire compensation sum on account of the shortfall would be paid and honoured.
In the last GST council meeting 
Get to know about GST (Goods and Services Tax) council 1st to 41th meeting updates and decisions taken by members. We have covered 1st meeting to last meeting decisions, the central government gave two options to the state governments. The first was an open window of Rs 97,000 crore from the Reserve Bank of India and the second was to borrow 5the entire shortfall of Rs 2.35 trillion from the markets for convenience by the central bank. The amount will be paid by compensation cess which will be carried forward from June 30, 2022.
Now if states decide to borrow the entire Rs 2.35 trillion shortfalls then they have to bear the interest burden. And in the other option, the extension of cess will only be used to pay the principal amount, not the interest.
Additionally in the first case borrowing under the special window will not be considered as the debt of stats but in the second option amount up to Rs 97000 crore will be not treated as debt. The states were given time till Tuesday to send their feedback, and as per updates, opposition ruled states accused the Centre of reneging on their promise whereas some BJP-ruled states such as Bihar and Karnataka opted for the first option.
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Sources in the ministry said that borrowing to meet the entire shortfall can hurt the private sector very badly as they are still recovering from the losses and current financial slowdown situation. Some recommended transferring the compensation cess to the Compensation Fund and release it for States and a few others are recommending the centre to borrow the funds.
However, one source who knows the matter has responded in this matter that “It is unarguable that since rates on Central government securities work as one of the benchmarks for market rates, any additional borrowings by the Centre would have a higher impact on the market rates than that by States. If the benchmark rates increase on account of borrowing by the Center, the states too will get impacted because it will increase their cost of borrowing”.
Therefore, some top sources believe that, in the current scenario, raising additional resources to meet the gap may be a safer option for states due to the unavailability of compensation. One top source added that “Since the repayment will come from the compensation cess, there is no reason why the rates would be different from each State. In fact, the debt window could be so packaged that it is State independent altogether”.
madam Nirmala Sitaraman jee I like Bharatiya Janata Party. because you are very principle. but I am facing many problems through covid and GST applications you are not extending the last date for GST 3b filling I request you to extend the due date for Mar 31 or at least dec31st. so this very helpful for me. because I cannot pay the due date fees or penalties.
GSTR 3B and GSTR 1 late fee must be waived up to march 2021
Late filing of Gate 3b must be waived till Dec 31st for small traders like us.
GSTR 3B late fees is burden for all small traders. After lockdown, small traders like me not financially doing well. Hoping some relief from govt in this regard… This late fees sector will close many small scale companies..
Late filing of Gate 3b must be waived till Dec 31st for small traders like us.
Late fee for small Trader late GSTR 3B and GSTR 1 must be waived further in this pandemic situation up to 31.03.2021 so that they can survive.
Late fee for small Trader late gstr 3b and gstr 1 must be waived further in this pandemic situation so that they can survive. Kindly re survive the waive of the late fee.
We are providing works contract mainly civil contracts to Govt. we reg under GST in 2 states and receiving various goods and services from unregistered dealers and also sub-contract services from various contractors they are not registered. my doubt is there any liability on us on RCM basis because we are receiving goods and services from unregistered persons?
Please go through Sec 9(3) & 9(4) of the CGST Act to clarify your doubts
Hon.Finance Minister Madamji,
Due to covid 19 pandmic even there is no normal life in the business as of now. peoples are suffering for money and have panic to work at office. Businesses are running with limited staffs.
My humble request to extend due date of filling Annual Return GSTR9 & 9C -2018-19 till 31st March 2021.
Hon.Finance Minister Madamji,
Due to covid 19 pandmic even there is no normal life in the business as of now. peoples are suffering for money and have panic to work at office. Businesses are running with limited staffs. My humble request to extend due date of filling Annual Return GSTR9 & 9C -2018-19 till 31st March 2021.
As the pandemic situation all over the country followed by lockdown shutdown since the last march,2020 even there is no such normalcy in the business as on date. The Annual Return for the Year-2018-19(u/s9-A&9-C) has been extended to 31/10/2020 so also the Tax Audited Balance Sheet u/s44AB of I.T. Act,1961 for the Assessment Year-2020-2021 has been extended to 31/10/2020 which is real unjustice to the business community, and Professionals.
My sincere request to honorable Finance Minister Sitaramanjee to take appropriate steps or pass any such Circular to the Competent Authority for extension of both the matter (C.B.D.T. & GST Council) upto March-2021 for enabling the business community and professionals to file Direct Tax & Indirect Tax Returns in a very systematic, accurate manner. So also request to waive the late fees below 5 crores who are willingly to file their GST Annual Return for the Financial Year-2018-19
Late fee for small Trader late gstr 3b and gstr 1 must be waived further in this pandemic situation so that they can survive.
When both center and state are betting heads over the bush for generating revenue especially during COVID-19, it is seen that is not seen that both center & state GST offices are flooded with unwanted staff and unnecessary overhead expenses are borne by them, at this point of time Govt must introduce voluntary retirement scheme, especially to those who are not conversant with System of GST.
The highhanded officers are still running after service tax, ost, entry tax, and VAT not to unearth default dealer but only to gather some amount for their own.
Groundwork is something different from practice. Presently, Govt has not enough sources to check corrupted people.